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Budgeting Concepts - Review Session

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Iyad Mourtada, CMA, CIA, CFE, CCSA, CRMA, CPLP
Iyad Mourtada, CMA, CIA, CFE, CCSA, CRMA, CPLP

The document presents a production budget for a company over 3 months (October, November, December). It includes budgets for sales, production quantities, materials, direct labor, and manufacturing overhead. Production is budgeted to be 10,100 units with required materials of 102,500 pounds. Direct labor is budgeted at 5,050 hours at $2 per hour, and manufacturing overhead is budgeted at $20,150 for the quarter.

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Budgeting Concepts - Review Session
Sales Budget Ending Finished Goods Budget Production Budget Direct Direct Manufacturing Materials Labor Overhead Budget Budget Budget Selling and Cash Administrative Budget Budget
Budgeting Concepts - Review Session
October   November   December   Quarter   Budgeted  Sales  in  units   2000 5000 3000 10,000 Selling  price  per  units   $10 $10 $10 $10 Total  budgeted  Sales   $20,000 $50,000 $30,000 $100,000
Budgeting Concepts - Review Session
October   November   December   Quarter   Budgeted  Sales  in  units   2000 5000 3000 10,000 Add:  Desired  ending  inventory     Total  Needs   Less:  Beginning  inventory   Required  production    
October   November   December   Quarter   Budgeted  Sales  in  units   2000 5000 3000 10,000 Add:  Desired  ending  inventory     1000 Total  Needs   3000 Less:  Beginning  inventory   400 Required  production     2600 ? September 31 20% of November ending inventory Sales (5000)
October   November   December   Quarter   Budgeted  Sales  in  units   2000 5000 3000 10,000 Add:  Desired  ending  inventory     1000 600 Total  Needs   3000 5600 Less:  Beginning  inventory   400 1000 Required  production     2600 4600 20% of December Sales (3000)
October   November   December   Quarter   Budgeted  Sales  in  units   2000 5000 3000 10,000 Add:  Desired  ending  inventory     1000 600 500 500 Total  Needs   3000 5600 3500 10,500 Less:  Beginning  inventory   400 1000 600 400 Required  production     2600 4600 2900 10,100 20% of January Sales (2500)
Budgeting Concepts - Review Session
October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Materials  per  unit  (pounds)   Production  Needs   Add:  Desired  ending  inventory     Total  needed   Less:  Beginning  inventory   Materials  to  be  purchased     From production budget
October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Materials  per  unit  (pounds)   10 10 10 10 Production  Needs   26,000 46,000 29,000 101,000 Add:  Desired  ending  inventory     Total  needed   Less:  Beginning  inventory   Materials  to  be  purchased    
October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Materials  per  unit  (pounds)   10 10 10 10 Production  Needs   26,000 46,000 29,000 101,000 Add:  Desired  ending  inventory     4,600 Total  needed   30,600 Less:  Beginning  inventory   2,000 Materials  to  be  purchased     28,600 ? 10% of following month’s production needs
October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Materials  per  unit  (pounds)   10 10 10 10 Production  Needs   26,000 46,000 29,000 101,000 Add:  Desired  ending  inventory     4,600 2,900 3500 3500 Total  needed   30,600 48,900 32,500 104,500 Less:  Beginning  inventory   2,000 4,600 2,900 2000 Materials  to  be  purchased     28,600 53,500 35,400 102,500
Budgeting Concepts - Review Session
October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Direct  labor  per  unit   Total  labor  hours   Hourly  rate   Total  Direct  labor  cost  
October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Direct  labor  per  unit   0.5 0.5 0.5 0.5 Total  labor  hours   1,300 2,300 1,450 5,050 Hourly  rate   Total  Direct  labor  cost  
October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Direct  labor  per  unit   0.5 0.5 0.5 0.5 Total  labor  hours   1,300 2,300 1,450 5,050 Hourly  rate   Total  Direct  labor  cost  
October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Direct  labor  per  unit   0.5 0.5 0.5 0.5 Total  labor  hours   1,300 2,300 1,450 5,050 Hourly  rate   2 2 2 2 Total  Direct  labor  cost   2,600 4,600 2,900 10,100
Budgeting Concepts - Review Session
October   November   December   Quarter   Budgeted  DLH   1,300 2,300 1,450 5,050 Variable  MOH  rate   Variable  MOH  costs   Fixed  MOH  costs   Total  MOH  costs   Direct Labor Budget
October   November   December   Quarter   Budgeted  DLH   1,300 2,300 1,450 5,050 Variable  MOH  rate   2 2 2 2 Variable  MOH  costs   2,600 4,600 2,900 10,100 Fixed  MOH  costs   3,350 3,350 3,350 10,050 Total  MOH  costs   5,950 7,950 6,250 20,150 Direct Labor Budget Total MOH for quarter $20,150 ≈ $4 per hour Total labor hours required 5,050
Budgeting Concepts - Review Session
Direct labor budget
Total MOH for quarter $20,150 ≈ $4 per hour Total labor hours required 5,050
Budgeting Concepts - Review Session
iyad.mourtada@gmail.com         h1p://ae.linkedin.com/in/iyadmourtada     h1p://twi1er.com/iyadmourtada   h1p://www.youtube.com/Iyadmourtada   h1p://www.iyadmourtada.com   h1p://www.facebook.com/iyad.mourtada     iyadmourtada  

