Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen

Exercise 38

PRODUCTION, DIRECT LABOR, DIRECT MATERIALS, SALES BUDGETS, BUDGETED CONTRIBUTION MARGIN
Janzen Company makes and sells high-quality glare filters for microcomputer monitors. John Crave, controller, is responsible for preparing Janzen's master budget and has assembled the following data for 2011. The direct labor rate includes wages, all employee-related benefits, and the employer's share of FICA. Labor saving machinery will be fully operational by March. Also, as of March 1, the company's union contract calls for an increase in direct labor wages that is included in the direct labor rate. Janzen expects to have 9,000 glare filters in inventory at December 31, 2010, and has a policy of carrying 45 percent of the following month's projected sales in inventory.

Required:
1. Prepare the following monthly budgets for Janzen Company for the first quarter of 2011. Be sure to show supporting calculations. a. Production budget in units.
b. Direct labor budget in hours.
c. Direct materials cost budget.
d. Sales budget.
2. Calculate the total budgeted contributions margin for Janzen Company for the first quarter of 2011. Be sure to show supporting calculations. (CMA adapted)