Budget

Direct materials
Red oaks 10 per board foot
granite 15 per square foot
direct manufacturing 25 per hour

Contents of each product unit

product
casual granit table deluxe granit table
Red oaks 13 14
granite 8 9
direct manufacturing 5 7

product
casual granit table deluxe granit table
expected sales in unit 60,000 12,000
selling price 700 900
target ending inventories 15,000 600
beginning inventory in units 2,000 600
beginning inventory in dollars 450,000 280,000

direct materials
red oak granit
beginning inventory 80,000 70,000
target ending inventory 90,000 30,000

1) calculate the revenue

Revenues budget
Revenue budget for the year ending
Items units selling price total revenues
Casual 60,000 700 $ 42,000,000
Deluxe 12,000 900 $ 10,800,000
$ 52,800,000

Production budget (in unit) for the year ending

product
casual granit table deluxe granit table
budgeted unit sales 60,000 12,000
add: target ending finished goods in dollars 15,000 600
total required units 75,000 12,600
deduct: beginning finished goods in units 2,000 600
units of finished goods to be production 73,000 12,000
 direct materials
physical units budget red oak
direct materials required casual table 73,000 13
direct materials required deluxe table 12,000 14
total quantity of direct materials used

red oak
cost budget
available form beginning direct material inventory (under fifo cost)
red oak 80,000 10
granite 70,000 15
to be purchased and used this period
red oak 1037000 10
granite 622,000 15
total dollar of direct material used

physical units budget

to be used in productrion
add: target ending inventory
total requirements
deduct: beginning inventory
purchase to be made
cost budget
red oak $ 1,127,000 10
granite $ 652,000 15

direct manufacturing labor cost budget for the year ending

output unit direct manuf
casual 73,000 5
deluxe 12,000 7
total

STEP 5

Cost Driver of
Variable
Component of
Overhead
manufacturing overhead Costs Cost Driver of Fixed
manufacturing: direct manuf manufacturing
operations labor hours capacity
overhead costs
Machine setup: setup labor hours setup capacity
overhead costs

casual tables deluxe table

1. quantity of tables to be produced 73,000 12,000
2. number of tables to be produced per batch 60 50
3. number of batches 1216.6666666667 240
4. setup time per batch 10 12
5. total setup hours 12166.666666667 2880
6. setyp hours per table 0.1666666666667 0.24
 two product table casual
deluxe

material oak
granite

items units
casual 60,000
deluxe 12,000
 granit
949000 73,000 8 584000
168000 12,000 9 108000
$ 1,117,000 $ 692,000

granit

800000
1050000

10370000
9330000
$ 11,170,000 $ 10,380,000

materials
red oak granite

$ 1,117,000
$ 90,000
$ 1,207,000
$ 80,000
$ 1,127,000
$ 692,000
$ 30,000
$ 722,000
$ 70,000
$ 652,000

$ 11,270,000
$ 9,780,000

total hours hourly wagtotal

365000 25 $ 9,125,000
84000 25 $ 2,100,000
449000 $ 11,225,000

Manufacturing and
Setup
Capacity
449000
 15046.6666666667

total

15046.6666666667