Magnolia Candle Co. projected sales of 75,000 candles for 2014. The estimated January 1, 2014, inventory is 3,500 units

Magnolia Candle Co. projected sales of 75,000 candles for 2014. The estimated January 1, 2014, inventory is 3,500 units, and the desired December 31, 2014, inventory is 2,700 units. What is the budgeted production (in units) for 2014?

Answer:


Expected units to be sold………………………………………………………………… 75,000 
Plus desired ending inventory, December 31, 2014…………………………………   2,700 
Total…………………………………………………………………………………………… 77,700 
Less estimated beginning inventory, January 1, 2014………………………………   3,500 
Total units to be produced………………………………………………………………… 74,200 



LifeTyme Publishers Inc. projected sales of 190,000 diaries for 2014. The estimated January 1, 2014, inventory is 18,400 units, and the desired December 31, 2014, inventory is 20,300 units. What is the budgeted production (in units) for 2014?

Answer:

Expected units to be sold………………………………………………………………… 

190,000 

Plus desired ending inventory, December 31, 2014…………………………………   20,300 

Total…………………………………………………………………………………………… 210,300 

Less estimated beginning inventory, January 1, 2014………………………………   18,400 

Total units to be produced………………………………………………………………… 191,900 

LifeTyme Publishers Inc. budgeted production of 191,900 diaries in 2014. Paper is required to produce a diary.

LifeTyme Publishers Inc. budgeted production of 191,900 diaries in 2014. Paper is required to produce a diary. Assume seven square yards of paper are required for each diary. The estimated January 1, 2014, paper inventory is 29,100 square yards. The desired December 31, 2014, paper inventory is 32,900 square yards. If paper costs $0.80 per square yard, determine the direct materials purchases budget for 2014.

Answer:


Square yards required for production: 
Diaries (191,900 × 7 sq. yd.)………………………………………………… 1,343,300 
Plus desired ending inventory, December 31, 2014…………………………   32,900 
Total………………………………………………………………………………… 1,376,200 
Less estimated beginning inventory, January 1, 2014………………………   29,100 
Total square yards to be purchased…………………………………………… 1,347,100 
Unit price (per sq. yd.)……………………………………………………………   $0.80 
Total direct materials to be purchased……………………………………… $1,077,680 

LifeTyme Publishers Inc. budgeted production of 191,900 diaries in 2014. Each diary requires assembly.

LifeTyme Publishers Inc. budgeted production of 191,900 diaries in 2014. Each diary requires assembly. Assume that nine minutes are required to assemble each diary. If assembly labor costs $16.00 per hour, determine the direct labor cost budget for 2014.

Answer:


Hours required for assembly: 
Diaries (191,900 × 9 min.)……………………………………………………  1,727,100  min. 
Convert minutes to hours…………………………………………………… ÷   60  min. 
Assembly hours………………………………………………………………  28,785  hrs. 
Hourly rate…………………………………………………………………….…… ×       $16.00 
Total direct labor cost……………………………………………………………  $460,560 

LifeTyme Publishers Inc. collects 30% of its sales on account in the month of the sale and 70% in the month following the sale

LifeTyme Publishers Inc. collects 30% of its sales on account in the month of the sale and 70% in the month following the sale. If sales on account are budgeted to be $320,000 for June and $350,000 for July, what are the budgeted cash receipts from sales on account for July?

Answer:
                                                                                                                                               July
Collections from June sales (70% × $320,000)…………………………………………   $224,000
Collections from July sales (30% × $350,000)…………………………………………    105,000
Total receipts from sales on account……………………………………………………   $329,000

Prepare a cost of goods sold budget for LifeTyme Publishers Inc., using the information in Practice Exercises 22-3A and 22-4A

Prepare a cost of goods sold budget for LifeTyme Publishers Inc., using the information in Practice Exercises 22-3A and 22-4A. Assume the estimated inventories on January 1, 2014, for finished goods and work in process were $28,000 and $17,000, respectively. Also assume the desired inventories on December 31, 2014, for finished goods and work in process were $23,700 and $19,500, respectively. Factory overhead was budgeted at $205,800.

Answer:


Finished goods inventory, January 1, 2014   $ 28,000 
Work in process inventory, January 1, 2014  $ 17,000  
Direct materials:    
Direct materials inventory, January 1, 2014    
(29,100 × $0.80) $ 23,280   
Direct materials purchases (from PE 22–3A) 1,077,680   
Cost of direct materials available for use $1,100,960   
Less direct materials inventory,    
December 31, 2014 (32,900 × $0.80) 26,320   
Cost of direct materials placed in    
production $1,074,640   
Direct labor (from PE 22–4A) 460,560   
Factory overhead 205,800   
Total manufacturing  costs  1,741,000  
Total work in process during period  $1,758,000  
Less work in process inventory, December 31, 2014  19,500  
Cost of goods manufactured   1,738,500 
Cost of finished goods available for sale   $1,766,500 
Less finished goods inventory, December 31, 2014   23,700 
Cost of goods sold   $1,742,800