Exercise 8-25 Name:
Insert your answers in the gray-shaded cells of columns D and F. If an answer is
incorrect, the word “wrong” will appear.”
a. Production Budget Boxes Trays Total
Units of sales 42,000 30,000 72,000$
Units desired in ending inv. 1,800 650 2,450
Units needed 43,800 30,650 74,450$
Units in beginning inv. (1,200) (800) (2,000)
Budgeted production 42,600 29,850 72,450
b. Purchases Budget Material A Material B Total
Pounds needed for production 115,050 87,780 202,830
Desired ending inventory 1,500 1,400 2,900
Total requirements 116,550 89,180 205,730
Less beginning inventory (1,780) (5,000) (6,780)
Pounds to be purchased 114,770 84,180 198,950
x Cost per pound 0.05$ 0.07$
Total cost of purchases 5,738.50$ 5,893$ 11,631$
c. Direct Labor Budget
Required hours: Boxes 12,780
Required hours: Trays 5,970
Total direct labor hours 18,750
d. Overhead Budget Boxes Trays Total
Activity base (hours) 12,780 5,970
x Overhead rate 1.60$ 1.60$
Overhead applied 20,448$ 9,552$ 30,000$
Solution
