Reference no: EM133107957
Question - The following data are provided for Lirag Corporation:
A. Sales: Sales through June 30, 2019, the first 6 months of the current year, are 24,000 units. Expected sales for the full year are 60,000 units. Actual sales in units for May and June and estimated unit sales for the next 4 months are as follows:
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May
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4,000
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June
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4,000
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|
July
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5,000
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|
August
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6,000
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|
September
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7,000
|
|
October
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7,000
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B. Direct Materials: At each month end, Lirag wants to have sufficient materials on hand to produce the next month's estimated sales. Data regarding materials are as follows:
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Direct Materials
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Units of Material Required
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Cost per Unit
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Units in Inventory, June 30, 2019
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|
101
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6
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Php 0.40
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35,000
|
|
211
|
4
|
3.60
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32,000
|
|
242
|
2
|
1.20
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14,000
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C. Direct Labor:
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Process
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Hours per Unit
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Hourly Labor Rate
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Forming
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80
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P 8.00
|
|
Assembly
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2.00
|
5.50
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Finishing
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0.25
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6.00
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D. Factory Overhead: The company produced 27,000 units during the 6-month period through June 30, 2019 and expects to produce 60,000 units during the year. The actual variable factory overhead costs incurred during this 6-month period are as follows. The Controller believes that these costs will be incurred at the same rate during the remainder of 2019.
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Supplies
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P59,400
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Electricity
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27,000
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Indirect Labor
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54,000
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Other
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21,600
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Total Variable Factory Overhead
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P162,000
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The fixed factory overhead costs incurred during the first 6 months of 2019 amounted to Php 93,000. Fixed overhead costs are budgeted for the full year as follows:
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Supervision
|
P60,000
|
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Property Tax
|
7,200
|
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Depreciation
|
86,400
|
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Other
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32,400
|
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Total Fixed Factory Overhead
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P186,000
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E. Finished goods inventory: The desired monthly ending finished goods inventory in units is 80% of the next month's estimated sales. These are 5,600 finished units in the June 30, 2019 inventory.
Required -
1. Prepare the production budget for the third quarter ending September 30, 2019.
2. Prepare the direct materials purchases budget for the third quarter.
3. Prepare the direct labor budget for the third quarter.
4. Prepare the factory overhead budget for the 6 months ending December 31, 2019, presenting two figures for total variable and total fixed overhead.
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