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Atkinson's Reliable Tools makes two products that use similar raw materials: #587Q and #253X. Estimated production needs for a unit of each product follows.#587Q #253XSteel (in pounds) 3 5Wood (in board feet) 0.5 0.2Direct Labor (in hours) 2 3Machine Hours 0.5 0.7
Estimated sales in units by product for 2011 are 80,000 of #587Q and 30,000 of #253X. Additionally, estimated beginning and desired ending inventory quantities for 2011 are as follows:
Beginning Ending#587Q (units) 800 640#253X (units) 1200 900Steel (in pounds) 2000 1400Wood (in board feet) 800 600
Overhead is applied to production at the rate of $15 per machine hour and the direct labor wage rate is 10.50 per hour. Prepare the production, purchases, direct labor, and overhead budgets for 2011.
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