Answer:
Wesley Power Tools
A.
Budgeted sales Revenue
Revenue = Volume x Selling price
Jan. 5,200 x $60 = $312,000
Feb. 5,400 x $60 = $324,000
Mar. 5,900 x $60 = $354,000
Q1 Total Revenue = $990,000
B.
Budget production (units)
Based on 20% finished goods ending policy
Jan.
80% of Jan Sales = 4,160
Add: 20% of Feb Sales = 1,080
January production = 5,240
Feb.
80% of Feb Sales = 4,320
Add: 20% of Mar Sales = 1,180
February production = 5,500
Mar.
80% of Mar Sales = 4,720
Add: 20% of Apr Sales = 1,140
March production = 5,860
Q1 production = $16,600
April.
80% of Apr Sales = 4,560
Add: 20% of May Sales = 1,020
April production = 5,580
C.
Cost of materials purchased to plastic housings.
Ending inventory policy is 20% of following month production plan
Jan.
$7 x 80% x Jan pdtn plan = $29,344
$7 x 20% x Feb pdtn plan = $7,700
January cost of plastics purchased = $37,044
Feb
$7 x 80% x Feb pdtn plan = $30,800
$7 x 20% x Mar pdtn plan = $8,204
February cost of plastics purchased = $39,004
Mar
$7 x 80% x Mar pdtn plan = $32,816
$7 x 20% x Apr pdtn plan = $7,812
March cost of plastics purchased = $40,628
C.
Budget Direct labour costs
Labour cost per hour = $22
0.75hr to produce 1 Handsaw
This implies labour cost per unit = $22 x 0.75hrs = $16.5
Jan. $16.5 x 5,240 = $86,460
Feb. $16.5 x 5,500 = $90,750
Mar. $16.5 x 5,860 = $96,690
Total labour in Q1 = $273,900
