Niva B. Beauty Company manufactures and sells a makeup blusher called Laura Blush. The following data are available for preparing budgets for Laura Blush for the first 2 quarters of 2020.

1- Sales in quarter 1 is 55,000 blushers; and in quarter 2 is 66,000 blushers. Selling price is $70 per blush

2- Direct Materials: each blusher of Laura requires 5 pounds of powder at a cost of $3.50 per pound and 3 pounds of glitter at $2 per pound.

3- Desired inventory:

Type of Inventory	January 1	April 1	July 1
Laura Blushers	9,000	16,000	19,000
Powders ( Pounds)	10,000	11,000	14,000
Glitter (Pounds)	15,000	21,000	25,000

4- Direct labor: Direct labor times is 35 minutes per blush at an hourly rate of $ 15 per hour.

5- Selling and administrative expenses are expected to be 10% of sales plus $170,000 per quarter.

6- Interest Expense is $150,000

7- Income tax are expected to be 30% of income before income taxes.

8- Niva has issued 500,000 shares closing at 13$ per share.

9- Two budgets are already prepared

• The manufacturing overhead budget shows expected cost to be 125% of direct labor cost.
• The direct materials budget of Glitter shows the cost of glitter purchases to be $297,000 in quarter 1 and $439,500 in quarter 2.

Instructions:

1. Prepare the following operating budgets by quarters to be able to prepare the multiple-step income statement for the first 6 months:

a- Sales Budget

b- Production Budget

c- Direct Material Budget for Powder only

d- Direct Labor

e- Selling and Administrative Expense Budget

f- Multiple-step income statement for the first 6 months. (Do not do the quarterly budget)

2. Calculate the companys Profit margin and price-earnings ratio.