Production and purchases budgets


Task 1:

Production and Purchases budgets:

Gold Medal Productions, Inc. makes award medallions that are attached to ribbons. Each medallion requires 18 inches of ribbon. The sales forecast for July is 4,000 medallions. Estimated beginning inventories and desired ending inventories for July are:

 

Estimated Beginning Inventory

Desired Ending Inventory

Medallions

2,000

1,000

Ribbon (yards)

100

40

Required:

a.) Calculate the number of medallions to be produced in July.

b.) Calculate the number of yards of ribbon to be purchased in July.

Task 2:

Performance reporting and flexible budgeting:

For the stamping department of a manufacturing firm, the standard cost for direct labor is $12 per hour, and the production standard calls for 1,000 stampings per hour. During June 168, hours were required for actual production of 148,000 stampings. Actual direct labor cost for the stamping department for June was $2,184.

Required:

a.) Complete the following performance report for June

 

Flexed Budget

Actual

Budget Variance

Direct Labor

 

 

 

b.) Analyze the budget variance by calculating the direct labor efficiency and rate variances for June.

c.) What alternatives to preceding monthly report could improve control over the stamping department’s direct labor?

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