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- Santiago?s Salsa is in the process of preparing a production cost budget for May. Actual costs in April were:
Production 25,000 Jars of Salsa
Ingredients Cost (variable) 20,000
Labor cost (variable) 12,000
Rent (fixed) 5,000
Depreciation (fixed) 6,000
Other (fixed) 1,000
- 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.
- 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?
- Calculate the actual cost per unit in April and the budget cost per unit in May. Explain why the cost per unit is expected to decrease.
Paper#9255566 | Written in 27-Jul-2016Price : $22