Morgan Inc. predicts sales of 4,000 frames in May & 14,000 units in June. Target end of month finished-goods inventory is 10% of next month’s sales.The company wants RM ending inventory to cover 20% of next month’s needs. The frames each require 2 pieces of trim to manufacture and each trim costs $3 per piece. The frames also require three hours of labor. The direct labor rate is $10 per hour. 1.What is the target # of units (frames) in Ending Finished Goods Inventory for May? 2.What was Beginning Finished Goods Inventory (frames) in units for May? 3.Prepare a production budget for frames for May. What is the total units (frames) to produce in May?
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Morgan Inc. predicts sales of 4,000 frames in May & 14,000 units in June. Target end of month finished-goods inventory is 10% of next month’s sales.The company wants RM ending inventory to cover 20% of next month’s needs. The frames each require 2 pieces of trim to manufacture and each trim costs $3 per piece. The frames also require three hours of labor. The direct labor rate is $10 per hour.
1.What is the target # of units (frames) in Ending Finished Goods Inventory for May?
2.What was Beginning Finished Goods Inventory (frames) in units for May?
3.Prepare a production budget for frames for May. What is the total units (frames) to produce in May?
4.How many pieces of trim are needed to cover May's production?
5.If June’s budgeted production = 6,000 frames. What is the desired inventory of Raw Materials (trim not frames) at the end of May?
6.What was the beginning raw materials inventory for May (trim not frames)?
7.Prepare a May materials usage budget for Morgan Inc. if June’s budgeted production = 6,000 frames. How many pieces of trim must be purchased in May?
8.Prepare a May materials usage budget for Morgan Inc. if June’s budgeted production = 6,000 frames. What is the total budgeted Raw Materials Cost for May? Give your answer in dollars as a positive number but do not use the $ sign.
9.Prepare a direct labor budget in hours and dollars for May. What is the total budgeted direct labor cost for May for Morgan Inc.?
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