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 8,000 units in the urban region at a unit price of $65 and 6,000 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 4,000-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 (2 lb. @ $2.50/lb.)			$5.00		-
B (5 lb. @ $1.40/lb.)			7.00		-
Direct labor (2 hours per unit)			10.00		-
Manufacturing overhead
Depreciation			-		$22,500
Factory supplies			0.55		2,500
Supervisory salaries			-		16,250
Other			0.65		9,200
Operating expenses:
Selling:
Advertising			-		12,500
Sales salaries & commissions*			1.25		20,000
Other*			0.50		4,200
Administrative
Office salaries			-		15,000
Supplies			0.40		1,200
Other			0.25		5,000

*Varies per unit sold, not per unit produced.

a. Assuming that the desired ending inventories of materials A and B are 4,000 and 20,000 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

$

2. Production

units

3. Material purchases 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

$

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 35%.

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

Williams 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					$