Renato Company manufactures blankets. The company sews the blankets from fabric and sews on a logo patch purchased from another company. Products are as follows:
Blanket A (made of orange wool) and Blanket B (made of purple wool).
Blanket B is slightly larger than the Blanket A.
The budgeted direct-cost inputs for each product in 2020 are as follows:
| Blanket A | Blanket B | |
| Orange wool fabric | 4 yards | 0 yards |
| Purple wool fabric | 0 | 5 |
| Blanket A logo patches | 1 | 0 |
| Blanket B logo patches | 0 | 1 |
| Direct manufacturing labor | 3 hours | 4 hours |
Unit data pertaining to the direct materials for January 2020 are as follows:
Actual Beginning Direct Materials Inventory (1.1.2020)
| Blanket A | Blanket B | |
| Orange wool fabric | 35 yards | 0 yards |
| Purple wool fabric | 0 | 15 |
| Blanket A logo patches | 45 | 0 |
| Blanket B logo patches | 0 | 60 |
Target Ending Direct Materials Inventory (31.1.2020)
| Blanket A | Blanket B | |
| Orange wool fabric | 25 yards | 0 yards |
| Purple wool fabric | 0 | 15 |
| Blanket A logo patches | 25 | 0 |
| Blanket B logo patches | 0 | 25 |
Unit cost data for direct-cost inputs pertaining to December 2019 and January 2020 are as follows:
| December 2019 (actual) | January 2020 (budgeted) | |
| Orange wool fabric (per yard) | $ 9 | $ 10 |
| Purple wool fabric (per yard) | 12 | 11 |
| Blanket A logo patches (per patch) | 7 | 7 |
| Blanket B logo patches (per patch) | 6 | 8 |
| Manufacturing labor cost per hour | 26 | 27 |
Manufacturing overhead (both variable and fixed) is allocated to each blanket on the basis of budgeted direct manufacturing labor-hours per blanket. The budgeted variable manufacturing overhead rate for January 2020 is $16 per direct manufacturing labor-hour. The budgeted fixed manufacturing overhead for January 2020 is $14,640. Both variable and fixed manufacturing overhead costs are allocated to each unit of finished goods.
Budgeted sales for January 2020 are 130 units of Blanket A and 190 units of Blanket B. The budgeted selling prices per unit in January 2020 are $229 for the Blanket A and $296 for Blanket B. Assume the following in your answer:
§ Work-in-process inventories are negligible and ignored.
§ Direct materials inventory is costed using the FIFO method.
§ Unit costs of direct materials purchased is constant in January 2020
Required:
Prepare the following budgets for January 2020:
a.Revenues budget
b.Production budget in units
c.Direct material usage budget and direct material purchases budget