Examples of the topics for task 3

Practical case 1

1. Prepare the annual production budget, assuming that the policy of

the administration is to budget the final inventory of finished goods
in a standard amount, based on the ratio of historical sales of
20A to the inventory rotation.

Sales $350,000.00
more Final Inventory $70,000.00
Total Required $420,000.00
Less final inventory $96,000.00
Planned Production $324,000.00

2. Prepare a document that shows the sales, production, and the

inventory levels for each month, assuming: 1) an inventory
stable, 2) a stable production and 3) the recommended levels of
inventory-production. In the development of your recommendations,
suppose that the following policies have been established:

A) The president has set the policy that an inventory must be used.
a maximum of 85,000 units and a minimum of 75,000 units, except
in abnormal circumstances.
B) A stable level in production is definitely preferred, except
that, during the holiday season, in July and August, the
production can be reduced by 25 percent. Likewise, it is acceptable
a variation in production of 7.5 percent above and below the
average level.
 Stable production

PROPOSAL

Year January February March April May June

Ventas Planificadas 380,000 36,000 38,000 38,000 36,000 32,000 26,000

More Final Inventory 76,000 78000 80000 77000 82000 84000 79000
Total 456,000 114,000 118,000 115,000 118,000 116,000 105,000
Less Initial Inventory 96,000 96000 78000 80000 77000 82000 84000
Planned Production 360,000 18,000 40,000 35,000 41,000 34,000 21,000
July August Septiembre Octubre Noviembre Diciembre TOTAL

Planned Sales 22,000 20,000 26,000 30,000 36,000 40,000 380000

More Final Inventory 81000 83000 75000 85000 78000 76000 76000
Total 103,000 103,000 101,000 115,000 114,000 116,000 456000
Less Initial Inventory 79000 81000 83000 75000 85000 78000 96000
Planned Production 24,000 22,000 18,000 40,000 29,000 38,000 360000

Stable Inventory

PROPOSAL

Year January February March April May June

Ventas Planificadas 380,000 36,000 38,000 38,000 36,000 32,000 26,000

More Final Inventory 76,000 80000 79000 78000 77000 76000 76000
Total 456,000 116,000 117,000 116,000 113,000 108,000 102,000
Less Initial Inventory 96,000 96000 80000 79000 78000 77000 76000
Planned Production 360,000 20,000 37,000 37,000 35,000 31,000 26,000
July August Septiembre Octubre Noviembre Diciembre TOTAL

Planned Sales 22,000 20,000 26,000 30,000 36,000 40,000 380,000

More Final Inventory 76000 76000 76000 76000 76000 76000 76000
Total 98,000 96,000 102,000 106,000 112,000 116,000 456000
Less Initial Inventory 76000 76000 76000 76000 76000 76000 96000
Planned Production 22,000 20,000 26,000 30,000 36,000 40,000 360,000

The recommended levels of inventory-production.

PROPOSAL

Year January February March April May June

Planned Sales 380,000 36,000 38,000 38,000 36,000 32,000 26,000

More Final Inventory 76,000 85000 81000 79000 78000 78000 81000
Total 456,000 121,000 119,000 117,000 114,000 110,000 107,000
Less Initial Inventory 96,000 96000 85000 81000 79000 78000 78000
Planned Production 360,000 25,000 34,000 36,000 35,000 32,000 29,000
July August Septiembre Octubre Noviembre Diciembre TOTAL

Planned Sales 22,000 20,000 26,000 30,000 36,000 40,000 380,000

More Final Inventory 76000 84000 84000 85000 85000 76000 76000
Total 98,000 104,000 {"value1":"110,000","value2":"115,000"}
121,000 116,000 456000
Less Initial Inventory 81000 76000 84000 84000 85000 85000 96000
Planned Production 17,000 28,000 26,000 31,000 36,000 31,000 360000
 Case 2. 8-2

La Pocono develops two direct labor budgets that are designated

how it continues:

1) planned hours of direct labor

A) Direct labor hours during July, for process 2, by

product.

Product Hours Units MOD Hours

Y 3 3,000 9,000
Z 2 21,000 42,000

B) Total hours of direct labor during the semester for the process
2, per product.