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Budgeting Concepts - Review Session

  • 2. Sales Budget Ending Finished Goods Budget Production Budget Direct Direct Manufacturing Materials Labor Overhead Budget Budget Budget Selling and Cash Administrative Budget Budget
  • 4. October   November   December   Quarter   Budgeted  Sales  in  units   2000 5000 3000 10,000 Selling  price  per  units   $10 $10 $10 $10 Total  budgeted  Sales   $20,000 $50,000 $30,000 $100,000
  • 6. October   November   December   Quarter   Budgeted  Sales  in  units   2000 5000 3000 10,000 Add:  Desired  ending  inventory     Total  Needs   Less:  Beginning  inventory   Required  production    
  • 7. October   November   December   Quarter   Budgeted  Sales  in  units   2000 5000 3000 10,000 Add:  Desired  ending  inventory     1000 Total  Needs   3000 Less:  Beginning  inventory   400 Required  production     2600 ? September 31 20% of November ending inventory Sales (5000)
  • 8. October   November   December   Quarter   Budgeted  Sales  in  units   2000 5000 3000 10,000 Add:  Desired  ending  inventory     1000 600 Total  Needs   3000 5600 Less:  Beginning  inventory   400 1000 Required  production     2600 4600 20% of December Sales (3000)
  • 9. October   November   December   Quarter   Budgeted  Sales  in  units   2000 5000 3000 10,000 Add:  Desired  ending  inventory     1000 600 500 500 Total  Needs   3000 5600 3500 10,500 Less:  Beginning  inventory   400 1000 600 400 Required  production     2600 4600 2900 10,100 20% of January Sales (2500)
  • 11. October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Materials  per  unit  (pounds)   Production  Needs   Add:  Desired  ending  inventory     Total  needed   Less:  Beginning  inventory   Materials  to  be  purchased     From production budget
  • 12. October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Materials  per  unit  (pounds)   10 10 10 10 Production  Needs   26,000 46,000 29,000 101,000 Add:  Desired  ending  inventory     Total  needed   Less:  Beginning  inventory   Materials  to  be  purchased    
  • 13. October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Materials  per  unit  (pounds)   10 10 10 10 Production  Needs   26,000 46,000 29,000 101,000 Add:  Desired  ending  inventory     4,600 Total  needed   30,600 Less:  Beginning  inventory   2,000 Materials  to  be  purchased     28,600 ? 10% of following month’s production needs
  • 14. October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Materials  per  unit  (pounds)   10 10 10 10 Production  Needs   26,000 46,000 29,000 101,000 Add:  Desired  ending  inventory     4,600 2,900 3500 3500 Total  needed   30,600 48,900 32,500 104,500 Less:  Beginning  inventory   2,000 4,600 2,900 2000 Materials  to  be  purchased     28,600 53,500 35,400 102,500
  • 16. October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Direct  labor  per  unit   Total  labor  hours   Hourly  rate   Total  Direct  labor  cost  
  • 17. October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Direct  labor  per  unit   0.5 0.5 0.5 0.5 Total  labor  hours   1,300 2,300 1,450 5,050 Hourly  rate   Total  Direct  labor  cost  
  • 18. October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Direct  labor  per  unit   0.5 0.5 0.5 0.5 Total  labor  hours   1,300 2,300 1,450 5,050 Hourly  rate   Total  Direct  labor  cost  
  • 19. October   November   December   Quarter   Production   2,600 4,600 2,900 10,100 Direct  labor  per  unit   0.5 0.5 0.5 0.5 Total  labor  hours   1,300 2,300 1,450 5,050 Hourly  rate   2 2 2 2 Total  Direct  labor  cost   2,600 4,600 2,900 10,100
  • 21. October   November   December   Quarter   Budgeted  DLH   1,300 2,300 1,450 5,050 Variable  MOH  rate   Variable  MOH  costs   Fixed  MOH  costs   Total  MOH  costs   Direct Labor Budget
  • 22. October   November   December   Quarter   Budgeted  DLH   1,300 2,300 1,450 5,050 Variable  MOH  rate   2 2 2 2 Variable  MOH  costs   2,600 4,600 2,900 10,100 Fixed  MOH  costs   3,350 3,350 3,350 10,050 Total  MOH  costs   5,950 7,950 6,250 20,150 Direct Labor Budget Total MOH for quarter $20,150 ≈ $4 per hour Total labor hours required 5,050
  • 25. Total MOH for quarter $20,150 ≈ $4 per hour Total labor hours required 5,050
  • 27. iyad.mourtada@gmail.com         h1p://ae.linkedin.com/in/iyadmourtada     h1p://twi1er.com/iyadmourtada   h1p://www.youtube.com/Iyadmourtada   h1p://www.iyadmourtada.com   h1p://www.facebook.com/iyad.mourtada     iyadmourtada