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.