ACC6010 WK6 Operating Budget Template

Operating Budget

Create an operating budget for the first quarter of a new business (use EXCEL template provided at Course Home)

Projected Sales are:

Month #1: $65,000

Month #2: $97,500

Month #3: $130,000

Month #4: $110,500

These sales are based on selling one product with a selling price of $6.50

Create a Production Budget based on Units (not dollars).

Desired Finished Goods Ending Inventory each month is 10% of the next month's projected sales. (Use the Finished Goods Ending Inventory amount for the previous year for the Beginning Finished Goods Inventory to start this year. The Finished Goods Inventory for the previous month is 1000 units.)

Create a Direct Materials Purchase Budget

Each unit produced requires 10# (pounds) of direct materials at a cost of $0.08 per pound.

Create a Direct Labor Budget

Direct Labor Costs are $15/per hour

Each unit requires 5 minutes of labor

Create an Overhead Budget

Variable Overhead Expenses are:

Supplies ($.02 per unit)

Inspection ($.10 per unit)

Maintenance and Repair ($.03 per unit)

Utilities ($.01 per unit)

Fixed Overhead Expenses are $1,100 monthly.

Create a Selling and Administrative Budget

Variable Selling & Administrative Expenses are:

Sales Commissions ($.03 per unit)

Delivery ($.01 per unit)

Office Support ($.02 per unit)

Fixed Selling & Administrative Expenses are $2,500 monthly.

Combine all Budgets to Create a Budgeted Income Statement

Complete a Budgeted Income Statement for months 1 through 3, and SUM the three months for a Budgeted Income Statement that reflects the total first quarter.