Specialty Products, Inc., produces fire retardant tarps. The company expects to produce 8,320 units in the first quarter, 13,260 units in the second quarter, 15, 080 units in the third quarter, and 11,260 units in the fourth quarter (this information is derived from the previous exercise). With regards to direct materials, each unit of product requires 8 yards of material, at a cost of $4 per yard. Management prefers to maintain ending raw materials inventory equal to 15 percent of next quarters materials needed in production Raw materials inventory at the end of the fourth quarter budget period is estimated to be 14,000 yards. With regards to direct labor, each unit of product requires 3 labor hours at a cost of $16 per hour. Required: Prepare a direct materials purchases budget for Specialty Products, Inc. Prepare a direct labor budget for Specialty Products, Inc.

Specialty Products, Inc., produces fire retardant tarps. The company expects to produce 8,320 units in the first quarter, 13,260 units in the second quarter, 15, 080 units in the third quarter, and 11,260 units in the fourth quarter (this information is derived from the previous exercise). With regards to direct materials, each unit of product requires 8 yards of material, at a cost of $4 per yard. Management prefers to maintain ending raw materials inventory equal to 15 percent of next quarters materials needed in production Raw materials inventory at the end of the fourth quarter budget period is estimated to be 14,000 yards. With regards to direct labor, each unit of product requires 3 labor hours at a cost of $16 per hour. Required: Prepare a direct materials purchases budget for Specialty Products, Inc. Prepare a direct labor budget for Specialty Products, Inc.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 4CMA: Krouse Company produces two products, forged putter heads and laminated putter heads, which are sold...

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Krouse Company produces two products, forged putter heads and laminated putter heads, which are sold through specialty golf shops. The company is in the process of developing itsoperating budget for the coming year. Selected data regarding the companys two products areas follows: Manufacturing overhead is applied to units using direct labor hours. Variable manufacturing overhead Ls projected to be 25,000, and fixed manufacturing overhead is expected to be15,000. The estimated cost to produce one unit of the laminated putter head is: a. 42. b. 46. c. 52. d. 62.
Bellfont Company produces door stoppers. August production costs are below: Door Stoppers produced 70,000 Direct material (variable) $20,000 Direct labor (variable) 40,000 Supplies (variable) 20,000 Supervision (fixed) 29,600 Depreciation (fixed) 23,200 Other (fixed) 5,900 In september, Bellfont expects to produce 100,000 door stoppers. Assuming no structural changes, what is Bellfont's production cost per door stoppers for September? Round to two decimal places.
Hagerty, Inc. a manufacturer of computer diskettes, currently uses a conventional process cost system. During February, Hagerty plans to purchase P 50,000 of raw materials. Of this amount 80% will be used for current production, while the remainder will serve as a buffer in inventory. Direct labor cost is expected to be P 10,000 During February, and the actual factory overhead is anticipated to total P 65,000. Paul William, the owner, has been considering the use of a JIT inventory system. If implemented at the beginning of February, only the materials needed for current production would be purchased. Requirements: Using T-accounts, enter the February transactions for the purchase and usage of materials under: a) Conventional Costing b) JIT Costing Using T-accounts, enter the February transactions for the labor and overhead costs under: a) Conventional Costing b) JIT Costing Do not record the entry for applied overhead.
Catch, Inc., is a designer and manufacturer of backpacks and purses. The equipment must be switched over to a new setting and set up to prepare for each new batch of products. This setup process is very technical and requires a highly qualified team of engineers. Setting up each product requires different efforts. Here is the information about manufacturing costs for one month in the year 2020: Direct Manufacturing Costs: Purses Backpacks Direct Materials $379,290 $412,920 Direct Manufacturing Labor $98,000 $120,000 Manufacturing Overheads: Setup Costs $66,000 Machine-Related Costs $384,000 (Utilities, Maintenance, etc.) Factory Rent $100,000 Here is some information on potential allocation bases/cost drivers for overheads cost: Purses Backpacks Number of batches 120 60 Setup Time 0.5 hours/batch 4 hours/batch Machine-Hours 2,600 1,400 Number of bags 3,600 6,000 Production area used 4,000 sq. ft. 6,000 sq. ft. Q1: Using the above information, choose allocation bases for each…
Magnificent Modems has excess production capacity and is considering the possibility of making and selling security tokens. The following estimates are based on a production and sales volume of 1,000 security tokens. Unit-level manufacturing costs are expected to be $20. Sales commissions will be established at $1 per unit. The current facility-level costs, including depreciation on manufacturing equipment ($60,000), rent on the manufacturing facility ($50,000), depreciation on the administrative equipment ($12,000), and other fixed administrative expenses ($71,950), will not be affected by the production of the security tokens. The chief accountant has decided to allocate the facility-level costs to the existing product (modems) and to the new product (security tokens) on the basis of the number of units of product made (i.e., 5,000 modems and 1,000 security tokens). Required a. Determine the per-unit cost of making and selling 1,000 security tokens. Note: Do not round intermediate…
