Butler Corp. has forecast sales for the next three months as follows: July 14,000 units, August 16,000 units, September 17,500 units, October 18,000 units. Butler's policy is to have an ending inventory of 20% of the next month's sales needs on hand. July 1 inventory is projected to be 2,500 units. Manufacturing overhead is budgeted to be $18,000 (depreciation $2,000, supervision $7,000, factory lease $1,500, maintenance $4,000, training $3,500) plus $5 per unit produced ($3 indirect materials, $2 utilities).
a. Prepare a production budget for Butler for as many months as is possible.
b. Prepare a manufacturing overhead budget for the three months July through September. Be sure to include a total for the quarter as well.

Question

Quizplus · Accepted Answer

The Answer of Butler Corp. has forecast sales for the next three months as follows: July 14,000 units, August 16,000 units, September 17,500 units, October 18,000 units. Butler's policy is to have an ending inventory of 20% of the next month's sales needs on hand. July 1 inventory is projected to be 2,500 units. Manufacturing overhead is budgeted to be $18,000 (depreciation $2,000, supervision $7,000, factory lease $1,500, maintenance $4,000, training $3,500) plus $5 per unit produced ($3 indirect materials, $2 utilities).
a. Prepare a production budget for Butler for as many months as is possible.
b. Prepare a manufacturing overhead budget for the three months July through September. Be sure to include a total for the quarter as well.