Question
Galatasaray manufactures and sells shark repellent. Angelica and Vincent, members of the accounting staff, have collected the data below to assist in the development of
Galatasaray
manufactures and sells shark repellent. Angelica and Vincent, members of the
accounting staff, have collected the data below to assist in the development of
operating and financial budgets for the next
fiscal year:
Expected unit sales
3,000
Price per unit
$25
Variable product costs per unit:
Materials
$3.50
Labor
5.00
Variable overhead
2.50
Fixed product cost:
Manufacturing overhead
$12,200 allocated at $4.00 per unit
Period costs (totals):
Research & de
velopment
$ 3,000
Marketing
7,000
Administration
10,000
Galatasaray
had no beginning work in process or raw materials inventories. Beginning
finished goods inventory totaled 250 units at a cost of $15 per unit.
Galatasarays
managers
want an ending finished goods inventory equal to 10% of unit sales, and an ending raw
m
aterials inventory of $1,200.
a.
Prepare a revenue budget
(sales budget)
for expected sales of 3,000 units.
b.
Prepare a production budget in units for the sales level of 3,000 units.
c.
Estimate a cost of goods sold for the sales level of 3,000 units.
d.
Prepare a budgeted income statement (pretax) based on an expected sales level
of 3,000 units.
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