Carolyn has been promoted to the position of production manager for DC, Inc. DC produces button-down shirts that are very popular with teenagers. Carolyn would like to produce a budget for the manufacturing facility to help her better manage the plant.
The budgeted sales for the next month are 1,200,000 shirts to be sold for $75 each. The budgeted beginning inventory of finished product is 10,000 shirts at a cost of $55.00 per shirt with ending inventory of 15,000 shirts at a cost of $55.38 per shirt. The shirt is made up of 2 yards of fabric costing $8 per yard and 8 buttons costing $0.25 per button. Direct labor is $12 per hour, and it takes 3 hours to complete a shirt. Variable manufacturing overhead is budgeted at $1.25 per completed shirt. The budgeted beginning inventory for the fabric is 18,000 yards and the budgeted ending inventory is 22,000 yards. Beginning and ending inventories for the buttons have been budgeted at 2,500 and 2,000 respectively.
The following financial information is also available:
• Fixed manufacturing overhead is $156,000 per month.
• Manufacturing overhead expenses are paid in the month incurred.
• Purchases of direct materials and labor costs are paid for in the month acquired.
• Selling, General, and Administrative (SG&A) expenses are variable based on shirts sold at a rate of $0.75 per shirt.
• There is also a fixed amount of SG&A expenses of $126,300 for each month, including $45,000 of depreciation.
• All expenses are paid in the month incurred.

Question

Carolyn has been promoted to the position of production manager for DC, Inc. DC produces button-down shirts that are very popular with teenagers. Carolyn would like to produce a budget for the manufacturing facility to help her better manage the plant. 
The budgeted sales for the next month are 1,200,000 shirts to be sold for $75 each. The budgeted beginning inventory of finished product is 10,000 shirts at a cost of $55.00 per shirt with ending inventory of 15,000 shirts at a cost of $55.38 per shirt. The shirt is made up of 2 yards of fabric costing $8 per yard and 8 buttons costing $0.25 per button. Direct labor is $12 per hour, and it takes 3 hours to complete a shirt. Variable manufacturing overhead is budgeted at $1.25 per completed shirt. The budgeted beginning inventory for the fabric is 18,000 yards and the budgeted ending inventory is 22,000 yards. Beginning and ending inventories for the buttons have been budgeted at 2,500 and 2,000 respectively.
The following financial information is also available:
• Fixed manufacturing overhead is $156,000 per month.
• Manufacturing overhead expenses are paid in the month incurred.
• Purchases of direct materials and labor costs are paid for in the month acquired.
• Selling, General, and Administrative (SG&A) expenses are variable based on shirts sold at a rate of $0.75 per shirt.
• There is also a fixed amount of SG&A expenses of $126,300 for each month, including $45,000 of depreciation.
• All expenses are paid in the month incurred.

Quizplus · Accepted Answer

The Answer of Carolyn has been promoted to the position of production manager for DC, Inc. DC produces button-down shirts that are very popular with teenagers. Carolyn would like to produce a budget for the manufacturing facility to help her better manage the plant. 
The budgeted sales for the next month are 1,200,000 shirts to be sold for $75 each. The budgeted beginning inventory of finished product is 10,000 shirts at a cost of $55.00 per shirt with ending inventory of 15,000 shirts at a cost of $55.38 per shirt. The shirt is made up of 2 yards of fabric costing $8 per yard and 8 buttons costing $0.25 per button. Direct labor is $12 per hour, and it takes 3 hours to complete a shirt. Variable manufacturing overhead is budgeted at $1.25 per completed shirt. The budgeted beginning inventory for the fabric is 18,000 yards and the budgeted ending inventory is 22,000 yards. Beginning and ending inventories for the buttons have been budgeted at 2,500 and 2,000 respectively.
The following financial information is also available:
• Fixed manufacturing overhead is $156,000 per month.
• Manufacturing overhead expenses are paid in the month incurred.
• Purchases of direct materials and labor costs are paid for in the month acquired.
• Selling, General, and Administrative (SG&A) expenses are variable based on shirts sold at a rate of $0.75 per shirt.
• There is also a fixed amount of SG&A expenses of $126,300 for each month, including $45,000 of depreciation.
• All expenses are paid in the month incurred.

Carolyn Has Been Promoted to the Position of Production Manager