Budgeting!
Hey guys!
I have a major assignment submission coming up and I have done most of the questions but I am very very poor at Budgeting. CAn anyone do this for me and show me how to do it? Please I have attached the question. Please guys help me.
Document Preview:
Briggs Manufacturing produces a subassembly used in the production of train engines. The assembly is sold to engine manufactures and to train maintenance facilities. Projected sales for the coming four months follow:
January 40,000
February 50,000
March 60,000
April 60,000
The following data pertain to production policies and manufacturing specifications followed by Briggs Manufacturing:
Finished goods inventory on January 1 is 32,000 units, each costing $148.71. The desired ending inventory for each month is 80 percent of the next month’s sales.
The data on materials used are as follows:
Direct Material
Per-Unit Usage
Cost per Pound
Metal
10lbs
$8
Components
6
2
Inventory policy dictates that sufficient materials be on hand at the beginning of the month to produce 50 percent of that month’s estimated sales. This is exactly the amount of material on hand on January 1.
The direct labour used per unit of output is four hours. The average direct labour cost per hour is $9.25.
Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labour hours.)
Fixed-Cost Component
Variable-Cost Component
Supplies
–
$1.00
Power
–
0.50
Maintenance
$30,000
0.40
Supervision
16,000
–
Depreciation
200,000
–
Taxes
12,000
–
Other
80,000
1.50
Monthly selling and administration expenses are also estimated using a flexible budget formula. (Activity is measured in units sold.)
Fixed costs
Variable costs
Salaries
$50,000
–
Commissions
–
$2.00
Depreciation
40,000
–
Shipping
–
1.00
Other
20,000
0.60
The unit selling price of the subassembly is $215.
All sales and purchases are for cash. The cash balance on January 1 equals $378,000. If the firm develops a cash shortage by the end of the month, sufficient cash is borrowed to cover the shortage. Any cash borrowed is repaid at the end of the quarter, as is the interest due. (Cash borrowed at the end of the quarter is repaid at the
Attachments: