22-3

April May June July

Sales (units) 500 580 540 620

Production budget April May June July

Next period's unit sales 580 540 620
Ending inventory percent 25% 25% 25%
Desired ending inventory (units) 145 135 155
Current period's unit sales 500 580 540
Units to be available 645 715 695
Less: beginning inventory 190 145 135
Units to be produced 455 570 560 540
22-4
Direct materials budget April May June
Next period's unit production 570 560 540
Ending raw material inventory percnt 0.3 0.3 0.3
Desired ending raw material inventory 855 840 810
Current period's raw material for production 2275 2850 2800
Less: beginning raw material 663 855 840
Pounds of raw material to be purchased 2467 2835 2770
Budgeted cost per pound 4 4 4
Budgeted purchase 9868 11340 11080

22-5
Direct labor budget July August September
Unit to be produced 620 680 540
Hours of DL per unit 2 2 2
Hours needed 1240 1360 1080
Direct labor rate 20 20 21
Budgeted DL 24800 27200 22680
22-6
Direct materials budget 2nd quarter
Next period's unit production 52500
Ending raw material inventory percnt 30%
Desired ending raw material inventory 9450
Current period's raw material for production 144000
Less: beginning raw material 43200
Pounds of raw material to be purchased 110250
Budgeted cost per pound 175
Budgeted purchase 19293750
22-7
Direct labor budget 2nd quarter
Unit to be produced 2400
Hours of DL per unit 4
Hours needed 9600
Direct labor rate 9
Budgeted DL 86400

Factory overhead budget

Variable OH 105600
Fixed OH 450000
Budgeted OH 555600

22-8
Direct materials budget April May June
Next period's unit production 570 544 540
Ending raw material inventory percnt 30% 30% 30%
Desired ending raw material inventory 855 816 810
Current period's raw material for production 2210 2850 2720
Less: beginning raw material 663 855 816
Pounds of raw material to be purchased 2402 2811 2714

Direct labor budget April May June

Unit to be produced 442 570 544
Hours of DL per unit 0.5 0.5 0.5
Hours needed 221 285 272
Direct labor rate 16 16 16
Budgeted DL 3536 4560 4352

Factory overhead budget April May June

Variable OH 4420 5700 5440
Fixed OH 8000 8000 8000
Budgeted OH 12420 13700 13440

22-10

September October November December

Sales (units) 4000 5000 7000 7600

Production budget September October November

Next period's unit sales 5000 7000 7600
Ending inventory percent 60% 60% 60%
Desired ending inventory (units) 3000 4200 4560
Current period's unit sales 4000 5000 7000
Units to be available 7000 9200 11560
Less: beginning inventory 2400 3000 4200
Units to be produced 4600 6200 7360

22-12
Production budget 2nd quarter 3rd quarter
Next period's unit sales 525000 475000
Ending inventory percent 20% 20%
Desired ending inventory (units) 105000 95000
Current period's unit sales 450000 525000
Units to be available 555000 620000
Less: beginning inventory 75000 105000
Units to be produced 480000 515000

22-17
Cash budget January February March
Beginning cash balance 30000 30000 69294
Cash receipts 525000 400000 450000
Total cash available 555000 430000 519294
Cash disbursement -475000 -350000 -525000
Interest payment -600 -106 0
Preliminary balance 79400 79894 -5706
Additional borrowing 10600 0 35706
Loan repayment -60000 -10600 0
Ending cash balance 30000 69294 30000
Ending loan balance 10600 0 35706
22-18
April May June
Sales 525000 535000 560000
Ending AR 367500 374500 392000
Cash receipts
Cash sales 157500 160500 168000
Collections of prior month's receivables 400000 367500 374500
Total cash receipts 557500 528000 542500
23-11
DM price variance (34,500) F
DM quantity variance 12,000 U
(22,500) F
DL rate variance 3,100 U
DL efficiency variance 60,000 U
63,100 U
23-12 15 17-23
DM price variance (4,600) F p 3a 4a 5a
DM quantity variance 6,000 U
1,400 U
DL rate variance 1,880 U
DL efficiency variance 9,600 U
11,480 U
23-13
DM price variance 2,200 U
DM quantity variance (24,000) F
(21,800) F
23-15
DM price variance 800 U
DM quantity variance 4,000 U
4,800 U
DL rate variance (5,545) F
DL efficiency variance 10,700 U
5,155 U
23-16
October
DL rate variance 3,250 U
DL efficiency variance (8,250) F
(5,000) F
November 5,500 U
DL rate variance 60,000 U
DL efficiency variance 65,500 U
23-17
FO variance (25,000) U
Overhead variance 28,600 U
23-18
FO price variance 15,000 U
FO quantity variance (40,000) F
23-19
Overhead application rate
FO 2
VO 11
Overhead variance 30,000 U -130000
23-20
FO price variance 63,000 U
FO quantity variance (33,000) F