During the first calendar quarter of 2016, Williams Corporation is planning to manufacture a new product and introduce it in two regions. Market research indicates that sales will be 9,000 units in the urban region at a unit price of $65 and 7,000 units in the rural region at $55 each. Because the sales manager expects the product to catch on, she has asked for production sufficient to generate a 5,000-unit ending inventory. The production manager has furnished the following estimates related to manufacturing costs and operating expenses:

VariableFixed(per unit)(total)Manufacturing costs:Direct materialsA (2 lb. @ $2.50/lb.)$5.00-B (5 lb. @ $1.40/lb.)7.00-Direct labor (2 hours per unit)10.00-Manufacturing overheadDepreciation-$22,500Factory supplies0.552,500Supervisory salaries-16,250Other0.659,200Operating expenses:Selling:Advertising-12,500Sales salaries& commissions*1.2520,000Other*0.504,200AdministrativeOffice salaries-15,000Supplies0.401,200Other0.255,000

*Varies per unit sold, not per unit produced.

a. Assuming that the desired ending inventories of materials A and B are 5,000 and 21,000 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 signswith any of your answers below.

1. Total sales

$Answer

2. Production

Answer

units

3. Material purchases cost

Material AMaterial BTotal pounds (lbs.) required for productionAnswer

Answer

Desired ending materials inventoryAnswer

Answer

Total pounds to be availableAnswer

Answer

Beginning materials inventoryAnswer

Answer

Total material to be purchased (lbs.)Answer

Answer

Total material purchases ($)Answer

Answer

4. Direct labor costs

$Answer

5. Manufacturing overhead costs

FixedVariableTotalDepreciationAnswer

Answer

Answer

Factory suppliesAnswer

Answer

Answer

Supervisory salariesAnswer

Answer

Answer

OtherAnswer

Answer

Answer

Total manufacturing overheadAnswer

6. Selling and administrative expenses

FixedVariableTotalSelling expenses:AdvertisingAnswer

Answer

Answer

Sales salaries and commissionsAnswer

Answer

Answer

OtherAnswer

Answer

Answer

Total selling expensesAnswer

Administrative expenses:Office salariesAnswer

Answer

Answer

SuppliesAnswer

Answer

Answer

OtherAnswer

Answer

Answer

Total administrative expensesAnswer

Total selling and administrative expensesAnswer

b. Using data generated in requirement (a), prepare a budgeted income statement for the calendar quarter. Assume an overall effective income tax rate of 35%.

Round answers to the nearest whole number.

Do not use negative signswith your answers.

Williams Corporation

Budgeted Income Statement

For the Quarter Ended March 31, 2016SalesAnswer

Cost of Goods Sold:Beginning Inventory - Finished GoodsAnswer

Material:Beginning Inventory - MaterialAnswer

Material PurchasesAnswer

Material AvailableAnswer

Ending Inventory - MaterialAnswer

Direct MaterialAnswer

Direct LaborAnswer

Manufacturing OverheadAnswer

Total Manufacturing CostAnswer

Cost of Goods Available for SaleAnswer

Ending Inventory - Finished GoodsAnswer

Cost of Goods SoldAnswer

Gross ProfitAnswer

Operating Expenses:Selling ExpensesAnswer

Administrative ExpensesAnswer

Total Operating ExpensesAnswer

Income before Income TaxesAnswer

Income Tax ExpenseAnswer

Net IncomeAnswer