Nguyen Inc manufactures a line of rice crackers. Nguyen's management accountant has been doing a full analysis of the costs and activities. The information obtained from this analysis is as follows:

Activity Cost driver Budgeted cost of activity Budgeted levels of cost drivers Ordering Number of purchase orders $75,000 15,000 purchase orders Machine setup Number of batches $134,633 4,000 batches Materials movement Number of batches $10,637 4,000 batches Machine maintenance Machine hours $24,600 7,500 hours Packaging and shipping Number of packages $103,125 3,750,000 packages For the coming year (20X7), Nguyen predicts that sales of crackers will be 3,645,000 packages at $0.90 per package evenly throughout the year. The company keeps 5% of sales in finished goods inventory for the following month. Opening inventory for finished goods was 14,500 packages at a cost of $0.28 each. Nguyen uses first in, first out (FIFO) for producing the process cost report for inventory valuation. The opening inventory for direct materials is $15,200. Purchases for the year are budgeted at $304,000 with an estimated ending inventory of $15,620. Direct labour for the year is expected to be $311,500 for all production. Sales costs are 6% of sales. Administrative costs are estimated at $562,000. There was no work-inprocess inventory, whether opening or ending. The activities' predicted use is as follows:

Activity Cost driver Ordering 13,500 purchase orders Machine setup 3,646 batches Materials movement 3,646 batches Machine maintenance 7,000 hours Packaging 3,646,000 packages

Required:

a) Develop the production budget for the coming year. Production is always based on batches of 1,000. To answer this question, please calculate the required production in units and then calculate the production in units rounded to batches of 1,000.

b) Develop the schedule of cost of goods manufactured and the budgeted income statement. Ignore any under or over-applied overhead .