Mathes Corporation manufactures paper products. The company operates a landfill, which it uses to dispose of nonhazardous trash. The trash is hauled from the two nearby manufacturing facilities in trucks that can carry up to four tons of trash In a load. The landfill operation requires certain preparation activities regardless of the amount of trash in a truck (Le., for each load). The budget for the landfill for next year follows. volume of trash Preparation costs (varies by loads) other variable costs (varies by tons) Fixed costs 1,200 tons (300 loads) $ 54,000 54,000 178,000 $286, 000 Total budgeted costs Mathes is considering making the landfill a profit center and charging the manufacturing plants for disposal of the trash. The landfill has sufficlent capacity to operate for at least the next 20 years. Other landfills are available in the area (both private and municipal), and each plant would be free to declde which landfill to use. Required: a. Compute the optimal transfer…
Guthrie Generators manufactures a solenoid that it uses in several of its products. Management is considering whether to continue manufacturing the solenoids or to buy them from an outside source. The following information is available: 1. The company needs 20,000 solenoids per year. The solenoids can be purchased from an outside supplier at a cost of $15 per unit. 2. The unit cost of manufacturing the solenoids is $20, computed as follows: Direct materials Direct labor Factory overhead: Variable Fixed Total manufacturing costs Cost per unit ($400,000 ÷ 20,000 units) 3. If the company decides not to manufacture the solenoids, it will eliminate all of the raw materials and direct labor costs but only 75 percent of the variable factory overhead costs. 4. If the solenolds are purchased from the outside source, machinery used in the production of solenoids will be sold at its book value. Accordingly, no gain or loss will be recognized. The sale of this machinery would also eliminate $5,000…
Guthrie Generators manufactures a solenoid that it uses in several of its products. Management is considering whether to continue manufacturing the solenoids or to buy them from an outside source. The following information is available. The company needs 18,000 solenoids per year. The solenoids can be purchased from an outside supplier at a cost of $14 per unit. The unit cost of manufacturing the solenoids is $20, computed as follows. Direct materials $ 162,000 Direct labor 36,000 Factory overhead: Variable 72,000 Fixed 90,000 Total manufacturing costs $ 360,000 Cost per unit ($360,000 ÷ 18,000 units) $ 20 If the company decides not to manufacture the solenoids, it will eliminate all of the raw materials and direct labor costs, but will eliminate only 60 percent of the variable factory overhead costs. If the solenoids are purchased from the outside source, machinery used in the production of solenoids will be sold at its…
2. Johnny Co. operates under the lean philosophy. As a result, it has a production cell for its power drills. The conversion costs for 4,000 hours of production is budgeted for the year at $2,400,000. During January, 2,000 units were started and completed. Each drill requires 12 minutes of cell production time. (a) Determine the budgeted cell conversion costs per hour (b) Determine the conversion manufacturing costs per unit
Borges Machine Shop, Inc., has a 1-year contractfor the production of 200,000 gear housings for a new off-roadvehicle. Owner Luis Borges hopes the contract will be extendedand the volume increased next year. Borges has developed costsfor three alternatives. They are general-purpose equipment(GPE), flexible manufacturing system (FMS), and expensive, butefficient, dedicated machine (DM). The cost data follow: GENERAL-PURPOSE EQUIPMENT(GPE) FLEXIBLEMANUFACTURINGSYSTEM (FMS) DEDICATEDMACHINE(DM) Annual contractedunits 200,000 200,000 200,000Annual fi xed cost $100,000 $200,000 $500,000Per unit variable cost $ 15.00 $ 14.00 $ 13.00Which process is best for this contract?
Tioga Company manufactures sophisticated lenses and mirrors used in large optical telescopes. The company is now preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the following information. Lenses Mirrors Units produced 28 28 Material moves per product line 24 14 Direct-labor hours per unit 180 180 The total budgeted material-handling cost is $105,840.Required:1. Under a costing system that allocates overhead on the basis of direct-labor hours, the material-handling costs allocated to one lens would be what amount?2. Under a costing system that allocates overhead on the basis of direct-labor hours, the material-handling costs allocated to one mirror would be what amount?3. Under activity-based costing (ABC), the material-handling costs allocated to one lens would be what amount? The cost driver…
Borges Machine Shop, Inc., has a 1-year contract for the production of 75,000 gear housings for a new off-road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increased next year. Borges has developed costs for three alternatives. They are general-purpose equipment (GPE), flexible manufacturing system (FMS), and expensive, but efficient, dedicated machine (DM) The cost data follow General Purpose Equipment (GPE) Flexible Manufacturing System (FMS) 75,000 $125,000 $15.00 Annual contracted units Annual fixed cost Per unit vanable cost Based on the total cost, the process that is best suited for the current contracted volume is Suppose the contracted volume changes to 275,000 gear housings. Based on the total cost, the process that is best suited for the new volume is Suppose the contracted volume changes to 375,000 gear housings. Based on the total cost, the process that is best suited for the new volume is Dedicated Machine (DM) 75,000 $225,000 $14.00…