During the first calendar quarter of 2016, Clinton Corporation is planning to manufacture a new product and introduce it in two regions. Market research indicates that sales will be 5,000 units in the urban region at a unit price of $53 and 4,000 units in the rural region at $48 each. Because the sales manager expects the product to catch on, he has asked for production sufficient to generate a 3,000-unit ending inventory. The production manager has furnished the following estimates related to manufacturing costs and operating expenses:

			Variable		Fixed
			(per unit)		(total)
Manufacturing costs:
Direct materials
A (4 lb. @ $3.15/lb.)			$12.60		-
B (2 lb. @ $4.65/lb.)			9.30		-
Direct labor (0.5 hours per unit)			7.50		-
Manufacturing overhead:
Depreciation			-		$7,650
Factory supplies			0.90		4,500
Supervisory salaries			-		28,800
Other			0.75		22,950
Operating expenses:
Selling:
Advertising			-		22,500
Sales salaries& commissions*			1.50		15,000
Other*			0.90		3,000
Administrative:
Office salaries			-		2,700
Supplies			0.15		1,050
Other			0.08		1,950

*Varies per unit sold, not per unit produced.

a. Assuming that the desired ending inventories of materials A and B are 3,000 and 5,000 pounds, respectively, and that work-in-process inventories are immaterial, prepare budgets for the calendar quarter in which the new product will be introduced for each of the following operating factors:

Do not use negative signs with any of your answers below.

1. Total sales

$Answer

2. Production

Answer units

3. Material purchase cost

				Material A	Material B
Total pounds (lbs.) required for production
Desired ending materials inventory
Total pounds to be available
Beginning materials inventory
Total material to be purchased (lbs.)
Total material purchases ($)

4. Direct labor costs

$Answer

5. Manufacturing overhead costs

			Fixed	Variable	Total
Depreciation
Factory supplies
Supervisory salaries
Other
Total manufacturing overhead

6. Selling and administrative expenses

			Fixed	Variable	Total
Selling expenses:
Advertising
Sales salaries and commissions
Other
Total selling expenses
Administrative expenses:
Office salaries
Supplies
Other
Total administrative expenses
Total selling and administrative expenses

b. Using data generated in requirement (a), prepare a budgeted income statement for the calendar quarter. Assume an overall effective income tax rate of 30%.

Round answers to the nearest whole number. Do not use negative signs with your answers.

Clinton Corporation Budgeted Income Statement For the Quarter Ended March 31, 2016
Sales
Cost of Goods Sold:
Beginning Inventory - Finished Goods
Material:
Beginning Inventory - Material
Material Purchases
Material Available
Ending Inventory - Material
Direct Material
Direct Labor
Manufacturing Overhead
Total Manufacturing Cost
Cost of Goods Available for Sale
Ending Inventory - Finished Goods
Cost of Goods Sold
Gross Profit
Operating Expenses:
Selling Expenses
Administrative Expenses
Total Operating Expenses
Income before Income Taxes
Income Tax Expense
Net Income