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FINC 577 Chapter 9 Notes Outline

An ending inventory of 10 of next quarters production

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Unformatted text preview: y. An ending inventory of 10% of next quarter’s production requirements is sufficient. he manufactur ng un t The manufacturing of each unit requires requires 2 pounds of raw materials at an expected price of $4 per pound. Chapter 9-21 Operating Budgets: Direct Materials Budget Example – Hayes Company Illustration 9-7 Chapter 9-22 Operating Operating Budgets: Direct Labor Budget Shows Shows both the quantity of hours and quantity cost of direct labor necessary to meet production requirements. meet Critical in maintaining a labor force that can meet expected production. meet Total direct labor cost formula: Chapter 9-23 Operating Budgets: Direct Labor Budget Example – Hayes Company Units to be produced from the production budget. 2 hours of direct labor required for each unit. nit Anticipated hourly wage rate $10. Chapter 9-24 Illustration 9-9 Operating Operating Budgets: Manufacturing Overhead Shows the expected manufacturing overhead costs for the budget period. Distinguishes between fixed and variable an shes between xed and ar able overhead costs. Example – Hayes Company Fixed cost amounts are assumed. Expected variable costs per direct labor hour: Indirect materials: $1.00 Indirect labor: $1.40 Utilities: $0.40 Maintenance: $0.20 Chapter 9-25 Operating Budgets: Manufacturing Overhead Illustration 9-10 Chapter 9-26 Operating Operating Budgets: Selling and Administrative Projection Projection of anticipated operating expense...
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