Problem 1 20 As part of the annual budget process Rich Rende

Problem 1 (20%) As part of the annual budget process, Rich Render has to present his forecasted manufacturing costs for the Transmode Product Line for the upcoming fiscal year. Render\'s task is to develop a budget for materials, labor, and overhead costs based on projected sales and production for the year. He has asked you to prepare the budget for the month of March through the development of a template that can be used to easily adjust for variables if needed. Using the information included below, complete the following Sales (units) Production (units) Direct materials usage (dollars) Direct labor costs (dollars) Variable overhead costs (dollars) Fixed overhead costs (dollars) Rickard Enterprises -March Budget FACTS Total Sales per Quarter (sales are even per month) QuarterUnits Price Unit 02 03 04 4,200 6,600 5,900 9,700 $18 $21 $20 $22 Beginning Desired Ending Inventories for Marclh Raw materials inventory (in lbs.) Raw materials inventory (in $) Finished goods (FG) inventory (in units) Finished goods inventory (in S) (20% safety stock desired) 1,120 $8,960 280 S16,135 1,760 $14,080 440 $23,655 Other Information: Pounds of materials needed to produce each unit of FG Cost per lb. of raw material Labor hours needed per unit Hourly wage rate: VOH rate (based on direct labor hours) Fixed overhead (annual): $8.00 0.75 $16.00 $4.00 Rent Utilities (fixed monthly rate $19,200 $9,000 $7,500

Solution

Sales (Q1/3) 1400 FG Inventory add: Closing 440 less : Opening -280 Production 1560 RM per FG required (lbs) 4 RM needed 6240 @ $ 8/unit $      49,920.00 Direct Labour hours Per Unit 0.75 Direct Labour hours needed 1170 @ $ 16/hour $      18,720.00 VOH (based on DLH) @ $ 4/hour $         4,680.00 Fixed OH (19200 + 9000 + 7500)/12 $         2,975.00