Direct Labor Cost Budget
Donner Racket Company manufactures two types of tennis rackets,the Junior and Pro Striker models. The production budget for Marchfor the two rackets is as follows:
Junior Pro Striker Production budget 8,200 units 21,100 units
Both rackets are produced in two departments, Forming andAssembly. The direct labor hours required for each racket areestimated as follows:
Forming Department Assembly Department Junior 0.25 hour per unit 0.40 hour per unit Pro Striker 0.35 hour per unit 0.70 hour per unit
The direct labor rate for each department is as follows:
Forming Department $17.00 per hour Assembly Department $11.00 per hour
Prepare the direct labor cost budget for March. Enter allamounts as positive numbers.
DONNER RACKET COMPANY Direct Labor Cost Budget For the Month Ending March 31 Forming Department Assembly Department Hours required for production: Junior Pro Striker Total Hourly rate $ $ Total direct labor cost $ $
Direct Labor Cost Budget
Donner Racket Company manufactures two types of tennis rackets,the Junior and Pro Striker models. The production budget for Marchfor the two rackets is as follows:
Junior | Pro Striker | |
Production budget | 8,200 units | 21,100 units |
Both rackets are produced in two departments, Forming andAssembly. The direct labor hours required for each racket areestimated as follows:
Forming Department | Assembly Department | |
Junior | 0.25 hour per unit | 0.40 hour per unit |
Pro Striker | 0.35 hour per unit | 0.70 hour per unit |
The direct labor rate for each department is as follows:
Forming Department | $17.00 per hour |
Assembly Department | $11.00 per hour |
Prepare the direct labor cost budget for March. Enter allamounts as positive numbers.
DONNER RACKET COMPANY | ||
Direct Labor Cost Budget | ||
For the Month Ending March 31 | ||
Forming Department | Assembly Department | |
Hours required for production: | ||
Junior | ||
Pro Striker | ||
Total | ||
Hourly rate | $ | $ |
Total direct labor cost | $ | $ |
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Related questions
Anticipated sales for Safety Grip Company were 40,000 passenger car tires and 12,000 truck tires. Rubber and steel belts are used in producing passenger car and truck tires according to the following table:
Passenger Car | Truck | |
Rubber | 25 lbs. per unit | 58 lbs. per unit |
Steel belts | 4 lbs. per unit | 10 lbs. per unit |
The purchase prices of rubber and steel are $3.3 and $4.3 per pound, respectively. The desired ending inventories of rubber and steel belts are 38,000 and 8,000 pounds, respectively. The estimated beginning inventories for rubber and steel belts are 44,000 and 6,000 pounds, respectively.
Prepare a direct materials purchases budget for Safety Grip Company for the year ended December 31, 20Y9.
Safety Grip Company | |||
Direct Materials Purchases Budget | |||
For the Year Ending December 31, 20Y9 | |||
Rubber | Steel Belts | Total | |
Pounds required for production: | |||
Passenger tires | lbs. | lbs. | |
Truck tires | |||
Desired inventory, December 31, 20Y9 | |||
Total | lbs. | lbs. | |
Estimated inventory, January 1, 20Y9 | |||
Total units purchased | lbs. | lbs. | |
Unit price | x $ | x $ | |
Total direct materials to be purchased | $ | $ | $ |
2) Ace Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for July for the two rackets is as follows:
Junior | Pro Striker | |
Production budget | 5,800 units | 22,100 units |
Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:
Forming Department | Assembly Department | |
Junior | 0.2 hour per unit | 0.5 hour per unit |
Pro Striker | 0.3 hour per unit | 0.6 hour per unit |
The direct labor rate for each department is as follows:
Forming Department | $16 per hour |
Assembly Department | $13 per hour |
Prepare the direct labor cost budget for July 20Y9.