JULIO AUGUST SEPTEMBER 4th QUARTER

HOURS
Unit. Total hours Unid. Total horas Unit. Total hours Unit. Total hours
Y 3 3000 9000 6000 18000 8000 24000 18000 54000
Z 2 21000 42000 20000 52000 30000 60000 75000 150000

Total Hours
Product
Semesterly
Y 105000
Z 304000
 2) planned cost of direct labor.

A) Cost of direct labor during July for process 2, by product.

HOURS
Product Units Salary Quota
MOD
Y 3,000 $2.20 6,600
Z 21,000 2.2 46,200

B) Cost of direct labor during the semester, by process and by

product.
Process 1

JULY AUGUST SEPTEMBER 4th QUARTER

Quota
Salary Cost Cost
Unit. Unit. Unid. Costo Total Unid. Total Cost
Total Total
X $2.00 5000 10000 7000 14000 10000 20000 25000 50000
Y 2 3000 6000 6000 12000 8000 16000 18000 36000
Z 2 21000 42000 26000 52000 30000 60000 75000 15000

Total MOD
Product
Semester
X 94000
Y 70000
Z 250000
 Process 2

JULIO AUGUST SEPTEMBER 4° TRIMESTRE

Fee
PROD Cost Cost Cost
Salary Unit Unit. Unit. Unit. Total Cost
Total Total Total
Y $2.20 3000 6600 6000 13200 8000 17600 18000 39600
Z 2.2 21000 46200 26000 57200 30000 66000 75000 165000

Total MOD
Product
Semester
Y 77000
Z 334400

Process 3

JULIO AUGUST SEPTEMBER 4th QUARTER

Fee
PROD Cost Cost
Salary Unit. Unit. Unit. Total Cost Unit. Total Cost
Total Total
Z $1.80 21000 37800 26000 46800 30000 54000 75000 135000

Total MOD
Product
Semester
Z $273,600
Case 39-1

1.

Department 1 Department 2
Processes Product X/Product Y Product X
Planned Production 12,500 /20,000 12,500
Hours 4 / 5
Total 50,000 / 100 000
Activity Base HMD Units of Product X
Quantity 15,000 12,500

Processes Departments 3 Processes Department 4

Number of Employees For every 100 HMD 1,500
Department 1 Hours 4
Total Dept. 1 6000
Department 2 Per Unit 12,500
Hours 0.16
Total Total Dept. 2 2,000
Activity Base Activity Base HDR
Quantity 65 Quantity 8 000

2. Calculate the standard overhead rates for manufacturing costs for

each production department. The allocations of expenses
indirect costs of the service departments will be based on
the activities outlined in point 2 above.

Department Department
1 2

Planned indirect expenses of the production departments 764,000.00 330,500.00

Cost allocation of the
service department
Dept. 1 Expenses Coefficient
Department 3 assigned 70,000.00 0.62 43,400.00
Department 4 assigned 123,000.00 0.75 92,250.00
Apartment 2 Expenses Coefficient
 Apartment 3 assigned 70,000.00 0.38 26,600.00
Department 3 assigned 123,000.00 0.25 30,750.00
Planned activity base
Dept. 1 - HMD 150,000.00
Dept. 2 - Product X Units 12,500.00
Total indirect manufacturing expenses $6.00 $31.00

3. Develop by product, the planned cost of the items

produced during the year. The planned costs are: material
directo-producto X: $62 500; producto Y: $80 000; mano de obra
directa-producto X: $37 500; producto Y: $40 000.

Direct Material Direct Labor

Product X / Product Y Product X / Product Y
62,500.00 / 80,000.00 37,500.00 / 40,000.00

Product X Product Y
Cost Cost Cost Cost
Total Unitary Total Unitary
Actual Costs Indirect Raw Material 62,500.00 5 80,000.00 4
Direct Labor Costs 37,500.00 3 40,000.00 2
Total Direct Costs 100,000.00 120,000.00
Costs for Indirect Manufacturing Expenses
Product X Planned units 12,500
Department HMD/ units quota
1 50,000 6
2 12,500 31
total 687,500.00 687,500.00 55
Product Y Planned units 20,000
Department HMD quota
1 100000 6
total 60,000.00 60,000.00 30
Planned costs of
the articles
produced 787,500.00 63 720,000.00 36