7.

5- The company Plastics South -SA produces three lines of plastic pens : Fine Point, Point Medium and Large Point . The CEO is interested in hiring an expert to fill the position of head of budgets , but first want to make sure that person knows the art to which puts in evidence to draw : a) The production budget . b ) The budget of raw material requirements . c ) The budget for purchasing materials . d ) The budget for direct labor . e) The budget of indirect manufacturing costs f ) The expenditure budget and sales management . g ) The budget end inventories. h ) The budget of cost of sales. For this we provided the relevant information: Materiales: Component A Component B Component C DIRECT LABOR Hours Cost per hour DIRECT LABOR BUDGET sales.the first half of 2011 Fine Point 1 gram 2 grams 5 grams 0.05 S20 500.000pl.

CLIC CLIC CLIC CLIC CLIC CLIC CLIC FEATHERS Medium Point 1 gram 3 grams 5 grams 0.03 $20 800.000pl.

Large Point 1 gram 5 grams 5 grams 0.06 $20 s400 000

The cost of component B is $ 2 000 kg . The cost of a kilogram of A will be considered to be equal to 5 % of the cost of a kilogram of B , the cost component C is estimated as the cost of component A. The sales department believes it would be desirable to have an inventory at end of period 700 000 feathers , composed as follows : 25% Fine Point , Medium Point 60 % and 15 % of Large Point. The balance of the year just ended showed an inventory of 500 000 pens, each line is the same percentage as the sales department for final inventory estimates . Unit costs for each product line were $ 5.00 for Fine Point . Medium Point $ 7.00 and $ 12.00 for Large Point last year .

COMPONENT A COMPONENT B COMPONENT C Beginning inventory 1 050 000 gr. 2 080 000 gr. 998 000 gr. Desired ending inventory 900 000 gr. 800 000 gr. 700 000 gr. Indirect manufacturing costs are as follows (applied on the basis of hours of direct labor ) required $ 10,000 in maintenance expenses , $ 7,000 for insurance payments , $ 80,000 for costs of energy , in supervision costs will be paid 50% of the total budgeted cost of manual work, $ 10,000 for fixtures, and equipment depreciation and will be building for $ 12,000 . The selling and administrative expenses are as follows: a) Salaries: b ) Fees : they represent 10% of total wages c ) Stationery and office supplies : d ) Depreciation: e) Miscellaneous: 1. BUDGET PRODUCTION Fine Point BUDGET SALES (+)FINAL INVENTORY FINISHED PRODUCTS (-) INITIAL INVENTORY FINISHED PRODUCTS (=) TOTAL PRODUCTION Medium Point Large Point
400000 FEATHERS 105000 FEATHERS -75000 FEATHERS 430000 FEATHERS

$35000 $50 000 $20000 $40 000

500000 FEATHERS 800000 FEATHERS 175000 FEATHERS 420000 FEATHERS -125000 FEATHERS -300000 FEATHERS 550000 FEATHERS 920000 FEATHERS

2.RAW MATERIAL REQUIRED BUDGET COMPONENT "A" 550000 FEATHERS 1 gr. 550000 gr. 920000 FEATHERS 1 gr. 920000 gr. 430000 FEATHERS 1 gr. 430000 gr. 1900000 gr. * 0.11 $ 190,000 TOTAL RAW MATERIAL COMPONENT "B" 550000 FEATHERS 2 gr. 1100000 gr. 920000 FEATHERS 3 gr. 2760000 gr. 430000 FEATHERS 5 gr. 2150000 gr. 6010000 gr. *2 $ 12,020,000 $ 13,160,000 COMPONENT "C" 550000 FEATHERS 5 gr. 2750000 gr. 920000 FEATHERS 5 gr. 4600000 gr. 430000 FEATHERS 5 gr. 2150000 gr. 9500000 gr. * 0.11 $ 950,000

Fine Point Medium Point Large Point TOTAL (*) COST GRAM TOTAL RAW MATERIAL

3. BUDGET PURCHASE RAW MATERIAL DIRECT MAT. "A" DIRECT MAT. "B" DIRECT MAT. "C" Raw material required 1900000 gr. 6010000 gr. 9500000 gr. + Ending inventory desired 900000 800000 700000 - Beginning Inventory -1050000 -2080000 -998000 = Purchases Raw material 1750000 gr. 4730000 9202000 * Cost per gram 0.1 2 0.1 = ALL PURCHASES 175000 9460000 920200 TOTAL GENERAL PURCHASES: 10555200

