On January 1, 2020, the Hardin Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2020.
Rensing Ltd. estimates sales for the second quarter of 2020 will be as follows.
Fuqua Company's sales budget projects unit of part 198Z of 10,000 units in January, 12,000 units in February, and 13,000 units in March. Each unit of part 198z requires 4 pounds of materials, which cost $2 per pound. Fuqua Company desires its ending raw materials inventory to equal 40% of the next month's production requirements, and its ending finished goods inventory to equal 20% of the next month's expected unit sales. The goals were met at December 31, 2020.
Instructions
- Prepare a production budget for January and February 2021.
- Prepare a direct materials budget for January 2021.
Rodriguez, Inc, is preparing its direct labor budget for 2020 from the following production budget based on a calendar year.
Lowell Company makes and sells artistic frames for pictures. The controller is responsible for preparing the master budget and has accumulated the following information for 2020.
Lowell has a labor contract that calls for a wage increase to $9.00 per hour on April 1. New labor savings machinery has been installed and will be fully operational by March 1.
Lowell expects to begin the year with 17,600 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following month’s sales, plus 40% of the second following month’s sales.
Instructions
Prepare a production budget and a direct labor budget for Lowell Company by month and for the first quarter of the year. The direct labor budget should include direct labor hours.
Atlanta Company is preparing its manufacturing overhead budget for 2020. Relevant data consist of the following.
Kirkland Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first 6 months of 2020, the following data are available.
Fultz Company has accumulated the following budget data for the year 2020.
Danner Company expects to have a cash balance of $45,000 on January 1, 2020. Relevant monthly budget data for the first 2 months of 2020 are as follows.
Deitz Corporation is projecting a cash balance of $30,000 in its December 31, 2020, balance sheet. Deitz's schedule of expected collections from customers for the first quarter of 2020 shows total collections of $185,000. The schedule of expected payments for direct materials for the first quarter of 2020 shows total payments of $43,000. Other information gathered for the first quarter of 2020 is sale of equipment $3,000, direct labor $70,000 manufacturing overhead $35,000, selling and administrative expenses $45,000, and purchases of securities $14,000. Deitz wants to maintain of at least $25,000 cash at the end of each quarter.