Ham Inc. has gathered the following budgeting information for next year and has asked you to prepare their master budget. a. Sales for the final quarter of the prior year total 800 units. Expected sales (in units) for the current year are: 720 (Quarter 1), 480 (Quarter 2), 640 (Quarter 3), and 640 (Quarter 4). Sales for the first quarter of the following year total 960 units. The selling price is $660 per unit in the first three quarters of the year, and $690 per unit in the final quarter. b. Company policy calls for a given quarters ending finished goods inventory to equal 50% of the next quarters expected unit sales. The finished goods inventory at the end of the prior year is 360 units, which complies with the policy. The products manufacturing cost is $191 per unit, including per unit costs of $112 for materials (8 lbs. at $14 per lb.), $60 for direct labor (3 hours $20 direct labor rate per hour), $15 for variable overhead, and $4 for fixed overhead. Annual fixed overhead consists, incurred evenly throughout the year, consist of depreciation on production equipment, $4,200; factory utilities, $5,200, and other factory overhead of $1,000. c. Company policy also calls for a given quarters ending raw materials inventory to equal 50% of next quarters expected materials needed for production. The prior year-end inventory is 2,400 lbs of materials, which complies with the policy. The company expects to have 3,840 lbs. of materials in inventory at year-end. The company has no work in process inventory at the end of any quarter. d. Sales representatives commissions are 16% of sales and are paid in the quarter of the sales. The sales managers quarterly salary will be $52,000 in the first three quarters of the year, and $55,000 in the final quarter. e. Quarterly general and administrative expenses include $22,000 administrative salaries, rent expense of $13,000 per quarter, insurance expense of $10,000 per quarter, straight-line depreciation of $10,000 per quarter, and 1% monthly interest on the $400,000 long-term note payable (12% annually). f. Income taxes will be assessed at 30%, and are paid in the quarter incurred.

Sales Budget Production Budget Direct Mtls Budget Direct Lbr Budget Factory OH Budget Selling Exp Budget Admin Exp Budget Cost of Goods Sold Income Statement Requirement Prepare the Direct Materials Budget for Ham Inc. Company. Company policy calls for a given quarter's ending raw materials inventory to equal 50% of next quarter's expected materials needed for production. The prior year-end inventory is 2,400 lbs of materials, which complies with the policy. The company expects to have 3,840 lbs. of materials in inventory at year-end. The product's manufacturing cost is $191 per unit, including per unit costs of $112 for materials (8 lbs. at $14 per lb.), $60 for direct labor (3 hours x $20 direct labor rate per hour), $15 for variable overhead, and $4 for fixed overhead. Show less Fourth Qtr. Total 640 Ham Inc. Direct Materials Budget For the year ended December 31, 2018 First Qtr. Second Qtr. 720 360 112.0 112.0 80,6407 40,320 20,160 40,320 100,800 80,640 40,320 20,160 60,480p 60,480 112.0 1.680 Budgeted production (units) Materials requirements per unit Materials needed for production (pounds) Budgeted ending RM inventory (pounds) Total materials requirements (pounds) Budgeted beginning RM inventory (pounds) Materials to be purchased (pounds) 7 Third Qtr. 720 112.0 80.640 35,840 116,480 40,320 76,160 35,840 Total cost of direct materials purchases