29 Jun Question Cruise Tire Company’s budgeted un
QuestionQuestion
Cruise Tire Company’s budgeted un
Cruise Tire Company’s budgeted unit sales for the year 2011 were:
Passenger car tires . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 120,000
Truck tires . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 25,000
The budgeted selling price for truck tires was $200 per tire, and that for passenger car tires was $65 per tire.
The beginning finished goods inventories were expected to be 2,000 truck tires and 5,000 passenger tires, for a total cost of $326,478, with desired ending inventories at 2,500 and 6,000, respectively, with a total cost of $400,510.
There was no anticipated beginning or ending work in process inventory for either type of tire.
The standard materials quantities for each type of tire were as follows:
Truck Passenger Car
Rubber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 lb 10 lb
Steel belts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 lb 1.5 lb
The purchase prices of rubber and steel were $2 and $3 per pound, respectively.
The desired ending inventories for rubber and steel were 60,000 and 6,000 pounds, respectively.
The estimated beginning inventories for rubber and steel were 75,000 and 7,000 pounds, respectively.
The direct labor hours required for each type of tire were as follows:
Molding Department Finishing Department
Truck tire . . . . . . . . . . . . . . . . . . . .. . . . . . . 0.25 0.15
Passenger car tire . . . . . . . . . . . . . . .. . . . . 0.10 0.05
The direct labor rate for each department is as follows:
Molding Department . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . $15 per hour
Finishing Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13 per hour
Budgeted factory overhead costs for 2011 were as follows:
Indirect materials . . . . . . . . . . . . . . . . . . . . . .$198,500
Indirect labor . . . . . . . . . . . . . . . . . . . . .. . . . . 213,200
Depreciation of building and equipment . . .. . 157,500
Power and light . . . . . . . . . . . . . . . . . . . . . . . 122,900
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $692,100
Required:
Prepare each of the following budgets for Cruise for the year ended 2011:
1. Sales budget.
2. Production budget.
3. Direct material budget.
4. Direct labor budget.
5. Factory overhead budget.
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