Al-Nads Company is preparing its master budget for 2016. Relevant data pertaining to its sales. production, and direct materials budgets are as follows: Sales 1. Sales for the year are expected to total 1.500,000 units. Quarterly sales are 20% 25% 25%, and 30% respectively. The sales price is expected to be 560 per unit for the first three quarters and S65 per unit beginning in the fourth quarter. Sales in the first quarter of 2010 are expected to be 10% higher than the budgeted sales for the first quarter of 2011. 2. Production Management desires to maintain ending finished goods inventories at 25% of next quarter's budgeted sales volume. 3. Direct materials: Each unit requires 4 pounds of raw materials at a cost of S6 per pound. Management desires to maintain raw materials inventories at 3% of the next quarter's production requirements. Assume the production requirements for the first quarter of 2010 a 950,000 pounds 4. Direct labor hours are determined from the production budget. Al-Kamal Company, two hours of direct labor are required to produce cach unit of finished goods. The anticipated hourly wage rate is $15. 5. Al-Kamal Company expects variable costs to fluctuate with productie volume on the hasis of the following rates per direct labor hour indirect material $1.50, indirect labor $2.00, utilities $0.50 and maintenance 50.40. Thus, for the 6,500 direct labor hours to produce 3,100 units budgeted indirect materials are 56,200 (6,500S1.30), and budgeted indirect laboris 57,600 46,500 x $2.00). Al-Kamal also recognizes that some maintenance is fixed. The amounts reported for fixed costs are assumed 6. Variable expense rates per unit of sales are sales commissions $2.50 and freight-out $1. Variable expenses per quarter are based on the unit sales from the sales budget. Al-Kamal expects sales in the first quarter to be 4.000 units. Fixed expenses are based on assumed data 7. Al-Nada company has the following information Company sold 15.000 units of product Sales price is $60 per unit. Interest expense is expected to be $100, and Income taxes are estimated to be $12,000 Cost of One Rightride Illustration Quantity Cou Flement linit Cost Total direct materials 20-7 2 Pounds S8.00 54.00 Direct labor 20.9 2 Hours S 10.00 S2000 Manufacturing Overhead 20.10 2 Hours S800 $ 16,00 S44.00 Total Umit Cost Cost of Goods Sold - 15000X 560 5660.00 Requirements A Prepare the sales budget by quarters for 2016. B. Prepare the production budget by quarters for 2016 C Prepare the direct materials budget by quarters for 2016 D. Prepare the direct Labor budget by quarters for 2016. E Prepare the Manufacturing Overhead budget by quarters for 2016 F. Prepare a selling and administrative expense budget by quarters for 2016 G. Prepare income statement budget Al-Nad Company A sales budget for the Year Ending December 31.2016 Quarters 2 6 Year 1 Expected unit Sales Unit selling price Total sales Year Al-Nada Company B. Production budget for the Year Ending December 31.2016 Quarters 1 2 3 4 Expected unit sales Add. Desired ending finished goods unit Total required units Less Beginning finished goods units Required production units 25% of each quarters unit sales a. Estimated first quarter 2017 sales units t. 25%ot estimated first quarter 2017 sales units Year Al-Nada Company C. Direct materials budget for the Year Ending December 31.2016 Quarters 1 2 3 Unit to be produced Direct materials per unit Total pounds needed for production Add Desired ending Direct materiak (pounds! Total materials required Less Beginning direct materials (pounds) Direct materials purchases Cost per pound Total cost of direct materials purchases a. Estimated first quarter 2017 production requirements b. 5% OF Estimated first quarter pounds needed for production Al-Nada Company D. Direct Labor budget for the Year Ending December 31, 2016 Quarters 2 3 Year 1 1 Unit to be producer Direct Labor(hours) per unit Total required direct labor hours direct labor cost Total direct labor cost Al-Nada Company E. Manufacturing Overhead budget for the Year Ending December 31.2016 Quarters 2 3 Year 1 Variable costs Indirect material (1.50/hour) Indirect labor (2.00/hour) Utilities (50.50/hour) Maintenance ($0.40/hour), Total variable costs Fixed cost Supervisory salaries Depreciation Taxes and Insurance Maintenance Total fixed cost Total manufacturing overhead Direct labor hours manufacturing overhead rate per direct hour Al-Nada Company F. selling and administrative expense budget for the Year Ending December 31.2016 Quarters 1 2 3 4 Year Bandaged sales in units Variable expense sales commissions ($2.50 per unit) freight-out (siper unit) Total variable expenses Fixed expenses Advertising Sales salaries Office salaries Depreciation Taxes and Insurance Total Fixed expenses Total selling and administrative expense Al-Nada Company G. Prepare income statement budget for the Year Ending December 31, 2016 Sales Cost of goods solid Gross pront Selling and administrative experre Income from operating Interest expense Income before taxes Taxes Net Income
