The Sabat Corporation manufactures and sells two products:Thingone and Thingtwo. In July 2013, Sabatââ¬â¢s budget departmentgathered the following data to prepare budgets for 2014:
2014 Projected Sales
Product
Units
Price
Thingone
62,000
$172
Thingtwo
46,000
$264
2014 Inventories in Units
Expected Target
Product
January 1, 2014
December 31, 2014
Thingone
21,000
26,000
Thingtwo
13,000
14,000
The following direct materials are used in the two products:
Amount used per unit
Direct Material
Unit
Thingone
Thingtwo
A
Pound
5
6
B
Pound
3
4
C
Each
0
2
Projected data for 2014 for direct materials are:
Direct material
Anticipated purchase price
Expected inventories January 1, 2014
Target inventories December 31, 2014
A
$11
37,000lb
40,000lb
B
6
32,000lb
35,000lb
C
5
10,000 units
12,000 units
Projected direct manufacturing labor requirements and rates for2014 are:
Product
Hours per unit
Rate per hour
Thingone
3
$11
Thingtwo
4
14
Manufacturing overhead is allocated at the rate of $ 19 per directmanufacturing labor-hour.
Based on the preceding projections and budget requirements forThingone and Thingtwo, prepare the ÃÂfollowing budgets for2014:
Required
1. Revenues budget (in dollars)
2. What questions might the CEO ask the marketing manager whenreviewing the revenues budget? Explain briefly.
3. Production budget (in units)
4. Direct material purchases budget (in quantities)
5. Direct material purchases budget (in dollars)
6. Direct manufacturing labor budget (in dollars)
7. Budgeted finished goods inventory at December 31, 2014 ( indollars)
8. What questions might the CEO ask the production manager whenreviewing the production, direct materials, and directmanufacturing labor budgets?
9. How does preparing a budget help Sabat Corporationââ¬â¢s topmanagement better manage thecompany?
The Sabat Corporation manufactures and sells two products:Thingone and Thingtwo. In July 2013, Sabatââ¬â¢s budget departmentgathered the following data to prepare budgets for 2014:
2014 Projected Sales
Product | Units | Price |
Thingone | 62,000 | $172 |
Thingtwo | 46,000 | $264 |
2014 Inventories in Units
Expected Target
Product | January 1, 2014 | December 31, 2014 |
Thingone | 21,000 | 26,000 |
Thingtwo | 13,000 | 14,000 |
The following direct materials are used in the two products:
Amount used per unit
Direct Material | Unit | Thingone | Thingtwo |
A | Pound | 5 | 6 |
B | Pound | 3 | 4 |
C | Each | 0 | 2 |
Projected data for 2014 for direct materials are:
Direct material | Anticipated purchase price | Expected inventories January 1, 2014 | Target inventories December 31, 2014 |
A | $11 | 37,000lb | 40,000lb |
B | 6 | 32,000lb | 35,000lb |
C | 5 | 10,000 units | 12,000 units |
Projected direct manufacturing labor requirements and rates for2014 are:
Product | Hours per unit | Rate per hour |
Thingone | 3 | $11 |
Thingtwo | 4 | 14 |
Manufacturing overhead is allocated at the rate of $ 19 per directmanufacturing labor-hour.
Based on the preceding projections and budget requirements forThingone and Thingtwo, prepare the ÃÂfollowing budgets for2014:
Required
1. Revenues budget (in dollars)
2. What questions might the CEO ask the marketing manager whenreviewing the revenues budget? Explain briefly.
3. Production budget (in units)
4. Direct material purchases budget (in quantities)
5. Direct material purchases budget (in dollars)
6. Direct manufacturing labor budget (in dollars)
7. Budgeted finished goods inventory at December 31, 2014 ( indollars)
8. What questions might the CEO ask the production manager whenreviewing the production, direct materials, and directmanufacturing labor budgets?
9. How does preparing a budget help Sabat Corporationââ¬â¢s topmanagement better manage thecompany?
Related questions
Prepare the budgets for each month in the first quarter of 2104for the Bullwinkle, Inc.
*Slaes
Unit Selling Price $12.00
Unit Sales for November, 2013 $112,500.00
Unit Sales for December, 2013 $102,100.00
Expected unit sales for May, 2014 $137,500.00
Expected unit sales for April, 2014 $125,000.00
Expected unit sales for March, 2014 $116,000.00
Expected unit sales for February, 2014 $112,500.00
Expected unit sales for January, 2014 $113,000.00
Bullwinkle, Inc. likes to keep 10% of the next month's unitsales in ending inventory. All sales are on account. 85% of theAccounts Receivalbe are collected in the month of sale, and 15% ofthe Account Receivable are collected in the mont after sale.Account Receivable on December 31,2013, totaled $183,780.
Desired Ending Direct Materials 3/31/14 12625.0lbs
Metal, Plastic, and Rubber together are $0.75 per pound perunit.
Bullwinkle, Inc. likes to keep 5%of the materials needed ofr thenext month in ending inventory. Payment for materials is madewithin 15 days. 50% is paid in the month of purchase, and 50% ispaid in the month after purchase. Accounts Payable on December 31.2013 totaled $120,595 and were paid in full in January 2014.Beginning Raw Materials on December 31,2013 was 11,295 pounds.
*Direct Labor
Labor requires 2 pounds per unit for completion and is paid at arate of $8.00 per hour.
================================================================
*Sales Budget
| Jan | Feb | Mar | Total | ||
| Expected unit sales | 113000 | 112500 | 116000 | 341500 | |
| Unitselling price | X $12 | X $12 | X $12 | X $12 | |
| TotalSales | 1356000 | 1350000 | 1392000 | 4098000 | |
*Production Budget
| Jan | Feb | Mar | Total | |||||
| Expected Unit Sales | 113000 | 112500 | 116000 | |||||
| Add:Desired ending finished goods units | 11250 | 11600 | 12500 | |||||
| Totalrequired units | 124250 | 124100 | 128500 | |||||
| Less:Begginnng finished goods units | 10210 | 11250 | 11600 | |||||
| Required production units | 114040 | 112850 | 116900 | 343790 | ||||
Prepare a direct materials budget (Round to nearest dollar) inthis order:
| Units to beproduced | |||
| Direct materials per unit | |||
| Total | |||
| Add: ending materials | |||
| Total materials required | |||
| Less: Beginning materials | |||
| Direct materialspurchases | |||
| Cost per pound | |||
| Total cost of direct materialspurchases | |||
