Igloo Co. manufactures and sells a rubber for boots (in bags), called Rubbs. The following data are available for preparing budgets for Rubbs for the first two quarters of 2023.

Sales: Quarter 1, 28,000 bags; quarter 2, 42,000 bags.

Selling price is $60 per bag.

Direct materials: Each bag of Rubbs requires 4 kg of Aces at $4 per kilogram and 6 kg of Zeds at $1.50 per kilogram.

Desired inventory levels:

Type of Inventory January 1 April 1 July 1

Rubbs (bags) 8,000 12,000 18,000

Aces (kg) 9,000 10,000 13,000

Zeds (kg) 14,000 20,000 25,000

Direct labour: Direct labour time is 15 minutes per bag at an hourly rate of $14 per hour.

The company expects selling and administrative expenses to be 15% of sales plus $175,000 per quarter.

It expects income taxes to be 30% of income from operations.

Your assistant has prepared two budgets:

(1) the manufacturing overhead budget, which shows expected costs to be 150% of direct labour cost;

(2) the direct materials budget for Zeds, which shows the cost of Zeds purchases to be $297,000 in quarter 1 and $439,500 in quarter 2.

Instructions

Prepare the budgeted income statement for the first six months and all required operating budgets by quarters and answer the following questions; (Note all dollar figures will have $)

Group of answer choices

Sales, Q1

Sales, Q2

Required Units, Q1

Required Units, Q2

Required Units, Q1 and Q2

Required production in units, Q1

Required production in units, Q2

Hours required for production, Q1

Hours required for production, Q2

Cost of direct labour, Q1

Cost of direct labour, Q2

Materials required (kg), Q1

Materials required (kg), Q2

Costs of materials purchases, Q1

Cost of materials purchases, Q2

Selling and admin costs, Q1

Selling and admin costs, Q2

Cost of 1 unit of finished goods

Cost of goods sold

Gross profit

Net income