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 

Magnolia Candle Co. budgeted production of 74,200 candles in 2014. Wax is required to produce a candle. Assume eight ounces

Magnolia Candle Co. budgeted production of 74,200 candles in 2014. Wax is required to produce a candle. Assume eight ounces (one-half of a pound) of wax is required for each candle. The estimated January 1, 2014, wax inventory is 2,500 pounds. The desired December 31, 2014, wax inventory is 2,100 pounds. If candle wax costs $4.10 per pound, determine the direct materials purchases budget for 2014.

Answer:


Pounds of wax required for production: 
Candles [(74,200 × 8 oz.) ÷ 16 oz.]………………………………………… 37,100 
Plus desired ending inventory, December 31, 2014…………………………   2,100 
Total………………………………………………………………………………… 39,200 
Less estimated beginning inventory, January 1, 2014………………………   2,500 
Total pounds to be purchased………………………………………………… 36,700 
Unit price (per lb.)…………………………………………………………………   $4.10 
Total direct materials to be purchased………………………………………… $150,470 

Magnolia Candle Co. budgeted production of 74,200 candles in 2014. Each candle requires molding. Assume that 12 minutes

Magnolia Candle Co. budgeted production of 74,200 candles in 2014. Each candle requires molding. Assume that 12 minutes are required to mold each candle. If molding labor costs $14.00 per hour, determine the direct labor cost budget for 2014.

Answer:



Hours required for assembly: 
Candles (74,200 × 12 min.)…………………………………………………  890,400  min. 
Convert minutes to hours…………………………………………………… ÷   60  min. 
Molding hours…………………………………………………………………  14,840  hrs. 
Hourly rate…………………………………………………………………….……    ×     $14.00 
Total direct labor cost……………………………………………………………  $207,760 

Prepare a cost of goods sold budget for Magnolia Candle Co., using the information in Practice Exercises 22-3B and 22-4B

Prepare a cost of goods sold budget for Magnolia Candle Co., using the information in Practice Exercises 22-3B and 22-4B. Assume the estimated inventories on January 1, 2014, for finished goods and work in process were $9,800 and $3,600, respectively. Also assume the desired inventories on December 31, 2014, for finished goods and work in process were $12,900 and $3,500, respectively. Factory overhead was budgeted at $109,600.

Answer:

Finished goods inventory, January 1, 2014   $ 9,800 

Work in process inventory, January 1, 2014  $ 3,600  

Direct materials:    

Direct materials inventory, January 1, 2014    

(2,500 × $4.10) $  10,250   

Direct materials purchases (from PE 22–3B) 150,470   

Cost of direct materials available for use $160,720   

Less direct materials inventory,    

December 31, 2014 (2,100 × $4.10) 8,610   

Cost of direct materials placed in    

production $152,110   

Direct labor (from PE 22–4B) 207,760   

Factory overhead 109,600   

Total manufacturing costs  469,470  

Total work in process during period  $473,070  

Less work in process inventory, December 31, 2014  3,500  

Cost of goods manufactured   469,570 

Cost of finished goods available for sale   $479,370 

Less finished goods inventory, December 31, 2014   12,900 

Cost of goods sold   $466,470 

Magnolia Candle Co. pays 10% of its purchases on account in the month of the purchase and 90% in the month following the purchase

Magnolia Candle Co. pays 10% of its purchases on account in the month of the purchase and 90% in the month following the purchase. If purchases are budgeted to be $11,900 for March and $12,700 for April, what are the budgeted cash payments for purchases on account for April?

Answer:
                                                                                                                                          April
Payments for March purchases (90% × $11,900)…………………………………… $10,710
Payments for April purchases (10% × $12,700)…………………………………………1,270
Total payments for purchases on account………………………………………………  $11,980