Butler Corp

question 42

Essay

Butler Corp. has forecast sales for the next three months as follows: July 14,000 units, August 16,000 units, September 17,500 units, October 18,000 units. Butler's policy is to have an ending inventory of 20% of the next month's sales needs on hand. July 1 inventory is projected to be 2,500 units. Manufacturing overhead is budgeted to be $18,000 (depreciation $2,000, supervision $7,000, factory lease $1,500, maintenance $4,000, training $3,500) plus $5 per unit produced ($3 indirect materials, $2 utilities).
a. Prepare a production budget for Butler for as many months as is possible.
b. Prepare a manufacturing overhead budget for the three months July through September. Be sure to include a total for the quarter as well.

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Definitions:

Noncontrolling Interest Balance

Noncontrolling Interest Balance represents the equity in a subsidiary not attributable, directly or indirectly, to a parent company’s shareholders.

Annual Amortization

The process of gradually paying off a debt through regular payments over a set period, with each payment covering both interest and principal components.

Investment Sale

The process of selling securities or assets with the aim of generating returns such as capital gains or income.

Parent Company

A corporation that owns enough voting stock in another corporation to control its board of directors and therefore its policies and management.