ACCT303Chapter6

# Chairs 172500 units 3 mh per unit 517500 mh tables

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Chairs: 172,500 units × 3 MH per unit 517,500 MH Tables: 45,150 units × 5 MH per unit 225,750 MH Total 743,250 MH Total budgeted processing costs = Budgeted variable processing costs + Budgeted fixed processing costs = \$789,250 + \$5,900,000 = \$6,689,250 Processing allocation rate = \$6,689,250 743,250 MH \$9 per MH 5. Direct Material Usage Budget in Quantity and Dollars For the Year Ending December 31, 2009 Material Wood Glass Total Physical Units Budget Direct materials required for Chairs (172,500 units × 5 b.f. and 0 sheets) 862,500 b.f. Tables (45,150 units × 7 b.f. and 2 sheets) 316,050 b.f. 90,300 sheets Total quantity of direct materials to be used 1,178,550 b.f. 90,300 sheets Cost Budget Available from beginning direct materials inventory (under a FIFO cost-flow assumption) \$ 170,352 \$ 109,375 To be purchased this period Wood: (1,178,550 b.f. ─ 109,200 b.f.) × \$1.60 per b.f. 1,710,960 Glass: (90,300 sheets ─ 8,750 sheets) × \$12 per sheet _________ 978,600 Direct materials to be used this period \$1,881,312 \$ 1,087,975 \$2,969,287 Direct Materials Purchases Budget 6-34

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For the Year Ending December 31, 2009 Material Wood Glass Total Physical Units Budget To be used in production (requirement 5) 1,178,550 b.f. 90,300 sheets Add: Target ending direct material inventory 117,500 b.f. 9,000 sheets Total requirements 1,296,050 b.f. 99,300 sheets Deduct: Beginning direct material inventory 109,200 b.f. 8,750 sheets Purchases to be made 1,186,850 90,550 sheets Cost Budget Wood: 1,186,850 b.f. \$1.60 per b.f. \$ 1,898,960 Glass: 90,550 sheets \$12 per sheet __________ \$ 1,086,600 Purchases \$ 1,898,960 \$ 1,086,600 \$2,985,560 Total budgeted = Budgeted variable materials-handling costs + Budgeted fixed materials-handling co materials-handling costs = \$342,840 + \$600,000 = \$942,840 Materials handling allocation rate = \$942,840 1,178,550 b.f. = \$0.80 per b.f. 7. Direct Manufacturing Labor Costs Budget For the Year Ending December 31, 2009 Output Units Direct Manufacturing Total Hourly Wage Total Produced Labor-Hours per Unit Hours Rate Chairs 172,500 4 690,000 \$15 \$10,350,000 Tables 45,150 8 361,200 15 5,418,000 Total \$15,768,000 8. Manufacturing Overhead Cost Budget For the Year Ending December 31, 2009 Variable Fixed Total Materials handling \$ 342,840 \$ 600,000 \$ 942,840 Machine setup 97,000 300,740 397,740 Processing 789,250 5,900,000 6,689,250 Total \$1,229,090 \$6,800,740 \$8,029,830 6-35
9. Unit Costs of Ending Finished Goods Inventory For the Year Ending December 31, 2009 Chair Table Cost per Input per Input per Unit of Input Unit of Output Total Unit of Output Total Wood \$1.60 5 b.f. \$ 8.00 7 b.f. \$ 11.20 Glass 12 2 sheets 24.00 Direct manufacturing labor 15 4 hrs. 60.00 8 hrs. 120.00 Materials handling 0.80 5 b.f. 4.00 7 b.f. 5.60 Machine setup 140 0.006 hrs. 1 0.84 0.04 setup-hr 1 5.60 Processing 9 3 MH 27.00 5 MH 45.00 Total \$ 99.84 \$211.40 1 1,035 setup-hours ÷ 172,500 units = 0.006 hours per unit; 1,806 setup hours ÷ 45,150 units = 0.04 hours per unit Ending Inventories Budget December 31, 2009 Quantity Cost per unit Total Direct Materials Wood 117,500 b.f. \$1.60 \$188,000 Glass 9,000 sheets 12.00 108,000 \$ 296,000 Finished goods Chairs 8,500 \$99.84 \$848,640 Tables 2,250 211.40 475,650 1,324,290 Total ending inventory \$1,620,290 10. Cost of Goods Sold Budget For the Year Ending December 31, 2009 Beginning finished goods inventory, Jan. 1 (\$760,000 + \$477,000) \$ 1,237,000 Direct materials used (requirement 5) \$ 2,969,287 Direct manufacturing labor (requirement 7) 15,768,000 Manufacturing overhead (requirement 8) 8,029,830 Cost of goods manufactured 26,767,117 Cost of goods available for sale 28,004,117 Deduct: Ending finished goods inventory, December 31 (reqmt. 9) 1,324,290 Cost of goods sold \$26,679,827 11.

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