34. Award: 10.00 points Problems? Adjust credit for all students.

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows:

Unit Sales
April 50,000
May 75,000
June 90,000
July 80,000

The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month
inventory levels must equal 10% of the following month’s unit sales. The inventory at the end of March was 5,000 units.

Required:
Prepare a production budget by month and in total, for the second quarter.

Down Under Products, Ltd.,

Production Budget
April May June Quarter
Budgeted units sales 50,000 75,000 90,000 215,000
Add: Desired units of ending finished goods
7,500 9,000 8,000 8,000
inventory

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Total needs 57,500 F 84,000 F 98,000 F 223,000

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F
Less: Units of beginning finished goods inventory 5,000 7,500 9,000 5,000

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Required production in units 52,500 F 76,500 F 89,000 F 218,000

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F

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Explanation:
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Desired units of ending finished goods inventory is 10% of the following month's sales in units.
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v i y re

Hints References

Hint #1
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 35. Award: 10.00 points Problems? Adjust credit for all students.

Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the
musk oil is $1.50 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3:

Year 2 Year 3
First Second Third Fourth First
Budgeted production, in bottles 60,000 90,000 150,000 100,000 70,000

Musk oil has become so popular as a perfume ingredient that it has become necessary to carry large inventories as a precaution against stock-outs. For this
reason, the inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter’s production needs. Some 36,000 grams of musk oil
will be on hand to start the first quarter of Year 2.

Required:
Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. (Round "Unit cost of raw materials" answers to 2 decimal places.)

Mink Caress
Direct Materials Budget - Year 2
Quarter
First Second Third Fourth Year
Required production in units of finished goods 60,000 90,000 150,000 100,000 400,000
Units of raw materials needed per unit of finished goods 3 3 3 3 3
Units of raw materials needed to meet production F
180,000 F 270,000 F 450,000 F 300,000 F 1,200,000
Add: Desired units of ending raw materials inventory 54,000 90,000 60,000 42,000 42,000

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Total units of raw materials needed 234,000 360,000 510,000 342,000 1,242,000
Less: Units of beginning raw materials inventory 36,000 54,000 90,000 60,000 36,000

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Units of raw materials to be purchased 198,000 306,000 420,000 282,000 1,206,000

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Unit cost of raw materials $ 1.50 $ 1.50 $ 1.50 $ 1.50 $ 1.50

F$
Cost of raw materials to purchased 297,000 F $ 459,000 F $ 630,000 F $ 423,000 F $ 1,809,000

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rev: 06_13_2018_QC_CS-128783
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Explanation:
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Desired units of ending raw materials inventory:

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Fourth quarter: 70,000 units × 3 grams per unit × 20% = 42,000 grams.

Hints References
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Hint #1
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 36. Award: 10.00 points Problems? Adjust credit for all students.

The production manager of Rordan Corporation has submitted the following quarterly production forecast for the upcoming fiscal year:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Units to be produced 8,000 6,500 7,000 7,500

Each unit requires 0.35 direct labor-hours, and direct laborers are paid $12.00 per hour.

Required:
1. Prepare the company’s direct labor budget for the upcoming fiscal year. Assume that the direct labor workforce is adjusted each quarter
to match the number of hours required to produce the forecasted number of units produced.
2. Prepare the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each
quarter. Instead, assume that the company’s direct labor workforce consists of permanent employees who are guaranteed to be paid for at
least 2,600 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 2,600
hours anyway. Any hours worked in excess of 2,600 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct
labor.

Complete this question by entering your answers in the tabs below.

Required 1 Required 2

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Prepare the company’s direct labor budget for the upcoming fiscal year. Assume that the direct labor workforce is adjusted each

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quarter to match the number of hours required to produce the forecasted number of units produced. (Round "Direct labor time

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per unit (hours)" answers to 2 decimal places.)

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Rordan Corporation
rs e Direct Labor Budget
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1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Required production in units 8,000 6,500 7,000 7,500 29,000
Direct labor time per unit (hours) 0.35 0.35 0.35 0.35 0.35
Total direct labor-hours needed 2,800 2,275 2,450 2,625 10,150
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Direct labor cost per hour $ 12 $ 12 $ 12 $ 12 $ 12

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Total direct labor cost $ 33,600 $ 27,300 $ 29,400 $ 31,500 $ 121,800

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 Required 1 Required 2 
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Explanation:
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2.
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Wages for regular hours:

1st Quarter = 2,600 × $12 per hour = $31,200
2nd Quarter = 2,600 × $12 per hour = $31,200
3rd Quarter = 2,600 × $12 per hour = $31,200
4th Quarter = 2,600 × $12 per hour = $31,200

Overtime wages:
1st Quarter = 200 × $12 per hour × 1.5 = $3,600
2nd Quarter = 0 × $12 per hour × 1.5 = $0
3rd Quarter = 0 × $12 per hour × 1.5 = $0
4th Quarter = 25 × $12 per hour × 1.5 = $450

Hints References

Hint #1

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 36. Award: 10.00 points Problems? Adjust credit for all students.

The production manager of Rordan Corporation has submitted the following quarterly production forecast for the upcoming fiscal year:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Units to be produced 8,000 6,500 7,000 7,500

Each unit requires 0.35 direct labor-hours, and direct laborers are paid $12.00 per hour.

Required:
1. Prepare the company’s direct labor budget for the upcoming fiscal year. Assume that the direct labor workforce is adjusted each quarter to
match the number of hours required to produce the forecasted number of units produced.
2. Prepare the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each
quarter. Instead, assume that the company’s direct labor workforce consists of permanent employees who are guaranteed to be paid for at least
2,600 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 2,600 hours
anyway. Any hours worked in excess of 2,600 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor.

Complete this question by entering your answers in the tabs below.

Required 1 Required 2

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Prepare the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted

e r as
each quarter. Instead, assume that the company’s direct labor workforce consists of permanent employees who are guaranteed to
be paid for at least 2,600 hours of work each quarter. If the number of required direct labor-hours is less than this number, the

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workers are paid for 2,600 hours anyway. Any hours worked in excess of 2,600 hours in a quarter are paid at the rate of 1.5 times

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the normal hourly rate for direct labor. (Round "Direct labor time per unit (hours)" answers to 2 decimal places.)
Show less 

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Direct Labor Budget
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
Required production in units 8,000 6,500 7,000 7,500
Direct labor time per unit (hours) 0.35 0.35 0.35 0.35
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Total direct labor-hours needed 2,800 2,275 2,450 2,625

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Regular hours 2,600 2,600 2,600 2,600

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Overtime hours F 200 F (325) F (150) F 25

Wages for regular hours $ 31,200 $ 31,200 $ 31,200 $ 31,200 F 124,800
Overtime wages 3,600 450 F 4,050
Total direct labor cost F$ 34,800 F $ 31,200 F $ 31,200 F $ 31,650 F $ 128,850
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 Required 1 Required 2 
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Explanation:

2.
Wages for regular hours:
1st Quarter = 2,600 × $12 per hour = $31,200
2nd Quarter = 2,600 × $12 per hour = $31,200
3rd Quarter = 2,600 × $12 per hour = $31,200
4th Quarter = 2,600 × $12 per hour = $31,200

Overtime wages:
1st Quarter = 200 × $12 per hour × 1.5 = $3,600
2nd Quarter = 0 × $12 per hour × 1.5 = $0
3rd Quarter = 0 × $12 per hour × 1.5 = $0
4th Quarter = 25 × $12 per hour × 1.5 = $450

Hints References

Hint #1
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