Question & Answer: 3. Refer to r Refer to requirement 2. How could the reduction in material and labor costs be accomplished there any problems…..

3. Refer to r Refer to requirement 2. How could the reduction in material and labor costs be accomplished there any problems with this plan? 6-32 Revenue and production budgets. (CPA, adapted) The Sabat Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2013, Sabats budget department gathered the following data to prepare budgets for 2014 2014 Projected Sales Product Units Price Thingone 62,000 $172 Thingtwo 46,000 S264 2014 Inventories in Units Expected Target January 1, 2014 December 31, 2014 Product Thingone Thingtwo 21,000 3,000 26,000 14,000 The following direct materials are used in the two products: Amount Used per Unit Thingone Thingtwo Unit pound pound each Direct Material
media%2Ffa3%2Ffa34b6d0-77c2-4021-9891-36

3. Refer to r Refer to requirement 2. How could the reduction in material and labor costs be accomplished there any problems with this plan? 6-32 Revenue and production budgets. (CPA, adapted) The Sabat Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2013, Sabat’s budget department gathered the following data to prepare budgets for 2014 2014 Projected Sales Product Units Price Thingone 62,000 $172 Thingtwo 46,000 S264 2014 Inventories in Units Expected Target January 1, 2014 December 31, 2014 Product Thingone Thingtwo 21,000 3,000 26,000 14,000 The following direct materials are used in the two products: Amount Used per Unit Thingone Thingtwo Unit pound pound each Direct Material

Expert Answer

 

  1. Sabat Corporation

Revenues Budget for 2014

Don't use plagiarized sources. Get Your Custom Essay on
Question & Answer: 3. Refer to r Refer to requirement 2. How could the reduction in material and labor costs be accomplished there any problems…..
GET AN ESSAY WRITTEN FOR YOU FROM AS LOW AS $13/PAGE
Order Essay

Units             Price             Total

Thing one                                                             62,000           $172     $10,664,000

Thing two                                                              46,000             264      12,144,000

Budgeted revenues                                                                                 $22,808,000

2) The CEO would want to probe if the revenue budget is sufficiently stretched. Is the revenue growing faster than the market? Should the company increase marketing and advertising spending to grow sales? Would increasing the sales force or giving salespersons stronger incentives result in higher sales?

3)

Sabat Corporation

Production Budget (in units) for 2014

Thing one                Thing two

Budgeted sales in units                                         62,000                        46,000

Add target finished goods inventories,

December 31, 2014                                               26,000                        14,000

Total requirements                                                 88,000                         60,000

Deduct finished goods inventories,

January 1, 2014                                                     21,000                        13,000

Units to be produced                                              67,000                        47,000

4)

Sabat Corporation

Direct Materials Purchases Budget (in quantities) for 2014

Direct Materials

A                     B                   C               Direct materials to be used in production

• Thingone (budgeted production of 67,000units

times 5 lbs. of A, 3 lbs. of B)                                          335,000          201,000            —

• Thingtwo (budgeted production of 47,000units times 6 lbs. of A, 4 lbs. of B, 2 lb. of C)

282000       188,000        94,000

Total                                                                                        617,000       389,000       94,000

Add target ending inventories, December 31, 2014         40,000         35,000        12,000 Total requirements in units                                              657,000        424,000    106,000

Deduct beginning inventories, January 1, 2012               37,000          32,000       10,000 Direct materials to be purchased (units)                         620,000        392,000      96,000

5)

Sabat Corporation

Direct Materials Purchases Budget (in dollars) for 2014

Budgeted                         Expected

Purchases                         Purchase

(Units)                              Price per unit        Total Direct material A                             620,000                             $11                 $6,820,000 Direct material B                             392,000                                 6                   2,352,000 Direct material C                              96,000                                  5                  480,000 Budgeted purchases                                                                                        $9,652,000

6)

Sabat Corporation

Direct Manufacturing Labor Budget (in dollars) for 2014

Direct

Budgeted           Manufacturing                      Rate

Production            Labor-Hours    Total            per

(Units)                    per Unit         Hours         Hour         Total Thingone                             67,000                     3              201,000       $11    $2,211,000

Thingtwo                              47,000                     4               188,000          14     2,632,000

Total                                                                                                                     $4,843,000

7)

Sabat Corporation Budgeted Finished Goods Inventory

at December 31, 2014

Thingone:

Direct materials costs:

A, 5 pounds × $11                                                                    $55

B, 3 pounds × $6                                                                      18                $ 73

Direct manufacturing labor costs,

3 hours × $11                                                                                                 33

Manufacturing overhead costs at $19 per direct

manufacturing labor-hour (3 hours × $19)                                                      57

Budgeted manufacturing costs per unit                                                     $163

Finished goods inventory of Thingone $163 × 26,000 units                                $4,238,000

Thingtwo:

Direct materials costs:

A, 6 pounds × $11                                                                       $66

B, 4 pounds × $6                                                                           24

C, 2 each × $5                                                                              10         $100

Direct manufacturing labor costs,4 hours × $14                                            56

Manufacturing overhead costs at $19 per direct

manufacturing labor-hour (4 hours × $19)                                                    76

Budgeted manufacturing costs per unit                                                      $232

Finished goods inventory of Thingtwo

$232 × 14,000 units                                                                                             3,248,000 Budgeted finished goods inventory, December 31, 2014                                   $7,486,000

8)

The CEO would want to ask the production manager why the target ending inventories have increased. Could production be more closely tailored to demand? Could the efficiency and productivity of direct materials and direct manufacturing labor be increased? Could direct materials inventory be reduced?

Grand Paper Writers
Order NOW For A 10% Discount!
Pages (550 words)
Approximate price: -

Our Advantages

Plagiarism Free Papers

All papers are written by the best professional writers to ensure 100% originality. We always provide plagiarism reports whenever we deliver completed papers.

Free Revisions

All papers by Grand Paper Writers are completed and submitted on time. This timely delivery of papers gives you time to go through the paper before the official deadline.

Title-page

As an additional service, we will provide a title page that precedes the contents of your paper. Here, you will provide your personal details.

Bibliography

We also ensure that we provide an extra page for the references or bibliographies following referencing rules.

Originality & Security

At Grandpaperwriters.com, we guarantee students for the provision of security and original work. All your personal information is handled with confidentiality and is not shared with third parties. Additionally, we ensure that we provide original content with accompanying plagiarism reports to show originality.

24/7 Customer Support

Our customer support team is always available 24/7 to provide instant responses to any queries raised by students.

Try it now!

Calculate the price of your order

We'll send you the first draft for approval by at
Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

Grandpaperwriters.com has the best professional essay writers for quality services.

Pricing

Flexible Pricing

Here, a Grandpaperwriters.com, we do not compromise on the time of our clients. We always deliver all completed papers on or before the deadlines.

Communication

Admission Help & Client-Writer Contact

Grandpaperwriters.com provides an interactive portal where students can communicate directly to their writers.

Deadlines

Paper Submission

Here, a Grandpaperwriters.com, we do not compromise on the time of our clients. We always deliver all completed papers on or before the deadlines.

Reviews

Customer Feedback

Grandpaperwriters.com appreciates feedback from our clients to help us improve the delivery of essay writing services. As such, we are constantly changing our policies to ensure maximum customer and writer satisfaction.