prepare a revenue budget prepare a production budget in units prepare the direct mat 553574

The accountant at Canyon Kites has always prepared a budget that is calculated using only one estimated volume of sales. He has asked you to help him set up a spreadsheet that can be used for sensitivity analysis in the budgeting process. This year it appears that the company may not meet expectations, which could result in a loss. He is concerned that the company will incur a loss again next year and wants to develop a budget that will easily reflect changes in the assumptions. After gathering information about next year’s operations, he will provide information using a what-if sensitivity analysis. The following assumptions will be used to begin your analysis:

Direct materials per kite: Direct Labor: Hours Hrly Rate Cost/kite

Nylon $10 Assembly 0.5 $30 $15.00

Ribs $ 5 Packing 0.1 $15 $ 1.50

String $ 2

Inventory information: Beginning Target Ending

Direct Mat: Nylon $5,000 $7,000

Ribs 3,000 3,200

String 1,000 1,200

Finished Goods (units) 2,000 Kites 2,200 Kites

Finished Goods (cost) $97,850

Revenue assumptions: Selling Price Volume

$75.00 80,000

PART 1:

Create a spreadsheet with a data input box at the top that includes all relevant data. (Put a border around this data to separate). Set up each schedule with cell references to information in the data input box. Any changes made to information in this box should reflect through all of the schedules you create. As you proceed, more information will be given that you will need to add to the data input box, so leave space to add additional data.

1. Prepare a revenue budget
2. Prepare a production budget in units
3. Prepare the direct materials usage budget and a direct materials purchases budget
4. Prepare a direct labor budget (in hrs and cost)

In addition to the information given above, the following are estimated manufacturing overhead costs. Both fixed and variable overhead will be allocated based on the number of kites produced.

Estimates variable manufacturing overhead costs: Estimated fixed manufacturing overhead costs:

Supplies $160,250 Depreciation $211,728

Indirect Labor 200,650 Property Taxes 28,872

Maintenance 80,200 Insurance 67,368

Miscellaneous 40,100 Plant management 240,600

Total Variable OH $481,200 Benefits 336,840

Miscellaneous 76,992

Total Fixed OH $962,400

PART 2:

1. Prepare a manufacturing overhead budget and determine variable and fixed overhead allocation rates using labor hours for fixed and units for variable.
2. Prepare a schedule that calculates the unit costs of ending inventory in finished goods and then prepare the ending inventory budget.
3. Prepare a cost of goods sold budget.