Bellaire Inc. gathered the following data for use in developing the budgets for the first quarter (January, February, March) of its fiscal year:

a. Estimated sales at $125 per unit:

Month	Sales
January	25,000 units
February	30,000 units
March	45,000 units
April	50,000 units

b. Estimated finished goods inventories:

Month	Finished Goods Inventory
January 1	2,000 units
January 31	10% of next months sales
February 28	10% of next months sales
March 31	10% of next months sales

c. Work in process inventories are estimated to be insignificant (zero).

d. Estimated direct materials inventories:

Month	Direct Materials Inventory
January 1	1,000 lbs.
January 31	1,500 lbs.
February 28	2,000 lbs.
March 31	2,500 lbs.

e. Manufacturing costs:

Line Item Description	Per Unit
Direct materials (0.8 lb. per unit $15 per lb.)	$ 12
Direct labor (2.5 hrs. per unit $24 per hr.)	60
Variable factory overhead ($1.20 per direct labor hour)	3
Fixed factory overhead ($200,000 per month, allocated using 40,000 units)	5
Total per-unit manufacturing costs	$80

f. Selling expenses:

Line Item Description	Amount
Variable selling expenses	$4 per unit
Fixed selling expenses	$150,000
Administrative expenses (all fixed costs)	$400,000

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1. Prepare a sales budget for the first quarter.

Line Item Description	January	February	March	First Quarter
Estimated units sold
Selling price per unit
Total budgeted sales

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2. Prepare a production budget for the first quarter. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Line Item Description	January	February	March	First Quarter
Estimated units soldEstimated units producedEstimated ending inventoryEstimated beginning inventorySelling price per unit
Desired ending inventoryDesired beginning inventoryEstimated ending inventoryEstimated beginning inventorySelling price per unit
Total units available for sale
Less estimated ending inventoryLess estimated beginning inventoryAdd estimated ending inventoryAdd estimated beginning inventorySelling price per unit
Total units to be produced

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3. Prepare a direct materials purchases budget for the first quarter. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Line Item Description	January	February	March	First Quarter
Units to be produced
Materials required per unit
Materials required for production
Desired ending inventoryDesired beginning inventoryEstimated beginning inventoryEstimated ending inventorySelling price per unit
Total materials available for use
Less estimated ending inventoryLess estimated beginning inventoryAdd estimated ending inventoryAdd estimated beginning inventorySelling price per unit
Total materials to be purchased
Cost per pound
Cost of direct materials to be purchased

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4. Prepare a direct labor cost budget for the first quarter.

Line Item Description	January	February	March	First Quarter
Units to be producedDirect labor required per unitDirect labor hours required for productionDirect labor hourly rateDirect labor cost
Direct labor required per unitDirect labor hours required for productionDirect labor hourly rateDirect labor costEstimated units sold
Direct labor hours required for productionDirect labor hourly rateDirect labor costEstimated units soldSelling price per unit
Desired ending inventoryDirect labor hourly rateDirect labor costEstimated units soldSelling price per unit
Desired ending inventoryDesired beginning inventoryDirect labor costEstimated units soldSelling price per unit

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5. Prepare a factory overhead cost budget for the first quarter.

Line Item Description	January	February	March	First Quarter
Variable factory overhead:
Budgeted direct labor hoursBudgeted variable factory overheadBudgeted fixed factory overheadDirect labor required per unitVariable factory overhead rate
Budgeted variable factory overheadBudgeted fixed factory overheadDirect labor required per unitDirect labor costVariable factory overhead rate
Budgeted variable factory overheadBudgeted fixed factory overheadDirect labor required per unitDirect labor costDirect labor hourly rate
Fixed factory overhead:
Budgeted fixed factory overheadDirect labor required per unitDirect labor costDirect labor hourly rateDirect labor hours
Total factory overhead cost

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6. Prepare a cost of goods sold budget for the first quarter. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Line Item Description	January	February	March	First Quarter
Beginning finished goods inventory
Cost of goods manufactured:
Cost of finished goods available for saleDirect materialsDirect laborEnding finished goods inventoryFactory overhead
Cost of finished goods available for saleDirect laborEstimated units soldEnding finished goods inventoryFactory overhead
Cost of finished goods available for saleDesired ending inventoryEstimated units soldEnding finished goods inventoryFactory overhead
Total cost of goods manufactured
Cost of finished goods available for saleDesired ending inventoryEstimated units soldEnding finished goods inventoryVariable factory overhead rate
Budgeted fixed factory overheadDesired ending inventoryEstimated units soldEnding finished goods inventoryVariable factory overhead rate
Budgeted fixed factory overheadCost of goods soldDirect labor hoursEstimated units soldVariable factory overhead rate

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7. Prepare a selling and administrative expenses budget for the first quarter. Enter all amounts as positive number.

Line Item Description	January	February	March	First Quarter
Selling expenses:
Budgeted sales unitsBudgeted fixed administrative expensesDirect materialsVariable selling expenses per unit soldFixed selling expenses
Budgeted fixed administrative expensesDirect laborDirect materialsVariable selling expenses per unit soldFixed selling expenses
Total variable selling expenses
Budgeted fixed administrative expensesCost of goods soldDirect laborDirect materialsFixed selling expenses
Total selling expenses
Administrative expenses:
Budgeted fixed administrative expensesCost of goods soldCost of finished goods available for saleDirect laborDirect materials
Total selling and administrative expenses

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8. Prepare a budgeted income statement with budgeted operating income for the first quarter. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Line Item Description	January	February	March	First Quarter
Administrative expensesCost of goods soldDirect materialsSalesSelling expenses
Administrative expensesBudgeted sales unitsCost of goods soldDirect materialsSelling expenses
Gross profit
Selling and administrative expenses:
Administrative expensesBudgeted sales unitsDirect materialsFixed selling expensesSelling expenses
Administrative expensesBudgeted sales unitsDirect materialsDirect laborFixed selling expenses
Total selling and administrative expenses
Operating incomeOperating loss