Coffee Express produces coffeemakers known as coffee presses. The company’s controller is preparing a budget for the coming year and asks for your assistance.
The following costs and other data apply to production in Year 1:
Direct Materials per unit:
Glass at $0.40 per pound
Metal at $1.60 per pound
Direct Labor per unit
1/4-hour at $8.60 per Hour
Overhead per unit
Indirect Labor............................................................................................. $.12
Indirect Materials ........................................................................................ 0.03
Power .......................................................................................................... 0.07
Equipment Costs ........................................................................................ 0.36
Building Occupancy.................................................................................... 0.19
Total Overhead per Unit ............................................................................ $.77

You learn that equipment costs and building occupancy are fixed. The unit costs are computed based on a normal production of 20,000 units per year. Other overhead costs are variable. Plant capacity is sufficient to produce 25,000 units per year.
Labor costs per hour are not expected to change during the year. However, the supplier of metal has informed Coffee Express that it will impose a 10 percent price increase at the start of Year 2. No other costs are expected to change.
During Year 2, Coffee Express expects to sell 18,000 units. Finished goods inventory is targeted to increase from 4,000 units to 7,000 units to prepare for an expected sales in Year 3. Production will occur evenly throughout the year. There is no work-in-process inventory or materials inventory.
Prepare a production budget and estimate the materials, labor, and overhead costs for the coming year.