CLIC CLIC

10555200

4. BUDGET DIRECT LABOR FINE POINT MEDIUM POINT LARGE POINT Production 550000 FEATHERS 920000 FEATHERS 430000 FEATHERS * Hours per unit 0.05 hr c/FEATHER 0.03 hr c/FEATHER 0.06 hr c/FEATHER = Total Hours 27500 hrs 27600 hrs 25800 hrs 50 $ 20 $ 20 $ 20 = DIRECT LABOR COST $ 550,000 $ 552,000 $ 516,000 $ ALL HOURS DIRECT LABOR ALL DIRECT LABOR ($) 80900 hrs 1,618,000

1,618,000

CLIC

5. BUDGET AND ADMINISTRATIVE EXPENSES SALARY STATIONARY DEPRECIATION COMMISSIONS MISCELLANEOUS ALL 35000 50000 20000 3500 40000 148,500.00 CLIC

6. MANUFACTURING OVERHEAD BUDGET Maintenance $ Insurance $ Energy $ Supervisin 50% $ 50 Accessories $ Equipment and building depreciation $ ALL MANUFACTURING OVERHEAD Spreading Manufact. Overhead Allocation rate CLIC 10,000 7,000 80,000 809,000 10,000 12,000 928000 11.47

Allocation

ALL OVERHEAD ALL DIRECT LABOR

7. INVENTORY FINAL BUDGET

FINAL STATEMENT OF RAW MATERIAL
DESIRED INVENTORY

"Direct M."A" "Direct M."B" "Direct M."C"

900000 GR $ 800000 GR $ 700000 GR $

cost per gram 0.10 90000 GR 2.00 1600000 GR 0.10 70000 GR 1760000 GR

UNIT COST DIRECT RAW MATERIAL "D.M "A" "D.M "B" "D.M "C" DIRECT LABOR MANUFACTURING OVERHEAD

FINAL INVENTORY FINISHED PRODUCTS FINE POINT MEDIUM POINT 1 GR 2 GR 5 GR 0.05 HRS 0.05 HRS UNIT COST $ $ $ $ $ 0.10 2.00 0.10 20.00 11.47 $ $ $ $ $ $ 0.10 1 GR 4.00 3 GR 0.50 5 GR 1.00 0.03 HRS 0.57 0.03 HRS 6.17 UNIT COST $ $ $ $ $ 0.10 2.00 0.10 20.00 11.47 $ $ $ $ $ $ 0.10 1 GR 6.00 5 GR 0.50 5 GR 0.60 0.06 HRS 0.34 0.06 HRS 7.54 UNIT COST

LARGE POINT $ $ $ $ $ 0.10 2.00 0.10 20.00 11.47 $ $ $ $ $ $ 0.10 10.00 0.50 1.20 0.69 12.49

ENDING INVENTORY FINISHED PRODUCTS IF DESEADO UNIT COST PRODUCT COST FINE POINT 175000 FEATHERS $ 6.17 $ 1,079,750 MEDIUM POINT 420000 FEATHERS $ 7.54 $ 3,166,800 LARGE POINT 105000 FEATHERS $ 12.49 $ 1,311,450 $ 5,558,000.00 CLIC TO RETURN HOME BEGINNIG INVENTORY FINISHED PRODUCTS WANTED B.INV UNIT COST PRODUCT COST FINE POINT 125000 PLUMAS $ 5.00 $ 625,000.00 MEDIUM POINT 300000 PLUMAS $ 7.00 $ 2,100,000.00 LARGE POINT 75000 PLUMAS $ 12.00 $ 900,000.00 $ 3,625,000

8. BUDGET COST OF SALES BEGINNING INVENTORY FINISHED PRODUCTS (+) PRODUCTION DIRECT RAW MATERIAL DIRECT LABOR MANUFACTURING OVERHEAD (=) COST OF PRODUCTS AVAILABLE (-) INVENTORY FINISHED PRODUCTS (=) COST OF SALES $ 3,625,000 $ 3,625,000.00

$ 13,160,000 $ 1,618,000 $ 928,000 $ 5,558,000.00 $ 15,706,000 -$ 5,558,000 $ 13,773,000 HOME