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Estimated Sales:
Wallets: East Region Sales Volume 287,000. West Region Sales Volume 241,000. Unit Selling Price $12.
Handbags: East Region Sales Volume 156,400. West Region Sales Volume 123,600. Unit Selling Price $25.
Estimated Inventory, January 1,2016: Wallet 88,000. Handbags 48,000.
Desired Inventory , December 31, 2016: Wallets 80,000. Handbags 60,000.
Estimated direct material quantity and price for each unit:
Wallet : Leather 0.30 sq. yd.per unit. Lining: 0.10 sq. yd. per unit.
Handbag: Leather 1.25 sq. yd. per unit. Lining: .050 sq.yd. per unit.
Estimated Direct Materials Inventory, January 1, 2016: Leather 18,000 sq. yds. Lining 15,000 sq. yds.
Desired Direct Materials Inventory, December 31, 2016: Leather 20,000 sq. yds. Lining 12,000 sq. yds.
Estimated price per square yard of leather and lining during 2016: Leather $4.50. Lining $1.20
Estimated Direct Labor Quantity and Rate:
Wallet: Cutting Department: 0.10 hr. per unit. Sewing Department: 0.25 hr. per unit
Handbag: Cutting Department: 0.15 hr. per unit. Sewing Department: 0.40 hr. per unit
Hourly rate: Cutting Department $12. Sewing Department $15
Factory Overhead Budget for the year ending December 31, 2016 are as follow:
Indirect factory wages $732,800
Supervisor Salaries: $360,000
Power and light $306,000
Depreciation of plant and equipment $288,000
Indirect materials $182,800
Maintenance $140,280
Insurance and property taxes $79,200. Total factory overhead cost $2,089,080
Estimated Inventory January 1, 2016:
Direct materials: Leather $81,000(18,000 sq. yds. x $4.50)
Lining $18,000(15,000 sq. yds. x $1.20)
Total direct materials $99,000
Work in process $ 214,000. Finished goods $1,095,600
Desired Inventory December 31, 2016:
Direct materials: Leather $90,000(20,000 sq. yds. x $4.50)
Lining $14,400(12,000 sq. yds. x $1.20)
Total direct materials $104,400
Work in process $220,000. Finished goods $1,565,000
REQUIREMENT: Please make a Budget Unit Cost (show your calculations)
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