Sugar Co Has Forecast Sales for the Next Three Months as as Follows

question 35

Essay

Sugar Co. has forecast sales for the next three months as follows: July 4,000 units, August 6,000 units, September 7,500 units, and October 8,000 units. Sugar's policy is to have an ending inventory of 40% of the next month's sales needs on hand. July 1 inventory is projected to be 1,500 units. Manufacturing overhead is budgeted to be $17,000 plus $5 per unit produced.
a. Prepare a production budget for Sugar for as many months as is possible.
b. Prepare a manufacturing overhead budget for the three months July - September. Be sure to include a total for the quarter as well.

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Definitions:

Standard Cost

A predicated cost for a product or service, under normal conditions, used for budgeting and performance evaluations.

Materials Price Variance

The variance between the real expense of direct materials utilized in manufacturing and the projected standard expense for those materials.

Direct Materials Purchased

Raw materials bought that are directly used in the manufacturing of products.

Variable Manuf. Overhead

Costs that vary with the level of production, such as indirect materials and utilities used in manufacturing.