Budget for sales, production, direct materials, direct labor, and manufacturing overhead. 

Hershel's Chocolate produces chocolate bars and sells them by the box (1 unit = 1 box). The information to be used for next year's operating budget is as follows:

• The average sale price for each box is estimated to be $25. The sales units for this year are expected to be:

First quarter 80,000

Second quarter 84,000

Third quarter 88,000

Fourth quarter 97,000

• Finished goods inventory is maintained at a level equivalent to 15 percent of next quarter's sales. Finished goods inventory at the end of the fourth quarter budget period is estimated at 13,000 units.
• Each unit of product requires 5 pounds of cocoa beans for direct materials, at a cost of $3 per pound. Management prefers to maintain ending raw materials inventory equal to 10 percent of the materials needed for next quarter's production. Raw materials inventory at the end of the fourth quarter budget period is estimated at 43,000 lbs.
• Each unit of product requires 0.10 hours of direct labor at a cost of $14 per hour.
• Variable manufacturing overhead costs are

Indirect materials $0.20/unit

Indirect labor $0.15/unit

Other $0.10/unit

• Fixed manufacturing overhead costs per quarter are

Salaries $80,000

Other $70,000

Depreciation $55,625

• The quarterly estimates of administrative and selling costs for the coming year are:

Salaries $170,000

Renta 65,000

Advertising 120,000

Depreciation 75,000

Other 36,000

• All sales are made on credit. The company expects to collect 60 percent of sales in the quarter of sale and 40 percent in the quarter following the sale. Accounts receivable at the end of last year amounted to $770,000, which will be fully collected during the first quarter of next year.
• All direct material purchases are on credit. The company expects to pay 80 percent of the purchases in the purchasing quarter and 20 percent in the following quarter. Accounts payable at the end of last year amounted to $257,000, which will be paid in full during the first quarter of next year.

1. Prepare a manufacturing overhead budget.
2. Prepare an administrative and sales budget.
3. Prepare a budgeted income statement
4. Prepare a budget for cash receipts from sales.
5. Prepare a budget for cash payments for purchases of materials.