Lex, Corp., manufactures bamboo coat racks that sell for $25 each. Each rack requires 4 linear feet of bamboo, which costs $2.00 per foot. Each rack takes approximately 30 minutes to build, and the labor rate averages $14 per hour. Lex has the following inventory policies: Ending finished goods inventory should be 40 percent of next month's sales. Ending direct materials inventory should be 30 percent of next month's production. . Expected unit sales (racks) for the upcoming months follow: March 330 April 360 May 410 June 510 485 July August 535 Variable manufacturing overhead is incurred at a rate of $0.40 per unit produced. Annual fixed manufacturing overhead is estimated to be $8,400 ($700 per month) for expected production of 4,000 units for the year. Selling and administrative expenses are estimated at $750 per month plus $0.50 per unit sold. Lex, Corp., had $13,500 cash on hand on April 1. Of its sales, 80 percent is in cash. Of the credit sales, 50 percent is collected during the month of the sale, and 50 percent is collected during the month following the sale. Assume the company can borrow in increments of $1,000 to maintain a $13,000 minimum cash balance and that the amount will be repaid in the subsequent month, provided there is adequate cash flow. Borrowings are made at the beginning of the month and repayments occur at the end of the month. Interest on borrowings is 12% annually and is paid monthly on amounts outstanding. Of direct materials purchases, 80 percent is paid for during the month purchased and 20 percent is paid in the following month. Direct material purchases for March 1 totaled $2,800. All other operating costs are paid during the month incurred. Monthly fixed manufacturing overhead includes $260 in depreciation. During May, Lex plans to pay $4,500 for a piece of equipment. April Sales Budget Budgeted Sales (Units) Unit Sales Price Budgeted Sales Revenue May 360 25 $ 9,000 $ June 410 25 $ 10,250 $ 2nd quarter 510 1280 25 $ 25 12,750 $ 32,000 $ $ April Production Budget Budgeted Sales (Units) Ending Finished Goods Inventory May 360 June 410 204 2nd Quarter 510 1280 194 194 164 144 164 204 (Less) Beginning Finished Goods Inventory Budgeted Production in units 144 1330 380 450 500 Direct Materials Budget April May June 2nd Quarter Total Budgeted production Material requirements per unit Total material needed for production Ending direct materials inventory Less beginning direct materials inventory Budgeted direct materials purchases Material cost per foot Budgeted cost of direct materials purchases Direct Labor Budget 2nd Quarter Total April May June Budgeted production Direct labor requirements per unit Direct labor hours required Direct labor rate Budgeted direct labor cost Overhead Budget 2nd Quarter Total April May June Budgeted production Variable manufacturing overhead rate Budgeted variable manufacturing Fixed manufacturing overhead Budgeted manufacturing overhead