Yolinda Gardenware, Inc., manufactures floral containers. The controller is preparing a budget for the coming year and asks for your assistance. The following costs and other data apply to container production:

Direct material per container:

1 pound Z-A styrene at $.40 per pound 2 pounds Vasa finish at $.80 per pound Direct labor per container:

Y, hour at $8.60 per hour Overhead per container:

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Totaloverneadioeniuiniterme.ccmacsmcutde torent: $77 You learn that equipment costs and building occupancy are facility-level (fixed) costs and are based on a normal production of 20,000 units per year. Other overhead costs are unit-level (variable) costs. 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 Vasa finish supplier has informed the company’s management that it will impose a 10 percent price increase at the start of the coming budget period. No other costs are expected to change.

During the coming budget period, management 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 increase the year after next. Production will occur 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

a. _ Prepare a production budget and estimate the material, labor, and overhead costs for the coming year.