A C | D | E | F | SORIANO COMPANY Sales Budget For the Year Ending December 31, 2017 Quarter 23 4 Year 240,000 300,000 360,000 300,000 1,200,000 X $50 X $50 X $50 X $55 $12,000,000 $15,000,000 $18,000,000 $16,500,000 $61,500,000 1 6 Expected unit sales 7 Unit selling price 8 Total sales Prepare the sales, production, and direct materials budgets by quarters for 2017. | E | F B | C | D SORIANO COMPANY Production Budget For the Year Ending December 31, 2017 Quarter 2 3 Expected unit sales 240,000 300,000 360,000 7 Add: Desired ending finished goods unitsa 75,000 90,000 75,000 8 Total required units 315,000 390,000 435,000 9 Less: Beginning finished goods units 60,000 C 75,000 90,000 10 Required production units 255,000 315,000 345,000 Year 300,000 66,000 366,000 75,000 291,000 1,206,000 12 a25% of next quarter's unit sales 13 "Estimated first-quarter 2018 sales units: 240,000 + (240,000 X 10%) = 264,000: 264,000 X 25% 1425% of estimated first-quarter 2017 sales units (240,000 X 25%) F G H D E SORIANO COMPANY Direct Materials Budget For the Year Ending December 31, 2017 Quarter Year 255,000 X3 315,000 X3 345,000 X3 291,000 X3 765,000 945,000 1,035,000 873,000 6 Units to be produced Direct materials per unit 8 Total pounds needed for production 9 Add: Desired ending direct materials (pounds) 10 Total materials required 11 Less: Beginning direct materials (pounds) 12 Direct materials purchases 13 Cost per pound 14 Total cost of direct materials purchases 47,250 812,250 51,750 43,650 996,750 1,078,650 40,500 a 913,500 38,250 b 774,000 x $5 47,250 51,750 949,500 1,026,900 X $5 x $5 43,650 869,850 x $5 $3,870,000 $4,747,500 $5,134,500 $4,349,250 $18,101,250 16 a Estimated first-quarter 2018 production requirements: 810,000 x 5% = 40,500 17 65% of estimated first-quarter pounds needed for production 1. [From Dolt 2, p.371) Sales: Sales for the year are expected to total 1,200,000 units. .... The sales price is expected to be $50 per unit for the first three quarters and $55 per unit beginning in the fourth quarter. Revenue Budget of $61,500,000 = 1.200.000 units x WA Sell Price $51.251 Production: Management desires to maintain ending finished goods inventories at 25% of next quarter's budgeted sales volume. Direct materials: Each unit requires 3 pounds of raw materials at a cost of $5 per pound. Management desires to maintain raw materials inventories at 5% of the next quarter's production requirements. Assume the production requirements for the first quarter of 2018 are 810,000 pounds. A C | D | E | F | SORIANO COMPANY Sales Budget For the Year Ending December 31, 2017 Quarter 23 4 Year 240,000 300,000 360,000 300,000 1,200,000 X $50 X $50 X $50 X $55 $12,000,000 $15,000,000 $18,000,000 $16,500,000 $61,500,000 1 6 Expected unit sales 7 Unit selling price 8 Total sales Prepare the sales, production, and direct materials budgets by quarters for 2017. | E | F B | C | D SORIANO COMPANY Production Budget For the Year Ending December 31, 2017 Quarter 2 3 Expected unit sales 240,000 300,000 360,000 7 Add: Desired ending finished goods unitsa 75,000 90,000 75,000 8 Total required units 315,000 390,000 435,000 9 Less: Beginning finished goods units 60,000 C 75,000 90,000 10 Required production units 255,000 315,000 345,000 Year 300,000 66,000 366,000 75,000 291,000 1,206,000 12 a25% of next quarter's unit sales 13 "Estimated first-quarter 2018 sales units: 240,000 + (240,000 X 10%) = 264,000: 264,000 X 25% 1425% of estimated first-quarter 2017 sales units (240,000 X 25%) F G H D E SORIANO COMPANY Direct Materials Budget For the Year Ending December 31, 2017 Quarter Year 255,000 X3 315,000 X3 345,000 X3 291,000 X3 765,000 945,000 1,035,000 873,000 6 Units to be produced Direct materials per unit 8 Total pounds needed for production 9 Add: Desired ending direct materials (pounds) 10 Total materials required 11 Less: Beginning direct materials (pounds) 12 Direct materials purchases 13 Cost per pound 14 Total cost of direct materials purchases 47,250 812,250 51,750 43,650 996,750 1,078,650 40,500 a 913,500 38,250 b 774,000 x $5 47,250 51,750 949,500 1,026,900 X $5 x $5 43,650 869,850 x $5 $3,870,000 $4,747,500 $5,134,500 $4,349,250 $18,101,250 16 a Estimated first-quarter 2018 production requirements: 810,000 x 5% = 40,500 17 65% of estimated first-quarter pounds needed for production 1. [From Dolt 2, p.371) Sales: Sales for the year are expected to total 1,200,000 units. .... The sales price is expected to be $50 per unit for the first three quarters and $55 per unit beginning in the fourth quarter. Revenue Budget of $61,500,000 = 1.200.000 units x WA Sell Price $51.251 Production: Management desires to maintain ending finished goods inventories at 25% of next quarter's budgeted sales volume. Direct materials: Each unit requires 3 pounds of raw materials at a cost of $5 per pound. Management desires to maintain raw materials inventories at 5% of the next quarter's production requirements. Assume the production requirements for the first quarter of 2018 are 810,000 pounds