Prepare a Production Budget: Eastern Forest Products Corporation manufactures floral containers. The controller is preparing a budget for the coming year and asked for your assistance. The following costs and other data apply to container production:

You learn that equipment costs and building occupancy are fixed costs; these unit costs are 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 are not expected to change during the year. However, the supplier of the Vasa finish has informed the company that a 10 percent price increase will be imposed at the start of the coming budget period. No other costs are expected to change. During the coming budget period, the company expects to sell 18.000 units. Finished goods inventory is targeted to increase from 4,000 units to 7.000 units to get ready for an expected sales increase the year after next. Production will take place evenly throughout the year. Inventory levels for Vasa finish and Z-A styrene are expected to remain unchanged throughout the year. There is no work in process. inventory.

Required: Prepare a production budget for the coming year.

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Direct materials per container: 1 pound Z-A styrene at $.40 per pound 2 pounds Vasa finish at $.80 per pound Direct labor per container: hour at $8.60 per hour Overhead per container: Indirect labor Indirect materials $.12- Var, took Power .03- .07- Equipment costs :36 Building occupancy .19 Total overhead per unit $.77 uni