1. Herron Company has budgeted the following unit sales:

20CY Units

April 25,000

May 50,000

The selling price is $15 per unit.

Instructions:

Prepare separate sales budgets for the company for each month listed above.

2. Kelso Company budgeted units to be produced are as follows:

20CY Units

July 10,000

August 6,000

September 9,000

It takes 3 pounds of direct materials to produce the product. It is the company's policy to maintain an inventory of direct materials on hand at the end of each month equal to 30% of the next month's production needs. Direct materials inventory on hand at June 30 were 9,000 pounds. The cost per pound of materials is $5.

Instructions:

Prepare a direct materials budget for July and August.

3. Young Company has budgeted the following unit sales:

20CY Units

January 10,000

February 8,000

March 9,000

The finished goods units on hand on December 31, 20LY, was 2,000 units. Each unit requires 2 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 10% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 20% of the pounds needed for the following month's production. There were 3,920 pounds of raw materials on hand at December 31, 20CY.

Instructions:

Prepare a production budget for January and February.

4. Payton Company is preparing its direct labor budget for 20CY from the following production budget based on a calendar year:

Quarter Units

1 40,000

2 20,000

Each unit requires 1.5 hours of direct labor. The union contract provides a wage rate of $11 per hour.

Instructions

Prepare a direct labor budget for each quarter.

5. Neeley Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first quarter of 20CY, the following data is developed:

1. Sales: 20,000 units; unit selling price: $35

2. Variable costs per dollar of sales:

Sales commissions 6%

Delivery expense 2%

Advertising 4%

3. Fixed costs per quarter:

Sales salaries $24,000

Office salaries 17,000

Depreciation 6,000

Insurance 2,000

Utilities 1,000

Instructions

Prepare a selling and administrative expense budget for the first quarter of 20CY.

6. Farley Company has budgeted sales revenues as follows:

June

Credit sales $135,000

Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on credit and 50% is paid in the month of purchase and 50% in the month following purchase. Budgeted inventory purchases are:

June $300,000

Other cash disbursements budgeted: (a) selling and administrative expenses of $55,000 which includes depreciation of $7,000, (b) dividends of $103,000 will be paid in June, and (c) purchase of equipment in June is $30,000.

The company wishes to maintain a minimum cash balance of $50,000 at the end of each month. The beginning cash balance on June 1 was $50,000.

Instructions:

Prepare a cash budget for the month of June.