Chapter 8 Budgets

Question 1

Production Budget

Answer 1

1. Budgeted Unit Sales
2. Desired Units of Ending Finished Goods Inventory
   (Add 1 and 2) 3. Total Needs
3. Units of Beginning Finished Goods Inventory
   (subtract 3 and 4) 5.Required Production in Units

Question 2

Merchandise Purchases Budget

Answer 2

1. Budgeted COGS
\+Desired Ending Merchandise Inventory
3. Total Needs
(minus) Beginning merchandise inventory
5. Required Purchases

Question 3

Direct Materials Budget

Answer 3

1. Required Production in Units of a finished good
   2.units of raw materials needed per unit of finished goods
   (Multiply 1 and 2) 3. Units of raw materials needed to meet production
   4.Add desired units of ending raw materials inventory
   (Add 3 and 4) 5. Total Units of Raw Materials Needed
2. Units of Beginning raw materials inventory
   (Subtract 5 from 6) 7.Units of raw materials to be purchased
3. Unit cost of raw materials
   (multiply 7 & 8) Cost of raw materials to be purchased

Question 4

Direct Labor Budget

Answer 4

1. Required Production in units (Schedule 2)
   2.Direct labor-hours per unit
   (multiply 1 & 2) 3. Total Direct Labor-Hours Needed
2. Direct Labor cost per hour
   (Multiply 3 & 4) Total Direct Labor Cost

Question 5

Manufacturing Overhead Budget

Answer 5

1. Budgeted Direct Labor-Hours (schedule 4)
2. Variable Manufacturing Overhead Rate
3. (multiply 1 and 2) Variable Manufacturing Overhead
4. Fixed Manufacturing Overhead
5. (Add 3 and 4) Total Manufacturing Overhead
6. Depreciation
7. (Subtract 5 and 6) Cash Disbursements for manufacturing overhead

Total Manufacturing Overhead (a)
Budgeted Direct Labor-Hours (b)
(subtract a and b) Predetermined Overhead rate for the year

Question 6

Ending Finished Goods Inventory Budget

Answer 6

Production Cost Per Unit
1. Direct Materials
2. Direct Labor
3. Manufacturing Overhead
(add all 3) Unit Product Cost

Budgeted Finished Goods Inventory
1. Ending Finished Goods Inventory in Units (Schedule 2)
2. Unit Product Costs (see above)
(Add the 1 and 2) Ending Finished Goods Inventory in Dollars

Question 7

Selling and Admin Expense Budget

Answer 7

1. Budgeted Unit Sales (Schedule 1)
2. Variable Selling & Admin Expense per unit
   (multiply 1 and 2) 3. Variable Selling and Admin Expense
   Fixed Selling and Admin Expense
3. Advertising
   2.Executive Salaries
4. Insurance
5. Property Taxes
   5.Depreciation
   (Add 1 thru 5) 6. Total Fixed Selling and Admin Expenses
   (Add Variable &Fixed Selling & Admin) 7. Total S&A Expense
6. Depreciation
   (minus 7 &8) Cash Disbursments for selling &admin expenses