Create an annual budget on a monthly basis for 2013.

Eagle's Nest, Inc Information for Monthly Budget 2013 Unit Sales January February March April May June July August September October November December 600 700 900 1000 1000 1200 1100 1000 900 800 500 800 Total for Year 10500 Required: 1. Prepare the monthly production budget assuming that at the end of each month the Company wants to have 10% of the following month's sales in inventory and that there was no inventory to begin 2013. Sales for January 2014 should be assumed to be the same as January 2013 2. Prepare the monthly material purchases budget. 3. Prepare the monthly direct labor budget 4. Prepare the monthly income statement budget. Assume that payroll tax and benefit costs occur at the same ratio to direct labor throughout the year 5. Assume all other variable overhead costs occur in relation to the sales volume 6. Assume all fixed overhead costs and selling general and administrative costs occur evenly throughout the year. Eagle's Nest, Inc. Budget Assumptions for 2013 Assume that the new product material is used and the resulting changes in cost and selling price take place. Sales will be 10,500 units Direct labor cost will go to $ 15.10 per hour Other labor related costs will remain at the same percentages as in the 2012 budget. Depreciation will increase by $10,000 from 2012 Utilities will be $ 25,000. The supervisor will receive a 5% raise, this will also affect the other costs related to the supervisor's salary. Selling, general and administrative salaries will increase by 3% and so will the other personnel related costs. Since there is are no long term liabilities at the end of 2012 other than leases assume there is no interest expense for 2013. Advertising costs will increase by $5,000. All other S. G & A costs will remain at the same amounts or same percentages as in the 2012 budget The tax rate should be assumed to be 35%. Eagle's Nest, Inc Budget 2012 Sales 5,000,000 2,000,000 675,000 Direct Materials Direct labor Payroll taxes (direct labor) Consumable supplies Benefits (direct labor) Miscellaneous Total variable overhead 101,250 100,000 168,750 25,000 395,000 Production supervisor Payroll taxes (supervisor) Benefits (supervisor) Depreciation Utilities Total Fixed overhead 45,000 4,000 5,000 125,000 25,000 204,000 1.726,000 Gross Profit Salaries Payroll taxes (salaries) Benefits (salaries) Computer costs Building maintenance Advertising Miscellaneous Total Selling, general & administrative 750,000 100,000 80,000 15,000 15,000 20,000 20,000 1,000,000 Operating income (EBIT) 726,000 Interest 75,000 651,000 Earning before taxes Income taxes 260,400 Net Income 390,600 Budgeted sales were based on sales of 10,000 units at $500 per unit. Direct materials were based on 100 lbs of material per unit at $ 2.00 per Ib. Direct labor was based on 4 hours of labor at $ 15.00 per hour per unit. Payroll taxes on direct labor were based on 15% of labor Consumable supplies were based on best estimate (2% of sales) Benefits were based on 25% of direct labor (.5% of sales) Miscellaneous variable expenses were based on best estimate Supervisor's salary was set at $ 45,000 Benefits were estimated for supervisor at $ 5,000 per year Payroll taxes were estimated at $ 4,000 for supervisor Depreciation on building and production equipment was estimated at $ 125,000 per year Utilities were based on previous year adjusted for changes in production volume. Selling, general and administrative expenses Salaries were estimated at $ 750,000 for the year Payroll taxes were estimated at 100,000 for the year Benefits were estimated at $ 80,000 for the year Computer costs were estimated at $15,000 for the year Building maintenance was estimated at $ 15,000 for the year Advertising was budgeted at $20,000 for the year Miscellaneous expenses were estimated at $ 20,000 for the year The direct labor estimate requires 25 direct labor personnel. This is based on 10,000 units times 4.5 hours per unit for a total of 45,000 direct labor hours. The 45,000 are divided by the average of 1800 hours worked per person to arrive at 25 hourly production employees. Eagle's Nest, Inc. Actual results for 2012 Sales were 9,000 units for 2012 at an average selling price of $ 500 Direct material costs were $1.99 per Ib. and the total pounds used were 909,000 Direct labor costs were $ 15.05 per hour and the total number of direct labor hours was 40,050 Variable overhead per unit was at the budgeted level Fixed overhead was at the budgeted amount There were no changes between beginning and ending inventory in units Eagle's Nest, Inc Information for Monthly Budget 2013 Unit Sales January February March April May June July August September October November December 600 700 900 1000 1000 1200 1100 1000 900 800 500 800 Total for Year 10500 Required: 1. Prepare the monthly production budget assuming that at the end of each month the Company wants to have 10% of the following month's sales in inventory and that there was no inventory to begin 2013. Sales for January 2014 should be assumed to be the same as January 2013 2. Prepare the monthly material purchases budget. 