#hished Components c12 D57 10 pounds 0 2 pounds 2 hours 8 pounds 4 pounds 1 pound 3 hours Requirements for each finished component: RM 1 RM 2 RM 3 Direct labor Product information: Sales price Sales (units) Estimated beginning inventory (units) Desired ending inventory (units) Selling and Administrative Expense Information Advertising $ 65,000 Sales salaries 190,000 Travel and entertainment 61,000 Depreciation-warehouse 4,900 Office salaries 63,000 Executive salaries 300,000 Supplies 4,100 Depreciation-office 5,500 Total $ 693,500 $ 190 12,000 $ 230 9,000 410 130 300 200 The effective income tax rate for the company is 30%. $ Cost per pound Estimated beginning inventory in pounds Desired ending inventory in pounds Direct Materials Information RM1 RM2 RM3 4 $ 3.50 $ 0.50 3,000 1,800 1,500 4,100 1,500 2,000 Required: 5. Prepare the Factory overhead budget for 2019. 6. Prepare the Cost of goods sold and ending finished goods inventory budgets for 2019. 7. Prepare the Selling and administrative expense budget, broken down into two components: Selling Expenses, and Administrative Expenses for 2019. 8. Prepare the Budgeted income statement, the last item of which is labeled After-tax Operating Income for 2019. The firm expects the average wage rate to be $25 per hour in 2019. Spring Manufacturing uses direct labor hours to apply overhead. Each year the firm determines the overhead application rate for the year based on budgeted direct labor hours for the year. The firm maintains negligible Work-in-Process Inventory and expects the cost per unit for both beginning and ending inventories of finished products to be identical. Factory Overhead Information Indirect materials-variable $ 7,000 Miscellaneous supplies and tools-variable 4,800 Indirect labor-variable 42,000 Supervision-fixed 110,000 Payroll taxes and fringe benefits-variable 200,000 Maintenance costs-fixed 15,000 Maintenance costs-variable 10,080 Depreciation-fixed 71,380 Heat, light, and power-fixed 43, 440 Heat, light, and power-variable 15,000 Total $ 518,700 #hished Components c12 D57 10 pounds 0 2 pounds 2 hours 8 pounds 4 pounds 1 pound 3 hours Requirements for each finished component: RM 1 RM 2 RM 3 Direct labor Product information: Sales price Sales (units) Estimated beginning inventory (units) Desired ending inventory (units) Selling and Administrative Expense Information Advertising $ 65,000 Sales salaries 190,000 Travel and entertainment 61,000 Depreciation-warehouse 4,900 Office salaries 63,000 Executive salaries 300,000 Supplies 4,100 Depreciation-office 5,500 Total $ 693,500 $ 190 12,000 $ 230 9,000 410 130 300 200 The effective income tax rate for the company is 30%. $ Cost per pound Estimated beginning inventory in pounds Desired ending inventory in pounds Direct Materials Information RM1 RM2 RM3 4 $ 3.50 $ 0.50 3,000 1,800 1,500 4,100 1,500 2,000 Required: 5. Prepare the Factory overhead budget for 2019. 6. Prepare the Cost of goods sold and ending finished goods inventory budgets for 2019. 7. Prepare the Selling and administrative expense budget, broken down into two components: Selling Expenses, and Administrative Expenses for 2019. 8. Prepare the Budgeted income statement, the last item of which is labeled After-tax Operating Income for 2019. The firm expects the average wage rate to be $25 per hour in 2019. Spring Manufacturing uses direct labor hours to apply overhead. Each year the firm determines the overhead application rate for the year based on budgeted direct labor hours for the year. The firm maintains negligible Work-in-Process Inventory and expects the cost per unit for both beginning and ending inventories of finished products to be identical. Factory Overhead Information Indirect materials-variable $ 7,000 Miscellaneous supplies and tools-variable 4,800 Indirect labor-variable 42,000 Supervision-fixed 110,000 Payroll taxes and fringe benefits-variable 200,000 Maintenance costs-fixed 15,000 Maintenance costs-variable 10,080 Depreciation-fixed 71,380 Heat, light, and power-fixed 43, 440 Heat, light, and power-variable 15,000 Total $ 518,700
