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ending inventory ol finISHeu cost of goods sold budget d. PROBLEMS Problem 8.36 Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-traile trucks. The wiring harness assemblies are sold to various truck manufacturers around the wodd Operating Budget, Comprehensive Analysis Projected sales in units for the coming five months are given below. 10,000 10,500 13,000 16,000 18,500 January February March April May The following data pertain to production policies and manufacturing specifications followed by Ponderosa: a. Finished goods inventory month is 20 percent of the next month's sales. b. on January 1 is 900 units. The desired ending inventory for each The data on materials used are as follows: Per-Unit Usage Unit Cost Direct Material $4 Part #K298 Part #C30 7 3 Inventory policy dictates that sufficient materials be on hand at the beginnine of 6 month to satisfy 30 percent of the next month's production needs. This is exactly the amount of material on hand on January 1. The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20. d. Overhead each month is estimated using a flexible budget formula. (Activity is measured in C. direct labor hours.) Fixed Cost Variable Cost Component Component Supplies Power Maintenance $1.00 0.20 12,500 14,000 45,000 1.10 Supervision Depreciation es Other 4,300 86,000 1.60 3.99 I61800 Chapter s Budgeting for Planning and Control Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.) Fixed Costs Variable Costs Salaries Commissions Depreciation Shipping Other S 88,500 $1.40 25,000 3.60 137,000 1.60 fThe unit selling price of the wiring harness assembly is $110N In February, the company plans to purchase land for future expansion. The land costs $68,000. h All sales and purchases are for cash. The cash balance on January 1 equals $62,900. The ending cash balance of at least $25,000. If a cash shortage develops, firm wants to have an sufficient cash is borrowed to cover the shortage and provide the desired ending balance. Any cash borrowed must be borrowed in S1,000 increments and is repaid the following month, as is the interest due. The interest rate is 12 percent per annum Required: Prepare a monthly operating budget for the first quarter with the following schedules: 1. Sales budget 2. Production budget 3. Direct materials purchases budget 4. Direct labor budget 5. Overhead budget 6 Selling and administrative expense budget 1.Ending finished goods inventory budget 8.Cost of goods sold budget Budgeted income statement (ignore income taxes) 10. Cash budget Balance Sheet autting together the cash