Add target ending direct material inventory 240 lbs

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Add: Target ending direct material inventory 240 lbs. 480 Total requirements 1,930 lbs. 5,410 Deduct: beginning direct material inventory 125 lbs. 350 Purchases to be made 1,805 lbs. 5,060 Cost Budget Sugar: (1,805 lbs. × $0.50 per lb.) $903 Sticks: (5,060 × $0.30 per stick) ____ $1,518 Total $903 $1,518 $2,421 d. Direct Manufacturing Labor Costs Budget For the Month of June, 20xx Output Units Direct Manufacturing Total Hourly Wage Total Produced Labor-Hours per Unit Hours Rate Large 3,100 0.20 620 $8 $4,960 Giant 1,830 0.25 457.5 8 3,660 Total 1,077.5 $8,620 6-39
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e. Manufacturing Overhead Costs Budget For the Month of June 20xx Total Machine setup (Large 310 batches 1 0.08 hrs./batch + Giant 183 batches 2 0.09 hrs./batch) $20/hour $ 825 Processing (1,077.5 DMLH $1.70) 1,832 Total $2,657 1 Large: 3,100 units ÷ 10 units per batch = 310; 2 Giant: 1,830 units ÷ 10 units per batch = 183 f. Unit Costs of Ending Finished Goods Inventory For the Month of June, 20xx Large Giant Cost per Unit of Input Input per Unit of Output To tal Input per Unit of Output Total Sugar $ 0.50 0.25 lb $0.125 0.50 lb. $ 0.25 Sticks 0.30 1 0.30 1 0.30 Direct manufacturing labor 8.00 0.2 hr. 1.60 0.25 hr. 2.00 Machine setup 20.00 0.008 hr. 1 0.16 0.009 hr 1 0.18 Processing 1.70 0.2 hr 0.34 0.25 hr 0.425 Total $2.525 $3.155 1 0.08 hour per setup ÷ 10 units per batch = 0.008 hr. per unit; 0.09 hour per setup ÷ 10 units per batch = 0.009 hr. per unit. Ending Inventories Budget June, 20xx Quantity Cost per unit Total Direct Materials Sugar 240 lbs. $0.50 $120 Sticks 480 sticks 0.30 144 $ 264 Finished goods Large 300 $2.525 $757 Giant 180 3.155 568 1,325 Total ending inventory $1,589 6-40
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g. Cost of Goods Sold Budget For the Month of June, 20xx Beginning finished goods inventory, June 1 ($500 + $474) $ 974 Direct materials used (requirement c) $2,326 Direct manufacturing labor (requirement d) 8,620 Manufacturing overhead (requirement e) 2,657 Cost of goods manufactured 13,603 Cost of goods available for sale 14,577 Deduct ending finished goods inventory, June 30 (requirement f) 1,325 Cost of goods sold $13,252 h. Nonmanufacturing Costs Budget For the Month of June, 20xx Total Marketing and general administration 10% 16,200 $1,620 2. Cash Budget June 30, 20xx Cash balance, June 30, 20xx $ 587 Add receipts Collections from May accounts receivable 4,704 Collections from June accounts receivable ($16,200 80% 50%) 6,480 Collections from June cash sales ($16,200 20%) 3,240 Total collection from customers 14,424 Total cash available for needs ( x ) $15,011 Deduct cash disbursements Direct material purchases in May $ 696 Direct material purchases in June ( $2,421 70%) 1,695 Direct manufacturing labor 8,620 Manufacturing overhead ( $2,657 60% because 40% is depreciation) 1,594 Nonmanufacturing costs ( $1,620 70% because 30% is depreciation) 1,134 Taxes 500 Total disbursements ( y ) $14,239 Financing Interest at 12% ($20,000 12% 1 ÷ 12) ( z ) $ 200 Ending cash balance, June 30 ( x ) ─ ( y ) ─ ( z ) $ 572 6-41
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3. Budgeted Income Statement For the Month of June, 20xx Revenues $16,200 Cost of goods sold 13,252 Gross margin 2,948 Operating (nonmanufacturing) costs $1,620 Bad debt expense ($16,200 80% 1%) 130 Interest expense (for June) 200 1,950 Net income $ 998 Budgeted Balance Sheet June 30, 20xx Assets Cash $ 572 Accounts receivable ($16,200 80% 50%)) $ 6,480 Less: allowance for doubtful accounts 130 6,350 Inventories Direct materials $ 264 Finished goods 1,325 1,589 Fixed assets $190,000 Less: accumulated depreciation ($55,759 + 2,657 40% + 1,620 30%) 57,308 132,692 Total assets $141,203 Liabilities and Equity Accounts payable ($2,421 30%) $ 726 Interest payable 200 Long-term debt 20,000 Common stock 10,000 Retained earnings ($109,279 + $998) 110,277 Total liabilities and equity $141,203 6-42
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