assignment

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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

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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 Salsa Production Costs April 2020
Production	2 5,000 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.