Hardin Company is preparing its manufacturing overhead budget for 2012. Relevant data consist of the following.
Units to be produced (by quarters): 10,000, 12,000, 14,000, 16,000.
Direct labor: Time is 1.5 hours per unit.
Variable overhead costs per direct labor hour: Indirect materials $0.70; indirect labor $1.20; and maintenance $0.50.
Fixed overhead costs per quarter: Supervisory salaries $35,000; depreciation $16,000; and maintenance $12,000.
Complete the manufacturing overhead budget for the year, showing quarterly data. (Round overhead rate to 2 decimal places, i.e. 4.25.)
HARDIN COMPANY
Manufacturing Overhead Budget
For the Year Ending December 31, 2012
Quarter
1
2
3
4
Year
Variable costs
Indirect materials $ $ $ $ $
Indirect labor
Maintenance
Total variable
Fixed costs
Supervisory salaries
Depreciation
Maintenance
Total fixed
Total manufacturing overhead
$
$
$
$
$
Direct labor hours
Manufacturing overhead rate per direct labor hour
$
2. Neely, Inc., is preparing its direct labor budget for 2012 from the following production budget based on a calendar year.
Quarter Units Quarter Units
1 20,000 3 35,000
2 25,000 4 30,000
Each unit requires 1.6 hours of direct labor.
Complete the direct labor budget for 2012. Wage rates are expected to be $15 for the first 2 quarters and $16 for quarters 3 and 4.
NEELY, INC.
Direct Labor Budget
For the Year Ending December 31, 2012
Quarter
1
2
3
4
Year
Units to be produced
Direct labor time (hours) per unit
×
×
×
×
Total required direct labor hours
Direct labor cost per hour
× $
× $
× $
× $
Total direct labor cost
$
$
$
$
$
3. On January 1, 2013 the Batista Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2013.
Sales units: First quarter 5,000; second quarter 6,000; third quarter 7,000
Ending raw materials inventory: 50% of the next quarter’s production requirements
Ending finished goods inventory: 30% of the next quarter’s expected sales units
Third-quarter production: 7,250 units
The ending raw materials and finished goods inventories at December 31, 2012, follow the same percentage relationships to production and sales that occur in 2013. Three pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $4 per pound.
Complete the production budget by quarters for the 6-month period ended June 30, 2013.
BATISTA COMPANY
Production Budget
For the Six Months Ending June 30, 2013
Quarter
Six
1
2
Months
Add:
Total required units
Less:
Required production units
4. Moreno Industries has adopted the following production budget for the first 4 months of 2013.
Month Units Month Units
January 10,000 March 5,000
February 8,000 April 4,000
Each unit requires 3 pounds of raw materials costing $2 per pound. On December 31, 2012, the ending raw materials inventory was 9,000 pounds. Management wants to have a raw materials inventory at the end of the month equal to 30% of next month’s production requirements.
Complete the direct materials purchases budget by month for the first quarter.
MORENO INDUSTRIES
Direct Materials Purchases Budget
For the Quarter Ending March 31, 2013
January February March
×
×
×
Total pounds needed for production
Add:
Total materials required
Less:
Direct materials purchases
× $
× $
× $
Total cost of direct materials purchases
$
$
$
5. Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2012 sales budget is as follows.
Quarter HD-240
1 5,000
2 7,000
3 8,000
4 10,000
The January 1, 2012, inventory of HD-240 is 2,500 units. Management desires an ending inventory each quarter equal to 50% of the next quarter’s sales. Sales in the first quarter of 2013 are expected to be 30% higher than sales in the same quarter in 2012.
Complete quarterly production budgets for each quarter and in total for 2012.
TURNEY COMPANY
Production Budget
For the Year Ending December 31, 2012
Product HD-240
Quarter
1
2
3
4
Year
Add:
Total required units
Less:
Required production units
6. Roche and Young, CPAs, are preparing their service revenue (sales) budget for the coming year (2012). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.
Department Quarter 1 Quarter 2 Quarter 3 Quarter 4
Auditing 2,200 1,600 2,000 2,400
Tax 3,000 2,400 2,000 2,500
Consulting 1,500 1,500 1,500 1,500
Average hourly billing rates are: auditing $80, tax $90, and consulting $100.
Complete the service revenue (sales) budget for 2012 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.
ROCHE AND YOUNG, CPA’s
Sales Revenue Budget
For the Year Ending December 31, 2012
Quarter 1
Dept Billable Hours Billable Rate Total Rev.
Auditing $ $
Tax
Consulting
Totals
$
Quarter 2
Auditing $ $
Tax
Consulting
Totals
$
Quarter 3
Auditing $ $
Tax
Consulting
Totals
$
Quarter 4
Auditing $ $
Tax
Consulting
Totals
$
Totals
Auditing $ $
Tax
Consulting
Totals