Create a production overhead budget for Health & Wellness Consultants Health & Wellness Consultants produces and sells Sculp Max, a weight loss product for men and women. The company has been profitable for over five $(5)$ years. Its main customers are fitness enthusiasts and persons with non$-$communicable diseases such as diabetes and hypertension. The company has a long$-$term plan that it breaks down into annual budgets.The company's projected cash balance is $$750,000$ on January $1,2025.$ If the entity needs to borrow money, it should be repaid in four equal instalments on the last day of each quarter. The interest rate will be $15\%,$ and interest payments will also be quarterly $($calculated using simple interest$).$Each finished product requires $141$b material. Other raw materials are insignificant in cost and are treated as indirect materials. The following projections for $2025$ are made available:$1.$ Sales for December $2024$ are projected to be $45,000$ units. The marketing and sales manager anticipates that sales will increase by $500$ units each month, commencing in January $2025,$ and this trend is expected to continue for the next two $(2)$ years$\mathrm{.}2.$ The companys sales policy indicates that $60\%$ of all sales are on credit, with the remainder in cash. The companys collection experience shows: $50\%$ collected in the month of sales $20\%$ collected in the month following sales $28\%$ collected two months following the salesThe remaining $2\%$ is deemed uncolectable$\mathrm{.}3.$ The product sells for $$550$ per unit, which is expected to remain constant until December $2025\mathrm{.}4.$ Health and Wellness Consultants want to keep enough finished goods inventory on hand to meet $25\%$ of the next months sales. On December $31,2024,$ closing inventory stood at $9,100$ units.Regarding raw materials, the company has a policy to keep $30\%$ of all material inventory to meet the next months production needs. The closing inventory of raw materials for December $31,2024,$ was $11,600$ lbs$\mathrm{.}5.$ All direct$-$material purchases are made on credit, and $60\%$ of each months purchases are paid for during the month of purchase. The other $40\%$ will be paid next month$\mathrm{.}6.$ Indirect materials are purchased with cash as needed. Work$-$in$-$process is insignificant. $7.$ Projected manufacturing costs in $2025$ are as follows: Direct material $0\mathrm{.}25$ lbs per unit @ $$300$ per pound Direct labour $0\mathrm{.}20$ hrs per unit @ $$425$ per hour Production overhead is $$75$ per direct labour hour Total production cost per unit $$175$ Budgeting Project Summer $2024$Page $2$ of $48.$ The following information relates to manufacturing overheads: Manufacturing overhead is expected to be $$1,000,000$ per month up to June $2025$ Commencing July $2025,$ manufacturing overheads are expected to increase by $10\%$ forthe rest of the year$\mathrm{.}9.$ Selling expenses are estimated using the high$-$low method based on monthly sales figures. You are provided with total selling expenses for the previous $5$ months as shown below:December November October September August$40,000$ units $$380,00035,000$ units $$355,00030,000$ units $$330,00025,000$ units $$305,00042,000$ units $$390,00010.$ Administrative expenses are estimated using the least squares method based on direct labour hours. The administrative expenses include monthly depreciation charges of $$45,000.$ The following are past data on total administrative costs and the associated direct labour hours: PERIODDIRECT LABOUR HOURSTOTAL ADMINISTRATIVE COST$18,000$$$197,00027,000$$$194,250312,000$$$208,00046,000$$$191,50059,400$$$200,85069,000$$$199,75077,600$$$195,90011.$ Health and Wellness Consultants has the following expenditure planned during the year: March $2025$ July $2025$ September $2025$ December $2025$Purchase of gym equipment Purchase of new computers Insurance payments Licensing & Permits$$1,750,000$ $$275,000$ $$750,000$ $$550,000$ Create a production over head budget