Jacobs manufactures two products: A and B. The firm predicts a sales volume of 10,000 units for Product A and ending finished goods inventory of 2,000 units. These numbers for Product B are 12,000 and 3,000, respectively. Jacobs currently has 7,000 units of A in inventory and 9,000 units of B. The following raw materials are required to manufacture these products:
Required Required
RM Cost per pound Product A Product B
X $2.00 2 pounds 0
Y $2.50 1 pound 1 pound
Z $1.25 0 3pounds
Product A requires 3 hours of cutting time and two hours of finishing time; B requires one hour and three hours, respectively. The direct labor rate for cutting is $10 per hour and $18 per hour for finishing.
Required:
1. Prepare a production budget in units
2. Prepare a materials usage budget in pounds and dollars
3. Prepare a direct labor budget in hours and dollars for Product A