Basic Sound, Inc. produces portable solar powered music players for $45. It needs to prepare operating budgets for the year ending December 31, 20x3. The budgets need to be stated on a quarterly basis. Management expects to begin selling 4,000 music players in the first quarter of the year. Because of the marketing campaign the company will use, sales are forecasted to increase 500 units each quarter.

Required:

1. Sales Budget

Basic Sound has long held the belief that sales can spike at any time and extra units need to be on hand to prevent a backlog. Because of this, management wants to always end the year with at least 20% of the next quarter's sales requirements already completed. On December 31, 20x2, the company has a remaining inventory balance of 800 units from the previous year.

Required:

1. Production Budget

Basic Sound, Inc.'s music players require four pieces of material that will be assembled together to create one unit. Each piece of material costs $3. Last year, they have 820 pieces of materials left. The company desires to maintain an ending inventory of raw materials equal to 5% of the next quarter's production requirements.

Required:

1. Materials Purchases Budget

Basic Sound, Inc.'s music players require employees to spend on half hour assembling the pieces together to create the finished music player. The union representing the employees has negotiated a $15 hourly rate for each employee.

Required:

1. Direct Labor Budget

Basic Sound, Inc. expects variable manufacturing costs to fluctuate with direct labor hours. Management expects indirect labor costs to be $1.70 per hour, indirect materials to be $2.60 per hour, utility costs to be $1.40 per hour and machine maintenance costs to be $0.40 per hour. Quarterly manufacturing fixed costs are expected to include FCC inspections of $2,000, depreciation of $5,000, property taxes of $2,000, and insurance of $458.

Required:

1. Manufacturing Overhead Budget

Variable selling and administrative expenses fluctuate based on number of units sold. These include sales commission of $1 per unit, and shipping expenses of $1.50 per unit. Quarterly fixed selling and administrative expenses include advertising of $4,000, administrative salaries of $7,000, depreciation of $1,500 and property taxes of $1,000.

Required:

1. Selling and Administrative Budget