Chapter 20: 9E1 (page 918)
Refer to Exercise 20-8. Prepare (1) a direct labor budget
The direct labor budget for the month of April, May and June will be $3,536, $4,560 and $4,352.
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Question: Keggler’s Supply is a merchandiser of three different products. The company’s February 28 inventories are footwear, 20,000 units; sports equipment, 80,000 units; and apparel, 50,000 units. Management believes each of these inventories is too high. As a result, a new policy dictates that ending inventory in any month should equal 30% of the expected unit sales for the following month. Expected sales in units for March, April, May, and June follow.
Required
Analysis Component
X-Tel budgets sales of \(60,000 for April, \)100,000 for May, and \(80,000 for June. In addition, sales commissions are 10% of sales dollars and the company pays a sales manager a salary of \)6,000 per month. Sales commissions and salaries are paid in the month incurred. Prepare a selling expense budget for April, May, and June.
Electro Company budgets production of 450,000 transmissions in the second quarter and 520,000 transmissions in the third quarter. Each transmission requires 0.80 pounds of a key raw material. The company aims to end each quarter with an ending inventory of direct materials equal to 20% of next quarter’s budgeted materials requirements. Beginning inventory of this raw material is 72,000 pounds. Direct materials cost $1.70 per pound. Prepare a direct materials budget for the second quarter.
The Guitar Shoppe reports the following sales forecast: August, \(150,000; September, \)170,000. Cash sales are normally 40% of total sales, 55% of credit sales are collected in the month following sale, and the remaining 5% of credit sales are written off as uncollectible. Prepare a schedule of cash receipts for September.
Would a manager of an Apple retail store participate more in budgeting than a manager at the corporate offices? Explain
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