ABC Manufacturing produces a component that is used for the production of automobile engines. These components are sold to car manufacturers. Estimated sales in units for the next 5 (five) months as follows:

January : 50,000

February : 60,000

March : 70,000

April : 70,000

May : 65,000

The following is data on production policies and manufacturing specifications carried out by ABC manufacture:

a. Finished goods inventory on January 1 was 40,000 units, at a unit price of $182.72. Amount Desired inventory is 80% of the following month's sales. b. Data on the use of raw materials are as follows: Raw Materials Per-Unit Usage DM Unit Cost Metal 10 lbs $8 Components 6 5 The policy for sufficient raw material inventory at the end of each month is 50% of the production needs for the following month. This amount is the same as the amount of inventory at 31 December of the previous year.

c. The time required for labor to produce per unit of product is 4 hours. Average cost hourly labor is $14.5. d. Monthly overhead costs are estimated using the flexible budget formula (To note: activity measurement is by working hours)

		Fixed cost component	Variable cost component
Supplies		-	1
Power		-	0,5
Maintenance		30.000	0,4
Supervision		16.000	-
Depreciation		200.000	-
Taxes		12.000	-
Other		80.000	0,5

e. Monthly selling administrative costs are also estimated using a flexible budget (Note: activities are measured using units sold)

		Fixed Cost	Variable cost
Salaries		50.000	-
Commissions		-	2
Depreciation		40.000	-
Shipping		-	1
Other		20.000	0,6

f. The selling price per unit of components is $205.

g. All sales and purchases are in cash. Cash balance on January 1 is $400,000. The company sets a minimum cash balance of $50,000. If the Company at the end of the month experiences If there is a shortage of cash balances, they will make loans to meet their cash needs. Every loan cash will be paid at the end of each quarter, along with the maturity of interest (cash loans at the end of quarter will be paid at the end of the following quarter). The loan interest is 12% per year. There is not any loan money in early January.

Required: 1. a. Make a sales budget b. Make a production budget c .Make direct material purchases budget d. Make direct labor budget

2. a. Create an overhead budget b. Make selling and administrative expenses budget c. Making ending finished goods inventory budget d. Make cost of goods sold budget.

3. Make a budgeted income statement. 4. Cash Budget