Week 3 Capital Budgeting Problem Acct 556

| 1. Production budget | | | | | | | | | | |

|   | July | August | September | October | November | | | | | | |

| Projected sales in units | 100,000 | 125,000 | 156,000 | 165,000 | 185,000 | | | | | | |

| Production for the quarter |   |   | $381,000 | | | | | | | | |

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| 2. Materials purchase budget | | | | | | | July | August | September | Quarter |

| Production expected during the quarter | 381,000 | | 100,000 | 125,000 | 156,000 | 381,000 |

| Pounds per unit | 5 | | 5 | 5 | 5 | 5 |

| Total pounds needed for production | 1,905,000 | | 500,000 | 625,000 | 780,000 | 1,905,000 |

| Add ending inventory desired (5% x next period projection x 5 pounds) | 41,250 | | 31,250 | 39,000 | 41,250 | 41,250 |

| Total pounds of material needed | 1,946,250 | | 531,250 | 664,000 | 821,250 | 2,016,500 |

| Less beginning inventory on hand | (22,000) | | (22,000) | (31,250) | (39,000) | (92,250) |

| Pounds to be purchased | 1,924,250 | | 509,250 | 632,750 | 782,250 | 1,924,250 |

| Cost per pound | 1.50 | | 1.50 | 1.50 | 1.50 | 1.50 |

| Cost of direct materials purchases for the quarter | $2,886,375 | | $763,875 | $949,125 | $1,173,375 | $2,886,375 |

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| 3. Direct labor budget | | | | | | | July | August | September | Quarter |

| Units to be produced | 381,000 | | 100,000 | 125,000 | 156,000 | 381,000 |

| Labor required Per Unit | 0.4 | | 0.4 | 0.4 | 0.4 | 0.4 |

| Hours required | 152,400 | | 40,000 | 50,000 | 62,400 | 152,400 |

| Cost per hour | 30 | | 30 | 30 | 30 | 30 |

| Total labor budget for the quarter | $4,572,000 | | $1,200,000 | $1,500,000 | $1,872,000 | $4,572,000 |

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| 4. Overhead budget | | | | | | | | | | |

| Overhead item | Allocation rate |   |   | | | | | July | August | September | Quarter |

| Utilities | $0.50 per...