Ace Racket Company | ||
Direct Labor Cost Budget | ||
For the Month Ending July 31, 20Y9 | ||
Forming Department | Assembly Department | |
Hours required for production: | ||
Junior | ||
Pro Striker | ||
Total | ||
Hourly rate | x$ | x$ |
Total direct labor cost | $ | $ |
3) Sweet Tooth Candy Company budgeted the following costs for anticipated production for August:
Advertising expenses | $279,250 |
Manufacturing supplies | 15,310 |
Power and light | 45,650 |
Sales commissions | 312,220 |
Factory insurance | 26,580 |
Production supervisor wages | 134,260 |
Production control wages | 34,910 |
Executive officer salaries | 284,620 |
Materials management wages | 38,380 |
Factory depreciation | 21,750 |
Prepare a factory overhead cost budget, separating variable and fixed costs. Assume that factory insurance and depreciation are the only fixed factory costs.
Sweet Tooth Candy Company | ||
Factory Overhead Cost Budget | ||
For the Month Ending August 31 | ||
Variable factory overhead costs: | ||
Manufacturing supplies | $ | |
Power and light | ||
Production supervisor wages | ||
Production control wages | ||
Materials management wages | ||
Total variable factory overhead costs | $ | |
Fixed factory overhead costs: | ||
Factory insurance | $ | |
Factory depreciation | ||
Total fixed factory overhead costs | ||
Total factory overhead costs | $ |
Static Budget vs. Flexible Budget
The production supervisor of the Machining Department forRodriguez Company agreed to the following monthly static budget forthe upcoming year:
Rodriguez Company
Machining Department Monthly Production Budget
Wages $384,000
Utilities 36,000
Depreciation 60,000
Total $480,000
The actual amount spent and the actual units produced in thefirst three months of 2016 in the Machining Department were asfollows:
Amount Spent Units Produced
January $400,000 90,000
February 440,000 100,000
March 470,000 110,000
The Machining Department supervisor has been very pleased withthis performance because actual expenditures for JanuaryâMarch havebeen less than the monthly static budget of $480,000. However, theplant manager believes that the budget should not remain fixed forevery month but should âflexâ or adjust to the volume of work thatis produced in the Machining Department. Additional budgetinformation for the Machining Department is as follows:
Wages per hour $16.00
Utility cost per direct labor hour $1.50
Direct labor hours per unit 0.20
Planned monthly unit production 120,000
Static Budget vs. Flexible Budget
The production supervisor of the Machining Department forRodriguez Company agreed to the following monthly static budget forthe upcoming year:
Rodriguez Company Machining Department Monthly Production Budget | |
Wages | $384,000 |
Utilities | 36,000 |
Depreciation | 60,000 |
Total | $480,000 |
The actual amount spent and the actual units produced in thefirst three months of 2016 in the Machining Department were asfollows:
Amount Spent | Units Produced | |||
January | $400,000 | 90,000 | ||
February | 440,000 | 100,000 | ||
March | 470,000 | 110,000 |
The Machining Department supervisor has been very pleased withthis performance because actual expenditures for JanuaryâMarch havebeen less than the monthly static budget of $480,000. However, theplant manager believes that the budget should not remain fixed forevery month but should âflexâ or adjust to the volume of work thatis produced in the Machining Department. Additional budgetinformation for the Machining Department is as follows:
Wages per hour | $16.00 |
Utility cost per direct labor hour | $1.50 |
Direct labor hours per unit | 0.20 |
Planned monthly unit production | 120,000 |
X
Part A: Flexible Budget
a. Prepare a flexible budget for the actualunits produced for January, February, and March in the MachiningDepartment. Assume depreciation is a fixed cost. If required, useper unit amounts carried out to two decimal places. Enter allamounts as positive numbers.
Rodriguez Company-Machining Department | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Flexible Production Budget | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forthe Three Months Ending March 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
January | February | March | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Units of production | 90,000 | 100,000 | 110,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wages | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Utilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supportingcalculations: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Units of production | 90,000 | 100,000 | 110,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hours per unit | x | x | x | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total hours ofproduction | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wages per hour | x $ | x $ | x $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total wages | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total hours ofproduction | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Utility costs perhour | x $ | x $ | x $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total utilities Static Budget vs. Flexible Budget The production supervisor of the Machining Departmentfor Rodriguez Company agreed to the following monthly static budgetfor the upcoming year:
The actual amount spent and the actual units produced inthe first three months of 2016 in the Machining Department were asfollows:
The Machining Department supervisor has been verypleased with this performance because actual expenditures forJanuaryâMarch have been less than the monthly static budget of$480,000. However, the plant manager believes that the budgetshould not remain fixed for every month but should âflexâ or adjustto the volume of work that is produced in the Machining Department.Additional budget information for the Machining Department is asfollows:
X Part A: Flexible Budget a. Prepare a flexible budget for the actual unitsproduced for January, February, and March in the MachiningDepartment. Assume depreciation is a fixed cost. If required, useper unit amounts carried out to two decimal places. Enter allamounts as positive numbers.
