6.19 Production Budget:
Finished Goods (units)
Budgeted sales Add target ending finished goods inventory Total requirements requirement s "educt #eginning finished goods inventory $nits to #e %roduced
43,000 19,000 !,000 11,000 &1,000
"irect 'aterials Purchases Budget: Direct Materials (in gallons) (&1,000 ) 3* 1&3,000 &,000 !09,000 ,000
"irect materials needed for %roduction Add target ending direct materials inventory Total requirements requirement s "educt #eginning direct materials inventory
Direct materials to be purchased
143,000
6.30 1a.
Revenues Budget Knights Blanets
"nits sold #elling price Budgeted revenues
130 $%%9 $%9,&&0
Raiders Blanets
!otal
190 $%96 $'6,%40
$(6,0 10
b. Knights Blanets Budgeted unit sales )dd budgeted ending *nish goods inventor+ !otal !otal reuirements reuirements Deduct beginning *nish goods inventor+ Budgeted production
Raiders Blanets 130
190
%% 1'%
%& %1&
1%
1&
140
%00
c. Direct -aterials "sage Budget Red oo l Knights blanets/ 1. Budgeted input per *nish unit %. Budgeted production 3. Budgeted usage 1 %2 Raiders blanets/ 4. Budgeted input per *nish unit '. Budgeted production 6. Budgeted usage 4 '2 &. !otal direct materials usage 3 62 Direct -aterials ost Budget (. Beginning inventor+ 9. "nit price 5572 10. ost o8 D- used 8rom beginning inventor+ ( 92 11. -aterials to be used 8rom purchases & (2 1%. ost o8 D- in
Blac ool
Knights logo patches
4
1
140
140
'60
140
Raiders logo patches
'
1
%00
%00
1000
%00
'60
1000
140
%00
3'
1'
4'
60
9
1%
&
6
31'
1(0
31'
360
'%' 10
9(' 11
9' &
140 (
!otal
11&0
-arch 13. ost o8 D- purchased and used in -arch 11 1%2 14. Direct materials to be used 10 132
Budgeted usage )dd target ending inventor+ !otal reuirements Deduct beginning inventor+ !otal D- purchases :urchase price -arch2 !otal purchases
'%' 0 ''6 '
10(3'
66'
11%0
1101'
9(0
14(0
Red ool '60 %% '(% 3' '4&
Blac ool 1000 %% 10%% 1' 100&
Knights logos 140 %% 16% 4' 11&
Raiders logos %00 %% %%% 60 16%
10 $',4& 0
11 $11,0& &
&
(
$(19
$1,%96
1&(& 0 1904 0
!otal
$1(,6 6%
6.31 1. +ncrease in osts for the -ear Assume "ry Pool uses .e/ "ye "nits to d+e 60000 ost di;erential $1<$.402 per ounce = 3 ounces 1.( ncrease in costs $10(,000
#ince the *ne is $1%0,000, the+ ould be *nanciall+ better o; b+ sitching. %. 8 Dr+:ool sitches to the ne d+e, costs ill increase b+ $144,000. 8 Dr+:ool implements ai>en costing, costs ill be reduced as 8ollos/ 7riginal monthl+ costs
nput
"nit cost
?umber o8 units
5abric
$&
6000
@abor
$4
6000
!otal
!otal cost $4%,0 00 $%1,0 00 $63,0 00
)nnual cost $'04,000 $%'%,000 $&'6,000
.um#er of units (1!,000 0,000*21! months ,000 units 'onthly decrease
-onth 1 -onth % -onth 3 -onth 4 -onth ' -onth 6 -onth & -onth ( -onth 9 -onth 10 -onth 11 -onth 1%
!otal
$4%,00 0 $41,'( 0 $41,16 4 $40,&' 3 $40,34 ' $39,94 % $39,'4 % $39,14 & $3(,&' ' $3(,36 ( $3&,9( 4 $3&,60 4 $4&&,1 (4
-onth 1 -onth % -onth 3 -onth 4 -onth ' -onth 6 -onth & -onth ( -onth 9 -onth 10 -onth 11 -onth 1%
%1000 $%0,&90 $%0,'(% $%0,3&6 $%0,1&3 $19,9&1 $19,&&1 $19,'&3 $19,3&( $19,1(4 $1(,99% $1(,(0% $%3(,'9%
$&1',& &'
The different /ith and /ithout aien im%rovement $&'6,000 < $&1',&&' A $40,%%'