Prepare production budgets for july august and september

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Reference no: EM131792065

Problem - The Hale Company finished their sales projections for the coming year. The company produces one product. Part of next year's sales projections are as follows:

 

July

August

September

October

November

Projected Sales in units

100,000

125,000

156,000

165,000

185,000

The budget committee has also compiled the following information on inventories:

 

Raw materials

Work-in-Process

Finished Goods

Ending Balance, June

22,000 lbs

None

13,000 units

Desired ending levels (monthly)

5% of next month's production needs

None

12% of next month's sales

Engineering has developed the following standards upon which the production budgets will be developed:

Item

Standard

Materials usage

5 lbs per unit

Material price per pound

$1.50 per pound

Labor usage

0.4 hours per unit

Labor rate

$30 per  hour

Machine hours

3 machine hours per unit

The Hale Company uses a modified allocation method for allocating overhead costs. The rates that will be used in the coming year are as follows:

Overhead item

Allocation rate

Utilities

$0.50 per machine hour

Inspection

$10 per unit produced

Factory supplies

$2 per unit produced

Depreciation

$35,000 per month

Supervision

$12,000 per month

Required: Prepare the following production budgets for July, August, and September for the Hale Company: Materials purchase budget.

Note: It is expected that this problem will be complete using an Excel spreadsheet using formulas. Please see the Excel Tutorial that is available under the course home tab.

Reference no: EM131792065

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