Question
Ash Creek Company is preparing its master budget for 2014. Relevant data pertaining to its sales, production, and direct materials budgets are as follows. Sales:
Ash Creek Company is preparing its master budget for 2014. Relevant data pertaining to its sales, production, and direct materials budgets are as follows. Sales: Sales for the year are expected to total 1,000,000 units. Quarterly sales are 20%, 24%, 26%, and 30%, respectively. The sales price is expected to be $41 per unit for the first three quarters and $45 per unit beginning in the fourth quarter. Sales in the first quarter of 2015 are expected to be 15% higher than the budgeted sales for the first quarter of 2014. Production: Management desires to maintain the ending finished goods inventories at 19% of the next quarters budgeted sales volume. Direct materials: Each unit requires 2 pounds of raw materials at a cost of $10 per pound. Management desires to maintain raw materials inventories at 20% of the next quarters production requirements. Assume the production requirements for first quarter of 2015 are 494,500 pounds. Ash Creek budgets 0.2 hours of direct labor per unit, labor costs at $11.00 per hour, and manufacturing overhead at $17.00 per direct labor hour. Its budgeted selling and administrative expenses for 2014 are $6,591,000.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started