Larussa Inc. is preparing its annual budgets for the year ending December 31, 2011. Accounting assistants furnish the data shown

Sales budget: Product 4

Anticipated volume in units 450,000

Unit selling price $25

Quarterly sale units are 20%, 25%, 30%, and 25% respectively.

Production budget:

Desired ending finished goods units 30,000

Beginning finished goods units 20,000

Quarterly ending finished goods units and beginning finished goods units are 25% each quarters.

Direct materials budget:

Direct materials per unit (pounds) 2.5

Desired ending direct materials pounds 50000

Beginning direct materials pounds 40000

Cost per pound $2

Quarterly Desired ending direct materials and beginning desired direct materials are 25% each quarters.

Direct labor budget:

Direct labor time per unit 0.5

Direct labor rate per hour $12

Budgeted income statement:

Total unit cost $11

An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of $750,000 and administrative expenses of $ 420,000 for product 4. Income taxes are expected to be 30%.

Instructions

Prepare the following budgets for the year. Show data for each product. You need to prepare quarterly budgets.

(a) Sales.

(b) Production.

(c) Direct materials.

(d) Direct labor.

(e) Income statement.