8.3.5

Sales and Production Budgets

Sonic Inc. manufactures two models of speakers, Rumble and Thunder. Based on the following production and sales data for June, prepare (a) a sales budget and (b) a production budget:

	Rumble		Thunder
Estimated inventory (units), June 1	274		75
Desired inventory (units), June 30	315		65
Expected sales volume (units):
Midwest Region	3,500		3,900
South Region	5,500		4,800
Unit sales price	$125		$185

a. Prepare a sales budget.

Sonic Inc.
Sales Budget
For the Month Ending June 30
Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
Model: Rumble
Midwest Region	____	____	____
South Region	____	____	____
Total	____		____
Model: Thunder
Midwest Region	____	____	_____
South Region	______	______	_____
Total	_____		_____
Total revenue from sales			____

b. Prepare a production budget. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Sonic Inc.
Production Budget
For the Month Ending June 30
	Units Rumble	Units Thunder
Expected units to be sold	____	____
Desired inventory, June 30	____	____
Total units available	____	_____
Estimated inventory, June 1	____	____
Total units to be produced	____	_____

Then, Horizon Financial Inc. was organized on February 28. Projected selling and administrative expenses for each of the first three months of operations are as follows:

March	$148,900
April	141,500
May	128,800

Depreciation, insurance, and property taxes represent $32,000 of the estimated monthly expenses. The annual insurance premium was paid on February 28, and property taxes for the year will be paid in June. 69% of the remainder of the expenses are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month.

Prepare a schedule of cash payments for selling and administrative expenses for March, April, and May.

Horizon Financial Inc.
Schedule of Cash Payments for Selling and Administrative Expenses
For the Three Months Ending May 31
	March	April	May
March expenses:
Paid in March	____
Paid in April		_____
April expenses:
Paid in April		____
Paid in May			_____
May expenses:
Paid in May			_____
Total cash payments	_____	_____	_____