ACCT 556 Week 3 Homework Problem
Production Budgets
The Hale Company finished their sales projections for the coming year. The company produces one product. Part of next year’ s sales projections are as follows:
Engineering has developed the following standards upon which the production budgets will be developed:
Item
Standard Materials usage
5 lbs per unit Material price per pound
$ 1.50 per pound
Labor usage Labor rate
0.4 hours per unit
$ 30 per hour Machine hours 3 machine hours per unit
The Hale Company uses a modified allocation method for allocating overhead costs. The rates that will be used in the coming year are as follows:
Required:
Prepare the following production budgets for July, August, and September for the Hale Company:
1. Production budget 2. Materials purchase budget 3. Direct labor budget