a. Sales for the final quarter of the prior year total 2,400 units. Expected sales (in units) for the current year are: 2,160 (Quarter 1), 1,440 (Quarter 2), 1,920 (Quarter 3), and 1,920 (Quarter 4). Sales for the first quarter of the following year total 2,880 units. The selling price is $570 per unit in the first three quarters of the year, and $600 per unit in the final quarter. b. Company policy calls for a given quarter's ending finished goods inventory to equal 90% of the next quarter's expected unit sales. The finished goods inventory at the end of the prior year is 1,944 units, which complies with the policy. The product's manufacturing cost is $127 per unit, including per unit costs of $56 for materials (4 lbs. at $14 per lb.). $40 for direct labor (2 hours * $20 direct labor rate per hour), $23 for variable overhead, and $8 for fixed overhead. Annual fixed overhead consists, incurred evenly throughout the year, consist of depreciation on production equipment, $25,900; factory utilities, $32,400, and other factory overhead of $6,404. C. Company policy also calls for a given quarter's ending raw materials inventory to equal 50% of next quarter's expected materials needed for production. The prior year-end inventory is 3,024 lbs of materials, which complies with the policy. The company expects to have 5,760 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 16% of sales and are paid in the quarter of the sales. The sales manager's quarterly salary will be $134,000 in the first three quarters of the year, and $143,000 in the final quarter. e. Quarterly general and administrative expenses include $57,000 administrative salaries, rent expense of $34,000 per quarter, insurance expense of $27,000 per quarter, straight- line depreciation of $27,000 per quarter, and 1% monthly interest on the $150,000 long-term note payable (12% annually). f. Income taxes will be assessed at 30%, and are paid in the quarter incurred. Production Budget Sales Budget Direct Mols Budget Cost of Income Goods Sold Statement Direct Lbr Factory OH Selling Exp Admin Exp Budget Budget Budget Budget Requirement Prepare the Direct Materials Budget for Plum Inc. Company. Company policy calls for a given quarter's ending raw materials Inventory to equal 50% of next quarter's expected materials needed for production. The prior year-end Inventory is 3,024 lbs of materials, which complies with the policy. The company expects to have 5,760 lbs. of materials in Inventory at year-end. The product's manufacturing cost is $i27 per unit, including per unit costs of $56 for materials (4 lbs. at $14 per lb.), $40 for direct labor (2 hours x $20 direct labor rate per hour), $23 for variable overhead, and $8 for fixed overhead. Show less Plum Inc Direct Materials Budget For the year ended December 31, 2018 First Qtr. Second Qtr. Third Qur. Total Fourth Qtr. Budgeted fixed overhead Budgeted beginning inventory (units) Materials needed for production (pounds) Budgeted ending inventory (units) Total materials requirements (pounds) Budgeted beginning RM inventory (pounds) Materials to be purchased (pounds) Material price per pound Total cost of direct materials purchases Production Budget Direct Lbr Budget > Production Direct Mts Direct Lbr Factory OH Selling Exp Admin Exp Cost of Income Sales Budget Budget Budget Budget Budget Budget Budget Goods Sold Statement Requirement Prepare the Direct Labor Budget for Plum Inc.. The product's manufacturing cost is $127 per unit, including per unit costs of $56 for materials (4 lbs. at $14 per Ib.), $40 for direct labor (2 hours * $20 direct labor rate per hour), $23 for variable overhead, and $8 for fixed overhead. Plum Inc. Direct Labor Budget For the year ended December 31, 2018 First Qtr. Second Qur. Third Qtr. Fourth Qtr Total Direct labor requirements per unit (hours) Total direct labor hours needed Total budgeted direct labor cost (dollars)
Production Budget Direct Mtis Budget Sales Budget Cost of Goods Sold Direct Lbr Factory OH Selling Exp Admin Exp Budget Budget Budget Budget Income Statement Requirement: Prepare the production budget for Plum Inc.. Company policy calls for a given quarter's ending finished goods Inventory to equal 90% of the next quarter's expected unit sales. The finished goods Inventory at the end of the prior year is 1,944 units, which complies with the policy. Expected sales (in units) for the current year are: 2,160 (Quarter 1), 1,440 (Quarter 2), 1,920 (Quarter 3), and 1,920 (Quarter 4). Sales for the first quarter of the following year total 2,880 units. Show less Plum Inc. Production Budget For the year ended December 31, 2018 Third Qtr. Fourth Qtr. Total First Qtr. Second Qtr. Budgeted sales (units) Ratio of inventory to future sales Budgeted ending inventory (units) Required units of available production Units to be produced
