On January 1, 2021 the Tata Steel Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2021. Sales units: First quarter 25,000; second quarter 35,000; third quarter 30,000 Ending raw materials inventory 50% of the next quarter’s production requirements Ending finished goods inventory 20% of the next quarter’s expected sales units Direct Labor time per unit 1.6 hours per unit Direct labor rate per hour $12 per unit Three pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $4 per pound. Instructions: Prepare a production budget by quarters for the 6-month period ended June 30, 2021. Prepare a direct materials budget quarter 1 ended March 30, 2021. Prepare a Direct Labor budget for the 6-month period ended June 30, 2021.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 11CE: Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted...

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On January 1, 2021 the Tata Steel Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2021. Sales units: First quarter 25,000; second quarter 35,000; third quarter 30,000 Ending raw materials inventory 50% of the next quarter’s production requirements Ending finished goods inventory 20% of the next quarter’s expected sales units Direct Labor time per unit 1.6 hours per unit Direct labor rate per hour $12 per unit Three pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $4 per pound. Instructions: Prepare a production budget by quarters for the 6-month period ended June 30, 2021. Prepare a direct materials budget quarter 1 ended March 30, 2021. Prepare a Direct Labor budget for the 6-month period ended June 30, 2021.

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