Cherished Memories Company is preparing budgets for the first quarter of 2019. All relevant information is presented on the Excel template.

Requirements

1. Sales Budget.

2. Production Budget.

3. Direct Materials Budget.

4. Direct Labor Budget.

5. Manufacturing Overhead Budget.

6. Cost of Goods Sold Budget.

7. Selling and Administrative Expense Budget.

8. Calculate Gross Profit and Gross Profit Percentage for the Quarter Selling and Administrative Expense Budget.

9 Calculate Operating Income for the Quarter

Budget #1: Sales Budget

Cherished memories expects sales of 127,000 units in January 2019, 136,000 units in February, 142,000 units in March, 144,000 in April, and 146,000 in May. The sales price is $84 per unit.Use a sales budget.

Budget #2: Production Budget

Cherished wants to finish each month with 18% of next month's sales in units.

Use a production budget.

Hint: Beginning inventory for the period is equal to the ending inventory of the previous period.

Budget #3: Direct Materials Budget

Cherished Company uses 2.5 pounds of direct materials for each unit it produces, at a cost of $8.75 per pound. The company begins the year with 60,000 pounds of material in Raw

Materials Inventory. Management desires an ending inventory of 20% of next month's materials requirements

Budget #4: Direct Labor Budget

Cherished Company's workers require .50 hours of labor to produce each unit of product. The labor cost is $26 per hour

Budget #5: Manufacturing Overhead Budget

1. Cherished Company prepares its Manufacturing Overhead Budget. For each DLG, the variable overhead costs are:

Indirect Materials = $11.00 per DLH; Indirect Labor Cost = $7.80 per DLH; Maintenance = $5.75 per DLH

2. The Fixed Overhead Costs per month are: Salaries of $115,000, Depreciation =$21,500 and Maintenance = $72,000.

3. ROUND the predetermined overhead allocation rate to two decimal places. Manufacturing overhead is allocated using direct labor hours.

Budget #6: Cost of Goods Sold Budget

cherished Company uses the first-in, first-out (FIFO) inventory costing method.

The Beginning Finished Goods Inventory is $2,164,000 consisting of 37,800 units.

1. Begin by calculating the projected cost to produce each unit in 2018 based on projected sales.

2. ROUND the fixed manufacturing overhead cost per unit to two decimal places.

Budget #7: Selling and Administrative Expense Budget

Cherished Company's variable supplies expense per month is $7.85 per unit. The fixed selling and administrative expenses per month consist of Salaries:

$722,000; Advertising: $125,000; and Depreciation: $138,000

Budget #8: Gross Profit %

Budget #9: Operating Income