Country Cookin' Inc. begins the budgeting process for the following year in the 1st quarter of the current year. Download this Excel spreadsheet and use the information it contains to: Prepare the sales, production and direct materials budgets for the 1st quarter of next year. Determine the budgeted manufacturing cost per unit and prepare the budgeted income statement for January of next year. Prepare a flexible budget and performance report.

Module 9 Budget Problem Country Cookin' Inc. begins the budgeting process for the following year in the 1st quarter of the current year. With the information provided below, prepare the sales, production and direct materials budgets for the 1st quarter of next year. Also determine the budgeted manufacturing cost per unit and prepare the budgeted income statement for January of next year. Country Cookin' Inc. sells the cooker/smokers they manufacture to various retailers for $130 each. Each cooker/smoker requires 11 ounces of raw material, which is purchased by Country Cookin' Inc. for $8.00 per ounce. To prepare for next month's production, Country Cookin' Inc. likes to maintain an ending stock of raw material equal to 10% of the production requirements for the current month. The beginning inventory of materials is 7744 ounces. The company would also like to maintain an ending stock of finished cooker/smokers equal to 20% of next month's sales. Sales are projected to be 6,000 for January, 8,000 for February and 14,000 for March. Your Company expects to sell 12,000 cooker/smokers in April and needs 132,000 ounces of direct materials for production. 15% of sales from Country Cookin' Inc. to retailers are cash sales, while the remaining 85% are sold on account. Additional budgeted information includes: Month January $24,000 Projections For Next Year Direct labor Manufacturing overhead: Variable Fixed 1 February $34,500 $28,800 $41,000 $71,000 Total operating expenses 2 1st Quarter March $51,000 $109,500 $41,400 $41,000 $61,200 $41,000 $74,000 $95,000 $131,400 $123,000 $240,000 Each cooker/smoker requires 0.25 of an hour of direct labor at the rate of $15.00 per hour. Country Cookin' Inc. estimated at the beginning of the year that it would produce 307,500 cooker/smokers next year. Interest expense is budgeted at zero since the company has no outstanding debt. Income tax expense is budgeted at 35% of income before taxes. 1 Prepare next year's 1st quarter sales budget for Country Cookin' Inc. Country Cookin' Inc. Sales Budget For the Quarter Ended March 31 $130 $780,000 14,000 $130 $1,820,000 1st Quarter 28,000 $130 $3,640,000 $117,000 663,000 $780,000 Type of Sale Cash sales Credit sales Total sales revenue 2 Month February 8,000 $130 $1,040,000 $156,000 884,000 $1,040,000 $273,000 1,547,000 $1,820,000 $546,000 3,094,000 $3,640,000 January 6,000 Unit sales Unit selling price Total sales revenue March Prepare next year's 1st quarter production budget for Country Cookin' Inc. Country Cookin' Inc. Production Budget For the Quarter Ended March 31 January 6,000 1,600 7,600 1,200 6,400 Unit sales Plus: Desired ending inventory Total needed Less: Beginning inventory Units to produce 3 13,600 1st Quarter 28,000 6,800 34,800 5,600 29,200 March 13,600 Month February 8,000 2,800 10,800 1,600 9,200 1st Quarter 29,200 March 14,000 16,400 2,400 2,800 Prepare next year's 1st quarter direct materials budget for Country Cookin'. Country Cookin' Inc. Direct Materials Budget For the Quarter Ended March 31 Units to be produced x Ounces of direct materials needed per unit Ounces needed for production Plus: Desired ending inventory of direct materials Total ounces needed Less: Beginning inventory of direct materials Ounces to purchase x Cost per ounce Total cost of direct materials purchases 4 January 6,400 11 70,400 7,040 77,440 7,744 69,696 $8.00 $557,568 Month February 9,200 11 101,200 10,120 111,320 7,040 104,280 $8.00 $834,240 Country Cookin' Inc. Budgeted Manufacturing Cost per Unit January 5 This should equal $97.85 Prepare next year's budgeted income statement for the month ended January 31 for Country Cookin' Inc. Country Cookin' Inc. Budgeted Income Statement For the month ended January 31 Sales Revenue Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Less: Interest expense Less: Income tax expense Net income This should equal $79,235 11 $8.00 $1,235,520 Prepare next year's budgeted manufacturing cost per unit for Country Cookin' Inc. Direct materials Direct labor Manufacturing overhead: Variable Fixed Cost of manufacturing each widget 149,600 14,960 164,560 10,120 154,440 11 321,200 32,120 353,320 35,332 317,988 $8.00 $2,543,904