Calculate the actual cost per until in april

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Question - Budgets in Managerial Accounting. Santiago's Salsa is in the process of preparing a production cost budget for May. Actual costs in April were:

Santiago's Salsa Production Costs April 2011

Production

25,000 Jars of Salsa

Ingredient cost (variable)

$20,000

Labor cost (variable)

12,000

Rent (fixed)

5,000

Depreciation (fixed)

6,000

Other (fixed)

1,000

Total

$44,000

a. Using this information, prepare a budget for May. Assume that production will increase to 30,000 jars of salsa, reflecting an anticipated sales increase related to a new marketing campaign.

b. Does the budget suggest that additional workers are needed? Suppose the wage rate is $20 per hour. How many additional labor hours are needed in May? What would happen if management did not anticipate the need for additional labor in May?

c. Calculate the actual cost per until in April and the budgeted cost per unit in May. Explain why the cost per unit is expected to decrease.

Reference no: EM131817877

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