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 0.4 hours per unit
Labor rate
$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
4. Overhead budget