During the first calendar quarter of 2016, Clinton Corporation is planning to manufacture a new product and introduce it in two regions. Market research indicates that sales will be 6,000 units in the urban region at a unit price of \($53\) and 5,000 units in the rural region at \($48\) each. Because the sales manager expects the product to catch on, he has asked for production sufficient to generate a 4,000-unit ending inventory. The production manager has furnished the following estimates related to manufacturing costs and operating expenses:

Varies per unit sold, not per unit produced.
Required

a. Assuming that the desired ending inventories of materials A and B are 4,000 and 6,000 pounds, respectively, and that work-in-process inventories are immaterial, prepare budgets for the calendar quarter in which the new product will be introduced for each of the following operating factors:
1.Total sales 

2.Production 

3.Material purchases cost 

4.Direct labor costs 

5.Manufacturing overhead costs 

6.Selling and administrative expenses 

b. Using data generated in requirement (a), prepare a budgeted income statement for the calendar quarter. Assume an overall effective income tax rate of 30%.

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Manufacturing costs: Direct material: Variable (per unit) Fixed (total) A (4 lb. @ $3.15/lb.).. B (2 lb. @ $4.65/lb.). Direct labor (0.5 hr. per unit). Manufacturing overhead: Depreciation... $12.60 Factory supplies. Supervisory salaries Other... 9.30 7.50 $ 7,650 0.90 4,500 - 28,800 0.75 22,950 Operating expenses: Selling: Advertising 22,500 Sales salaries and commissions* 1.50 15,000 Other 0.90 3,000 Administrative: Office salaries 2,700 Supplies 0.15 1,050 Other. 0.08 1,950