Furniture Specialties is a company that make two types of dining tables: Simple and Futuristic. There are two types of direct materials: Pine and Mahogany woods. Direct manufacturing labor workers are hired on an hourly basis; no overtime is worked. In terms of manufacturing overhead costs, there are two manufacturing overhead cost pools and two cost drivers. The two manufacturing overhead cost pools are manufacturing operations overhead and machine setup overhead. The cost drivers for manufacturing overhead are: direct manufacturing labor-hours for manufacturing operations overhead cost and setup labor-hours for machine setup overhead cost. Nonmanufacturing costs consist of product design, marketing, and distribution costs.
The following data are available for the 2018 budget:
|
Direct Materials Rate |
|
|
Pine |
$ 9 per meter square (m 2 ) |
|
Mahogany |
$13 per meter square (m 2 ) |
|
Direct Manufacturing labor rate |
$25 per hour |
|
Quantity of Material for Each Product |
||
|
Simple Table |
Futuristic Table |
|
|
Pine |
14 m 2 |
14 m 2 |
|
Mahogany |
8 m 2 |
10 m 2 |
|
Direct Material Labor |
6 hours |
8 hours |
|
Products |
||
|
Simple Table |
Futuristic Table |
|
|
Expected Sales for 2018 (in units) |
55,000 |
15,000 |
|
Selling Price |
$750 |
$950 |
|
Target ending inventory in units |
12,000 |
500 |
|
Beginning inventory in units |
1,000 |
500 |
|
Beginning inventory in dollars |
$400,000 |
$275,000 |
|
Direct materials inventory |
||
|
Pine |
Mahogany |
|
|
Beginning inventory |
85,000 m 2 |
65,000 m 2 |
|
Target ending inventory |
90,000 m 2 |
25,000 m 2 |
|
Data on Manufacturing Overhead Cost |
|
|
Manufacturing Operations Overhead cost (in capacity of 350,000 direct manufacturing labor-hours) |
|
|
Variable manufacturing operation overhead costs (per direct manufacturing labor-hours) |
|
|
Supplies Indirect manufacturing labor Power (support department costs) Maintenance (support department costs) Total variable manufacturing operation overhead cost |
$4.50 6.50 7.00 3.50 $21.50 |
|
Fixed manufacturing operation overhead cost |
|
|
Depreciation Supervision Power (support department costs) Maintenance (support department costs) Total fixed manufacturing operation overhead cost |
$1,400,000 420,000 725,000 430,000 $2,975,000 |
|
Machine Setup Overhead Costs (in capacity of 15,150 setup labor-hours) |
|
|
Variable machine setup overhead cost (per setup labor-hours) |
|
|
Supplies Indirect manufacturing labor Power (support department) Total variable machine setup overhead cost |
$25 55 10 $90 |
|
Fixed machine setup overhead cost |
|
|
Depreciation Supervision Power (Support department cost) Total fixed machine setup overhead cost |
$605,000 1,040,000 21,500 $1,666,500 |
|
0.2 hour of setup labor-hour is allocated to make one unit of simple table and 0.3 hour of setup labor-hour is allocated for futuristic table |
|
|
Non-manufacturing Cost |
|
|
Product Design Cost (fixed) |
$1,100,000 |
|
Marketing Cost Fixed marketing cost Variable marketing cost is equals the 7.5% of revenues |
$1,350,000 |
|
Distribution Cost Fixed distribution cost Variable distribution cost is $2 per cubic feet of table sold and shipped Simple table 20 cubic feet per table sold and shipped Futuristic table 25 cubic feet per table sold and shipped |
$1,700,000 |
Required:
Based on the above information provided by the various department managers, prepare the following budget:
Direct Material Usage Budget in quantity and dollars
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