Production budgetSK Inc. estimates its unit sales to be 1,800 units in January. The estimated selling price is $100 per unit.The company estimates beginning inventory to be 50 units and desires ending inventory to be 250 units.
Production budgetEstimated units to be sold 1,800 units+ Desired Ending Finished Goods Inventory 250- Beginning Finished Goods Inventory(50)= Units to be produced2,000 units
Master BudgetDirect Materials BudgetDM to be used (based on production) 27,000 lbs.+ Desired Ending DM Inventory 3,000– Estimated Beginning DM Inventory (2,000)= DM required28,000 lbs.x Cost of DM per unit$10Cost of DM purchases $280,000Additional informationUnits to be produced 2,000 unitsCost of DM per unit$10 per poundDM required per unit:13.5 per pound
Master BudgetDirect Labor Budget Direct labor hours10,000 DLHx Direct Labor (hourly) rate$20Cost of Direct labor $200,000Additional informationUnits to be produced2,000 unitsHours required per unit5 DLHLabor rate per hour$20