To product one unit of output 2 kilograms of direct material are needed Berjaya

To product one unit of output 2 kilograms of direct

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To product one unit of output, 2 kilograms of direct material are needed Berjaya decides to have direct materials on hand at 10,000 kgs every month Cost of direct material is estimated at $1.50 per kg. Ending inventory of May: 10,000 kgs. June July August September Quarter October Production (units) 22,000 32,000 42,000 47,000 121,000 33,000 Materials per unit (Kgs) 2 2 2 2 2 2 Material need for production(Kgs) 44,000 64,000 84,000 94,000 242,000 66,000 Add desired ending inventory (kgs) 10,000 10,000 10,000 10,000 10,000 10,000 Total material needed(kgs) 54,000 74,000 94,000 104,000 252,000 76,000 Less beginning inventory 10,000 10,000 10,000 10,000 10,000 10,000 Materials to be purchased (kgs) 44,000 64,000 84,000 94,000 242,000 66,000 EXPECTED CASH DISBURSEMENT FOR MATERIALS The payment of direct materials is below: 50% purchases is paid in the month of purchase 50% purchases is paid in the following month of purchase June July August September Quarter October Materials to be purchased (kgs) 44,000 64,000 84,000 94,000 242,000 66,000 Cost of direct material ($/kgs) 1,5 1,5 1,5 1,5 1,5 1,5 Total cost of material to be purchased($) 66,000 96,000 126,000 141,000 363,000 99,000 Accounts pay June purchases 50% x $ 66,000 33,000 50% x $ 66,000 33,000 33,000 July purchases Master of Business Administration Page 12
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MANAGERIAL ACCOUNTING 50% x $96,000 48,000 48,000 50% x $96,000 48,000 48,000 August purchases 50% x 126,000 63,000 63,000 50% x 126,000 63,000 63,000 September purchases 50% x 141,000 70,500 70,500 50% x 141,000 70,500 October purchases 50% x $ 99,000 49,500 Total Expected cash disbusement for materials ($) 33,000 81,000 111,000 133,500 325,500 120,000 4. Direct labor budget To product one unit of output, 0.1 hours of direct labor is required. Berjaya pays $8 per hour to its direct labor. All wages are paid at the end of the month June July August September Quarter October Production (units) 22,000 32,000 42,000 47,000 121,000 33,000 Direct labor hours 0,1 0,1 0,1 0,1 0,1 0,1 Labor hours required 2,200 3,200 4,200 4,700 12,100 3,300 Wage rate ($) 8 8 8 8 8 8 Total direct labor cost ($) 17,600 25,600 33,600 37,600 96,800 26,400 5. Overhead budget Manufacturing is divided into variable and fixed overhead. Variable overhead is applied to each units of output on the basis of direct labor hours. The variable overhead rate is $10 per direct labor hour. Variable overhead rate of per unit producted : $10 x 0,1 hrs = $1 per unit Fixed overhead is estimated at $40,000 cash per month. June July August September Quarter October Master of Business Administration Page 13
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MANAGERIAL ACCOUNTING Production (units) 22,000 32,000 42,000 47,000 121,000 33,000 Variable overhead rate ($) 1 1 1 1 1 1 Variable overhead costs ($) 22,000 32,000 42,000 47,000 121,000 33,000 Fixed overhead costs ($) 40,000 40,000 40,000 40,000 120,000 40,000 Total overhead costs ($) 62,000 72,000 82,000 87,000 241,000 73,000 Cash disbursement for overhead costs ($) 62,000 72,000 82,000 87,000 241,000 73,000 6. Selling and administrative expenses budget Cost of Goods sold is computed based on the unit production cost $5.79 per unit. Selling and administrative cost is divided into variable and fixed components. Variable selling and administrative costs is estimated at $1.50 per unit sold. Fixed selling and administrative cost is estimated at $50,000 per month, where $5,000 is depreciation and not cash expense. June July August September Quarter October Budgeted sales (units) 20,000 30,000 40,000 50,000 120,000 35,000 Variable selling and admin. Rate ($) 1,5 1,5 1,5 1,5 1,5 1,5 Variable expense ($) 30,000 45,000 60,000 75,000 180,000 52,500 Fixed selling and admin. Expense ($) 50,000 50,000 50,000 50,000 150,000 50,000 Total expense ($) 80,000 95,000 110,000 125,000 330,000 102,500 Less noncash expenses ($) 5,000 5,000 5,000 5,000 15,000 5,000 Cash disbursements for selling & admin. 75,000 90,000 105,000 120,000 315,000 97,500 7.
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