FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
Bartleby Related Questions Icon

Related questions

Question

Please do not give solution in image format thanku 

West Partners manufactures metal fixtures. Each fitting requires both steel and an alloy that can withstand extreme temperatures. The
following data apply to the production of the fittings for year 1:
Direct materials per unit
2.0 pounds of steel at 50.80 per pound
1.2 pounds of alloy at $16.00 per pound
Direct labor per unit
0:04 hours at $30 per hour
Overhead per unit
Indirect materials
Indicect labor
Utilities
Machine depreciation
Other overhead
Total overhead per unit
*$ 0.40
0.80
0.60
1.10
8.60
$ 3.50
The machine depreciation and other overhead costs are fixed and are based on production of 100,000 units annually. Plant capacity is
120,000 units annually. All other overhead costs are variable.
The following are forecast for year 2. A wage increase of 6 percent for both direct and indirect labor, which was negotiated recently.
will go into effect. Steel prices are expected to decrease by 5 percent while alloy prices are expected to increase by 10 percent.
Machine depreciation costs are expected to increase by 4 percent. All other unit overhead costs are expected to remain constant.
West Partners expects to sell 84,000 units in year 2. The current inventory of fittings is 8,000 units. Management is forecasting much
higher sales volume in year 3, so wants to have 11.000 units on hand by the end of year 2. Steel and alloy Inventories will not change.
Sales are approximately uniform over the year.
Required:
a. Prepare a production budget for the coming year.
b. Estimate the direct materials, direct labor, and overhead costs for the coming year.
expand button
Transcribed Image Text:West Partners manufactures metal fixtures. Each fitting requires both steel and an alloy that can withstand extreme temperatures. The following data apply to the production of the fittings for year 1: Direct materials per unit 2.0 pounds of steel at 50.80 per pound 1.2 pounds of alloy at $16.00 per pound Direct labor per unit 0:04 hours at $30 per hour Overhead per unit Indirect materials Indicect labor Utilities Machine depreciation Other overhead Total overhead per unit *$ 0.40 0.80 0.60 1.10 8.60 $ 3.50 The machine depreciation and other overhead costs are fixed and are based on production of 100,000 units annually. Plant capacity is 120,000 units annually. All other overhead costs are variable. The following are forecast for year 2. A wage increase of 6 percent for both direct and indirect labor, which was negotiated recently. will go into effect. Steel prices are expected to decrease by 5 percent while alloy prices are expected to increase by 10 percent. Machine depreciation costs are expected to increase by 4 percent. All other unit overhead costs are expected to remain constant. West Partners expects to sell 84,000 units in year 2. The current inventory of fittings is 8,000 units. Management is forecasting much higher sales volume in year 3, so wants to have 11.000 units on hand by the end of year 2. Steel and alloy Inventories will not change. Sales are approximately uniform over the year. Required: a. Prepare a production budget for the coming year. b. Estimate the direct materials, direct labor, and overhead costs for the coming year.
Expert Solution
Check Mark
Knowledge Booster
Background pattern image
Similar questions
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education