5.38 Comprehensive master budget in a manufacturing setting Klandon Company manufactures decorative rocks for aquariums. Kim Klandon is preparing the budget for the quarter ended June 30. She has gathered the follow ing information. 1.Klandon's sales manager reported that the company sold 12,000 bags of rocks in March. He has developed the follow ing sales forecast. The expected sales price is $10 per bag A 20,000 bags May 50,000 bags June 30,000 bags July 25,000 bags August 15,000 ba 2Sales personnel receive a 5% commission on every bag of rocks sold. The following monthly fixed selling and administrative expenses are planned for the quarter. However these amounts do not include the depreciation increase resulting from the budgeted equipment purchase in June (see part 7) gs Variable Cost/Unit Monthly Fixed Selling and Administrative Costs $10,000 25,000 Depreciation Salaries of sales personnel Advertising Management salaries Miscellaneous Bad debts S .50 1,000 10,000 500 50 Total costs $46,500 $1.00 3.A fter experiencing difficulty in supplying customers in a timely fashion due to inventory shortages, the company established a policy requiring the ending Finished Goods Inventory to equal 20% of the following month's budgeted sales, in units. On March 31, 4,000 bags were on hand 4.Five pounds of raw materials are required to fill each bag of finished rocks. The company wants to have raw materials on hand at the end of each month equal to 10% ofthe following month's production needs. On March 31, 13,000 pounds of materials were on hand .5.The raw materials used in production cost $0.40 per pound. Half of the month's purchases is paid for in the month of purchase, the other half, in the following month. No discount is available 6.The standard labor allowed for one bag of rocks is 15 minutes. The current direct labor rate is $10 per hour