Problem 1.1 Budgets in Managerial Accounting
Problem 1.1 Budgets in Managerial Accounting
Directions: Please reference this chapter and problem in your textbook. Refer to problem instructions in the textbook. Please upload your completed assignment to this page by the due date.
Please note that all textbook assignments must be submitted in Excel.
Problem 1.1 ( LO1 , 2 ) Budgets in Managerial Accounting Santiago’s Salsa is in the process of preparing a production cost budget for May. Actual costs in April were:
| Santiago’s SalsaProduction CostsApril 2020 | |
| Production | 25,000 Jars of Salsa |
| Ingredient cost (variable) | $20,000 |
| Labor cost (variable) | 12,000 |
| Rent (fixed) | 5,000 |
| Depreciation (fixed) | 6,000 |
| Other (fixed) | 1,000 |
| Total | $44,000 |
Required
1. Using this information, prepare a budget for May. Assume that production will increase to 30,000 jars of salsa, reflecting an anticipated sales increase related to a new marketing campaign.
1. Does the budget suggest that additional workers are needed? Suppose the wage rate is $20 per hour. How many additional labor hours are needed in May? What would happen if management did not anticipate the need for additional labor in May?
1. Calculate the actual cost per unit in April and the budgeted cost per unit in May. Explain why the cost per unit is expected to decrease.
