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Samano Industries and Pacer, Inc.

1. Samano Industries has adopted the following production budget for the first 4 months of 2006

Month Units Month Units
January 10, 000 March 5, 000
February 8, 000 April 4, 000

Each unit requires 5 pounds of raw materials costing $2 per pound. On December 31, 2005, the ending raw materials inventory was 15, 000 pounds. Management wants to have a raw materials inventory at the end of the month equal to 30% of next month's production requirements.

Prepare a direct materials purchases budget by month of the first quarter

2. Pacer, Inc, is preparing its direct labor budget for 2005 from the following production budget based on a calendar year.

Quarter Units Quarter Units
1 20, 000 3 35, 000
2 25, 000 4 30, 000

Each unit requires 1.2 hours of direct labor.

Prepare a direct labor budget for 2005. Wage rates are expected to be $15 for the first 2 quarters and $16 for quarters 3 and 4

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1. Samano Industries has adopted the following production budget for the first 4 months of 2006

Month Units Month Units
January 10, 000 March 5, 000
February 8, 000 April 4, 000

Each unit requires 5 pounds of raw materials costing $2 per pound. On December 31, 2005, the ending raw materials inventory was 15, 000 pounds. Management wants to have a raw materials inventory at the end of the month equal to 30% of next month's production requirements.

Prepare a direct materials purchases budget by month of the first quarter

SAMANO INDUSTRIES
Direct Materials Budget
For the Quarter ...

Solution Summary

This solution is comprised of a detailed explanation to prepare a direct materials purchases budget by month of the first quarter and a direct labor budget for 2005.

$2.19