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sales,direct material, direct labour and production budgets

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LaRussa Inc. is preparing its annual budgets for the year ending December 31, 2011. Accounting assistants furnish the data shown below.

Product Product
JB 50 JB 60
Sales budget:
Anticipated volume in units 400,000 200,000
Unit selling price $20 $25
Production budget:
Desired ending finished goods units 25,000 15,000
Beginning finished goods units 30,000 10,000
Direct materials budget:
Direct materials per unit (pounds) 2 3
Desired ending direct materials pounds 30,000 15,000
Beginning direct materials pounds 40,000 10,000
Cost per pound $3 $4
Direct labor budget:
Direct labor time per unit 0.4 0.6
Direct labor rate per hour $12 $12
Budgeted income statement:
Total unit cost $12 $21

An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expense of $660,000 for product JB50 and $360,000 for JB 60 , and administrative expense of $540,000 for product JB 50 and $340,000 for product JB 60. Income taxes are expected to be 30%.

Prepare the following budgets for the year. Show data for each product. Quarterly budgets should not be prepared.
(c)Direct materials
(d)Direct labor
(e)Income statement (Note: Income taxes are not allocated to the products.)

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Solution Summary

The solution contains the preparation of sales, direct materials,direct labour and production budgets and also preparation of budgeted income statement.