Variable Manufacturing Overhead Rate

Bamboo You, Inc. This company manufactures bamboo picture frames that sell for $20 each. Each frame requires 4 linear feet of bamboo, which costs $1.50 per foot. Each frame takes approximately .50 minutes to build, and the labor rate averages $10.00 per hour.

Bamboo You has the following inventory policies:

Ending finished goods inventory should be 40 percent of the next month's sales.
Ending raw materials inventory should be 30 percent of the next month's production.
Expected unit sales (frames) for the upcoming months follow:


March 275
April 250
May 300
June 400
July 375
August 425

Variable manufacturing overhead is incurred at a rate of $.25 per unit produced. Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for an expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $650 per month plus $.60 per unit sold.

rev: 03-08-2011
Requirement 1: Sales Budget

April May June 2nd Quarter
Budgeted Sales (units) $ $ $ $ 
Unit Sales Price $ $ $ $ 
Budgeted sales revenue $ $ $ $ 

Requirement 2: Production Budget

April May June 2nd Quarter
Budgeted Sales (units) $ $ $ $ 
Ending finished goods inventory $ $ $ $ 
Beginning finished goods inventory $ $ $ $ 
Budgeted production $ $ $ $ 

Requirement 3: Raw Materials purchase budget

April May June 2nd Quarter
Budget production $ $ $ $ 
Material Requirements per unit $ $ $ $ 
Total Material needed for production $ $ $ $ 
Ending Raw Materials inventory $ $ $ $ 
Beginning raw materials inventory $ $ $ $ 
Budgeted Raw Materials Purchases $ $ $ $ 
Material Cost per foot $ $ $ $ 
Budgeted cost of raw material purchases $ $ $ $ 

Requirement 4: Direct Labor Budget

April May June 2nd Quarter
Budgeted Production $ $ $ $ 
Direct labor requirements per unit $ $ $ $ 
Direct Labor Hours Required $ $ $ $ 
Direct Labor Rate $ $ $ $ 
Budgeted direct labor cost $ $ $ $ 


Requirement 5: Manufacturing overhead cost budget

April May June 2nd Quarter
Budgeted Production $ $ $ $ 
Variable manufacturing overhead rate $ $ $ $ 
Budgeted Variable manufacturing $ $ $ $ 
Fixed Manufacturing overhead $ $ $ $ 
Budgeted Manufacturing overhead $ $ $ $