budgeting concepts - review session
Post on 12-May-2015
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Production Budget
Selling and Administrative
Budget
Direct Materials Budget
Manufacturing Overhead
Budget
Direct Labor
Budget
Cash Budget
Sales Budget
Ending Finished Goods
Budget
October November December Quarter
Budgeted Sales in units 2000 5000 3000 10,000
Selling price per units $10 $10 $10 $10
Total budgeted Sales $20,000 $50,000 $30,000 $100,000
October November December Quarter
Budgeted Sales in units 2000 5000 3000 10,000
Add: Desired ending inventory
Total Needs
Less: Beginning inventory
Required production
October November December Quarter
Budgeted Sales in units 2000 5000 3000 10,000
Add: Desired ending inventory 1000
Total Needs 3000
Less: Beginning inventory 400
Required production 2600 ?
September 31 ending inventory
20% of November Sales (5000)
October November December Quarter
Budgeted Sales in units 2000 5000 3000 10,000
Add: Desired ending inventory 1000 600
Total Needs 3000 5600
Less: Beginning inventory 400 1000
Required production 2600 4600
20% of December Sales (3000)
October November December Quarter
Budgeted Sales in units 2000 5000 3000 10,000
Add: Desired ending inventory 1000 600 500 500
Total Needs 3000 5600 3500 10,500
Less: Beginning inventory 400 1000 600 400
Required production 2600 4600 2900 10,100
20% of January Sales (2500)
October November December Quarter
Production 2,600 4,600 2,900 10,100
Materials per unit (pounds)
Production Needs
Add: Desired ending inventory
Total needed
Less: Beginning inventory
Materials to be purchased
From production budget
October November December Quarter
Production 2,600 4,600 2,900 10,100
Materials per unit (pounds) 10 10 10 10
Production Needs 26,000 46,000 29,000 101,000
Add: Desired ending inventory
Total needed
Less: Beginning inventory
Materials to be purchased
October November December Quarter
Production 2,600 4,600 2,900 10,100
Materials per unit (pounds) 10 10 10 10
Production Needs 26,000 46,000 29,000 101,000
Add: Desired ending inventory 4,600
Total needed 30,600
Less: Beginning inventory 2,000
Materials to be purchased 28,600 ?
10% of following month’s production needs
October November December Quarter
Production 2,600 4,600 2,900 10,100
Materials per unit (pounds) 10 10 10 10
Production Needs 26,000 46,000 29,000 101,000
Add: Desired ending inventory 4,600 2,900 3500 3500
Total needed 30,600 48,900 32,500 104,500
Less: Beginning inventory 2,000 4,600 2,900 2000
Materials to be purchased 28,600 53,500 35,400 102,500
October November December Quarter
Production 2,600 4,600 2,900 10,100
Direct labor per unit
Total labor hours
Hourly rate
Total Direct labor cost
October November December Quarter
Production 2,600 4,600 2,900 10,100
Direct labor per unit 0.5 0.5 0.5 0.5
Total labor hours 1,300 2,300 1,450 5,050
Hourly rate
Total Direct labor cost
October November December Quarter
Production 2,600 4,600 2,900 10,100
Direct labor per unit 0.5 0.5 0.5 0.5
Total labor hours 1,300 2,300 1,450 5,050
Hourly rate
Total Direct labor cost
October November December Quarter
Production 2,600 4,600 2,900 10,100
Direct labor per unit 0.5 0.5 0.5 0.5
Total labor hours 1,300 2,300 1,450 5,050
Hourly rate 2 2 2 2
Total Direct labor cost 2,600 4,600 2,900 10,100
October November December Quarter
Budgeted DLH 1,300 2,300 1,450 5,050
Variable MOH rate
Variable MOH costs
Fixed MOH costs
Total MOH costs
Direct Labor Budget
October November December Quarter
Budgeted DLH 1,300 2,300 1,450 5,050
Variable MOH rate 2 2 2 2
Variable MOH costs 2,600 4,600 2,900 10,100
Fixed MOH costs 3,350 3,350 3,350 10,050
Total MOH costs 5,950 7,950 6,250 20,150
Direct Labor Budget
Total MOH for quarter $20,150 Total labor hours required 5,050 ≈ $4 per hour
Direct labor budget
Total MOH for quarter $20,150 Total labor hours required 5,050 ≈ $4 per hour
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