3. Prepare the monthly direct labor budget 4. Prepare the monthly income statement budget. Assume that payroll tax and benefit costs occur at the same ratio to direct labor throughout the year 5. Assume all other variable overhead costs occur in relation to the sales volume 6. Assume all fixed overhead costs and selling general and administrative costs occur evenly throughout the year. Eagle's Nest, Inc. Budget Assumptions for 2013 Assume that the new product material is used and the resulting changes in cost and selling price take place. Sales will be 10,500 units Direct labor cost will go to $ 15.10 per hour Other labor related costs will remain at the same percentages as in the 2012 budget. Depreciation will increase by $10,000 from 2012 Utilities will be $ 25,000. The supervisor will receive a 5% raise, this will also affect the other costs related to the supervisor's salary. Selling, general and administrative salaries will increase by 3% and so will the other personnel related costs. Since there is are no long term liabilities at the end of 2012 other than leases assume there is no interest expense for 2013. Advertising costs will increase by $5,000. All other S. G & A costs will remain at the same amounts or same percentages as in the 2012 budget The tax rate should be assumed to be 35%. Eagle's Nest, Inc Budget 2012 Sales 5,000,000 2,000,000 675,000 Direct Materials Direct labor Payroll taxes (direct labor) Consumable supplies Benefits (direct labor) Miscellaneous Total variable overhead 101,250 100,000 168,750 25,000 395,000 Production supervisor Payroll taxes (supervisor) Benefits (supervisor) Depreciation Utilities Total Fixed overhead 45,000 4,000 5,000 125,000 25,000 204,000 1.726,000 Gross Profit Salaries Payroll taxes (salaries) Benefits (salaries) Computer costs Building maintenance Advertising Miscellaneous Total Selling, general & administrative 750,000 100,000 80,000 15,000 15,000 20,000 20,000 1,000,000 Operating income (EBIT) 726,000 Interest 75,000 651,000 Earning before taxes Income taxes 260,400 Net Income 390,600 Budgeted sales were based on sales of 10,000 units at $500 per unit. Direct materials were based on 100 lbs of material per unit at $ 2.00 per Ib. Direct labor was based on 4 hours of labor at $ 15.00 per hour per unit. Payroll taxes on direct labor were based on 15% of labor Consumable supplies were based on best estimate (2% of sales) Benefits were based on 25% of direct labor (.5% of sales) Miscellaneous variable expenses were based on best estimate Supervisor's salary was set at $ 45,000 Benefits were estimated for supervisor at $ 5,000 per year Payroll taxes were estimated at $ 4,000 for supervisor Depreciation on building and production equipment was estimated at $ 125,000 per year Utilities were based on previous year adjusted for changes in production volume. Selling, general and administrative expenses Salaries were estimated at $ 750,000 for the year Payroll taxes were estimated at 100,000 for the year Benefits were estimated at $ 80,000 for the year Computer costs were estimated at $15,000 for the year Building maintenance was estimated at $ 15,000 for the year Advertising was budgeted at $20,000 for the year Miscellaneous expenses were estimated at $ 20,000 for the year The direct labor estimate requires 25 direct labor personnel. This is based on 10,000 units times 4.5 hours per unit for a total of 45,000 direct labor hours. The 45,000 are divided by the average of 1800 hours worked per person to arrive at 25 hourly production employees. Eagle's Nest, Inc. Actual results for 2012 Sales were 9,000 units for 2012 at an average selling price of $ 500 Direct material costs were $1.99 per Ib. and the total pounds used were 909,000 Direct labor costs were $ 15.05 per hour and the total number of direct labor hours was 40,050 Variable overhead per unit was at the budgeted level Fixed overhead was at the budgeted amount There were no changes between beginning and ending inventory in units