X Part B: Decision Analysis b. Compare the flexible budget with the actualexpenditures for the first three months. Enter all amounts aspositive numbers.
What does this comparison suggest?
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Stewart Marketing Inc. manufactures two products, A andB. Presently, the company uses a single plant-wide factory overheadrate for allocating overhead to products. However, management isconsidering moving to a multiple department rate system forallocating overhead. From the following information, using a singleplant-wide rate, determine the overhead rate per unit for ProductA:
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A | B | |||
Painting Dept. | $248,000 | 10,000 dlh | 16 dlh | 4 dlh |
Finishing Dept. | 72,000 | 10,000 | 4 | 16 |
Totals | $320,000 | 20,000 dlh | 20 dlh | 20 dlh |
======== | ========== | ====== | ====== | |
$496.00 per unit |
$320.00 per unit |
$144.00 per unit |
$640.00 per unit |
Stewart Marketing Inc. manufactures two products, A andB. Presently, the company uses a single plant-wide factory overheadrate for allocating overhead to products. However, management isconsidering moving to a multiple department rate system forallocating overhead. From the following information, using a singleplant-wide rate, determine the overhead rate per unit for ProductB:
Overhead | Direct Labor Hours (dlh) | Product | ||
A | B | |||
Painting Dept. | $248,000 | 10,000 dlh | 16 dlh | 4 dlh |
Finishing Dept. | 72,000 | 10,000 | 4 | 16 |
Totals | $320,000 | 20,000 dlh | 20 dlh | 20 dlh |
======== | ========== | ====== | ====== | |
$320.00 |
$496.00 |
$144.00 |
$640.00 |
The single plantwide factory overhead rate is $52 perdirect labor hour. The company implements activity-based costingusing four different activity bases, including direct labor hours(and three others). What can be said about the direct labor rateunder activity-based costing relative to the single plantwiderate?
The direct labor rate under activity-based costing will beequal to $52 per direct labor hour. |
The direct labor rate under activity-based costing cannot becompared meaningfully to the $52 per direct labor hour rate. |
The direct labor rate under activity-based costing must be lessthan $52 per direct labor hour. |
The direct labor rate under activity-based costing must begreater than $52 per direct labor hour. |
The Nite Lite Factory produces two products - smalllamps and desk lamps. It has two separate departments - finishingand production. The overhead budget for the finishing department is$550,000, using 500,000 direct labor hours. The overhead budget forthe production department is $400,000 using 80,000 direct laborhours. If the budget estimates that a desk lamp will require 1hours of finishing and 2 hours of production, how much factoryoverhead will be allocated to each unit of desk lamps using themultiple production department factory overhead rate method with anallocation base of direct labor hours?
$11.10 |
$10.00 |
$4.91 |
$5.00 |
The Delph Company produces two products, Blinks andDinks. They are manufactured in two departments, Fabrication andassembly. Data for the products and departments are listedbelow.
Product | Number of units | Labor hrs per unit | Machine hours per unit |
Blinks | 1,000 | 4 | 5 |
Dinks | 2,000 | 2 | 8 |
All of the Machine hours take place in the Fabricationdepartment, which has an estimated overhead of $84,000. All of thelabor hours take place in the Assembly department, which has anestimated total overhead of $72,000.
The Delph Company usesa departmental overheadrates. The fabrication department uses machinehours for an allocation base, and the assembly department useslabor hours. What is the overhead cost per unit forDinks?
$64 |
$44 |
$56 |
$50 |