a. Sales for the final quarter of the prior year total 1,100 units. Expected sales (in units) for the current year are: 990 (Quarter 1), 660 (Quarter 2), 880 (Quarter 3), and 880 (Quarter 4). Sales for the first quarter of the following year total 1,320 units. The selling price is $690 per unit in the first three quarters of the year, and $720 per unit in the final quarter. b. Company policy calls for a given quarter's ending finished goods inventory to equal 50% of the next quarter's expected unit sales. The finished goods inventory at the end of the prior year is 495 units, which complies with the policy. The product's manufacturing cost is $183 per unit, including per unit costs of $104 for materials (8 lbs. at $13 per lb.), $54 for direct labor (3 hours * $18 direct labor rate per hour), $21 for variable overhead, and $4 for fixed overhead. Annual fixed overhead consists, incurred evenly throughout the year, consist of depreciation on production equipment, $5,700; factory utilities, $7,200, and other factory overhead of $1,400. C. Company policy also calls for a given quarter's ending raw materials inventory to equal 30% of next quarter's expected materials needed for production. The prior year-end inventory is 1,980 lbs of materials, which complies with the policy. The company expects to have 3,168 lbs. of materials in inventory at year-end. The company has no work in process inventory at the end of any quarter. d. Sales representatives' commissions are 14% of sales and are paid in the quarter of the sales. The sales manager's quarterly salary will be $65,000 in the first three quarters of the year, and $69,000 in the final quarter. Quarterly general and administrative expenses include $28,000 administrative salaries, rent expense of $17,000 per quarter, insurance expense of $14,000 per quarter, straight- line depreciation of $14,000 per quarter, and 1% monthly interest on the $200,000 long-term note payable (12% annually). Income taxes will be assessed at 25%, and are paid in the quarter incurred. Requirement Prepare the Direct Labor Budget for Carter Inc.. The product's manufacturing cost is $183 per unit, including per unit costs of $104 for materials (8 lbs. at $13 per lb.), $54 for direct labor (3 hours x $18 direct labor rate per hour), $21 for variable overhead, and $4 for fixed overhead. Carter Inc. Direct Labor Budget For the year ended December 31, 2018 First Qtr. Second Qtr. Third Qtr. Fourth Qtr. Total Total direct labor hours needed Total budgeted direct labor cost (dollars) Requirement Prepare the Factory Overhead Budget for Carter Inc.. The product's manufacturing cost is $183 per unit, including per unit costs of $104 for materials (8 lbs. at $13 per lb.), $54 for direct labor (3 hours x $18 direct labor rate per hour), $21 for variable overhead, and $4 for fixed overhead. Annual fixed overhead consists, incurred evenly throughout the year, consist of depreciation on production equipment, $5,700; factory utilities, $7,200, and other factory overhead of $1,400. Show less A Carter Inc. Factory Overhead Budget For the year ended December 31, 2018 First Qtr. Second Qtr. Third Qtr. Fourth Qtr. Total Budgeted variable overhead Budgeted total overhead Requirement Prepare the selling expense budget for the Carter Inc.. Sales representatives' commissions are 14% of sales and are paid in the quarter of the sales. The sales manager's quarterly salary will be $65,000 in the first three quarters of the year, and $69,000 in the final quarter. Carter Inc. Selling Expense Budget For the year ended December 31, 2018 First Qtr. Second Qtr. $ 1,320 Third Qtr. Fourth Qtr. Total Sales commissions 65,000 65,000 65,000 69,000 264,000 Total budgeted selling expenses Requirement Prepare the Administrative Expense Budget for Carter Inc. Quarterly general and administrative expenses include $28,000 administrative salaries, rent expense of $17,000 per quarter, insurance expense of $14,000 per quarter, straight-line depreciation of $14,000 per quarter, and 1% monthly interest on the $200,000 long-term note payable (3% quarterly). Show less Carter Inc. General and Administrative Budget For the year ended December 31, 2018 First Qtr. Second Qtr. Third Qtr. Fourth Qtr. Total Total budgeted general and administrative expenses Requirement Using information from the sales budget and the following information, calculate the budgeted cost of goods sold for Carter Inc. The product's manufacturing cost is $183 per unit, including per unit costs of $104 for materials (8 lbs. at $13 per lb.), $54 for direct labor (3 hours x $18 direct labor rate per hour), $21 for variable overhead, and $4 for fixed overhead. Annual fixed overhead consists, incurred evenly throughout the year, consist of depreciation on production equipment, $5,700; factory utilities, $7,200, and other factory overhead of $1,400. Show less A Carter Inc. Cost of Goods Sold Budget For the year ended December 31, 2018 First Qtr. Second Qtr. 990 660 Third Qtr. 880 Fourth Qtr. 880 Total 3,410 Cost of goods sold Requirement Prepare the Budgeted Income Statement for the year for Carter Inc. Interest on the $200,000 long-term note payable is 1% per month (12% annually). Income taxes will be assessed at 25%, and are paid in the quarter incurred. Carter Inc. Budgeted Income Statement For the year ended December 31, 2018 Sales Cost of goods sold Gross profit Operating expenses: Selling expenses Administrative expenses Interest expense Total operating expenses Income before income taxes Income tax expense Net income