sol06 - CHAPTER 6 MASTER BUDGET AND RESPONSIBILITY...

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CHAPTER 6 MASTER BUDGET AND RESPONSIBILITY ACCOUNTING 6-20 (30 min.) Revenues and production budget . 1. Selling Price Units Sold Total Revenues 12-ounce bottles $0.25 4,800,000 a $1,200,000 4-gallon units 1.50 1,200,000 b 1,800,000 $3,000,000 a 400,000 × 12 months = 4,800,000 b 100,000 × 12 months = 1,200,000 2. Budgeted unit sales (12-ounce bottles) 4,800,000 Add target ending finished goods inventory 600,000 Total requirements 5,400,000 Deduct beginning finished goods inventory 900,000 Units to be produced 4,500,000 3. Beginning Budgeted Target Budgeted = + inventory sales ending inventory production - = 1,200,000 + 200,000 - 1,300,000 = 100,000 4-gallon units
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6-23 (15-25 min.) Budgets for production and direct manufacturing labor. Roletter Company Budget for Production and Direct Manufacturing Labor for the Quarter Ended March 31, 2013 January February March Quarter Budgeted sales (units) 10,000 12,000 8,000 30,000 Add target ending finished goods inventory a (units) 16,000 12,500 13,500 13,500 Total requirements (units) 26,000 24,500 21,500 43,500 Deduct beginning finished goods inventory (units) 16,000 16,000 12,500 16,000 Units to be produced 10,000 8,500 9,000 27,500 Direct manufacturing labor-hours (DMLH) per unit × 2.0 × 2.0 × 1.5 Total hours of direct manufacturing labor time needed 20,000 17,000 13,500 50,500 Direct manufacturing labor costs: Wages ($10.00 per DMLH) $200,000 $170,000 $135,000 $505,000 Pension contributions ($0.50 per DMLH) 10,000 8,500 6,750 25,250 Workers’ compensation insurance ($0.15 per DMLH) 3,000 2,550 2,025 7,575 Employee medical insurance ($0.40 per DMLH) 8,000 6,800 5,400 20,200 Social Security tax (employer’s share) ($10.00 × 0.075 = $0.75 per DMLH) 15,000 12,750 10,125 37,875 Total direct manufacturing labor costs $236,000 $200,600 $159,300 $595,900 a 100% of the first following month’s sales plus 50% of the second following month’s sales. Note that the employee Social Security tax of 7.5% is irrelevant. Such taxes are withheld from employees’
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This note was uploaded on 09/13/2011 for the course ACCT 305 taught by Professor Franz during the Spring '07 term at S.F. State.

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sol06 - CHAPTER 6 MASTER BUDGET AND RESPONSIBILITY...

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