Problem
Matador Inc. sells computer monitor screens. The direct labor (DL) rate includes wages, benefits and payroll tax. Direct materials cost is $10 per unit. Beginning inventory is 10,000 screens and policy is to carry 50% of the following months projected sales in inventory. Data from the company is below.
Month Jan Feb Mar Apr
Estimated Sales in units 20,000 24,000 16,000 18,000
Sales Price/unit $80 $80 $75 $75
DL hours/unit 4 4 3.5 3.5
DL hourly rate $15 $15 $16 $16
a) Prepare the following budgets for the first quarter. Show your calculations.
1) Production Budget; 2) DL hours required; 3) Direct materials usage budget; 4) Revenue budget.
b) Calculate the total budgeted contribution margin for the first quarter. Show your calculations.