ONLY DO G AND H JAMZ Company Manufacturing Overhead Budget For the Quarter Ending March 31, 2021 Month February January March Quarter $23,296.88 $22,037.50 $23,871.88 13,046.25 12,341.00 13,368.25 8,386.88 7,933,50 8,593.88 3,727.50 3,526.00 3,819.50 48,457.50 45,838.00 49,653.50 $69,206.25 38,755.50 24,914.25 11,073.00 143,949.00 Variable costs Indirect materials ($1.25/hour) Indirect labor ($0.70/hour) Utilities ($0.45/hour) Maintenance ($0.20/hour) Total variable costs Fixed costs Supervisory salaries Depreciation Facility rent Total fixed costs Total manufacturing overhead Manufacturing overhead rate per direct labor hour 14,000.00 14,000.00 14,000.00 42,000.00 5,000.00 5,000.00 5,000.00 15,000.00 10,500.00 10,500.00 10,500.00 31,500.00 29,500.00 29,500.00 29,500.00 88,500.00 $77,957.50 $75,338.00 $79,153.50 $232,449.00 $4.20 JAMZ Company Selling and Administrative Expense Budget For the Quarter Ending March 31, 2021 Month February January March Quarter $37,975.00 $34,475.00 $38,400.00 $110,850.00 15,190.00 13,790.00 15,360.00 44,340.00 53,165.00 48,265.00 53,760.00 155,190.00 Variable expenses Sales commissions ($0.25 per unit) Freight-out ($0.10 per unit) Total variable expenses Fixed expenses Advertising Office salaries Insurance Total fixed expenses Total selling and administrative expenses 10,000.00 10,000.00 10,000.00 30,000.00 8,500.00 8,500.00 8,500.00 25,500.00 500.00 500.00 500.00 1,500.00 19,000.00 19,000.00 19,000.00 57,000.00 $72,165.00 $67,265.00 $72,760.00 $212,190.00 JAMZ Company is a family owned business that produces premium organic apple jam, which it sells to grocery stores nationwide for $8.50 per jar. The JAMZ Company budget committee is in the process of preparing budgets for the first quarter of the coming year and has gathered the following information: 1. Sales: Unit sales for November 2020 Unit sales for December 2020 Expected unit sales for January 2021 Expected unit sales for February 2021 Expected unit sales for March 2021 Expected unit sales for April 2021 Expected unit sales for May 2021 Expected unit sales for June 2021 146,100 151,000 151,900 137,900 153,600 149,500 155,300 157,500 Collections are expected to be 50 percent in the month of the sale, 35 percent in the first month following the sale, and 15 percent in the second month following the sale. Accounts receivable on December 31, 2020 totaled $828,027.50. 2. Direct materials: JAMZ Company's apple jam contains two main ingredients, apples and sugar. For every 24- ounce jar of apple jam, 1.5 pounds of organic apples at a cost of $1.75 per pound and 0.75 pounds of organic sugar at a cost of $0.85 per pound, will be used. Sixty percent of direct materials purchases are paid in the month of purchase, and the remaining 40 percent is paid in the month following the purchase. Direct materials purchases for December totaled $491,188.95 ($395,209.50 for apples and $95,979.45 for sugar). Accounts Payable on December 31, 2020 totaled $196,475.58. 3. Desired inventory levels: Type of Inventory Apple jam (jars) Apples (pounds) Sugar (pounds) December 1 30200 68031 34016 January 1 30380 67095 33548 February 1 27580 63468 31734 March 1 30720 68751 34376 April 1 29900 67797 33899 May 1 31060 70083 35042 4. Direct labor: To produce one jar of premium organic apple jam, 7.5 minutes of direct labor are consumed at an hourly rate of $14.00. 5. Manufacturing Overhead JAMZ Company expects variable manufacturing overhead to fluctuate with production volume on the basis of direct labor hours. Variable manufacturing overhead per unit and fixed manufacturing overhead are as follows: Indirect materials Indirect labor $1.25 per direct labor hour $0.70 per direct labor hour 5. Manufacturing Overhead JAMZ Company expects variable manufacturing overhead to fluctuate with production volume on the basis of direct labor hours. Variable manufacturing overhead per unit and fixed manufacturing overhead are as follows: Indirect materials $1.25 per direct labor hour Indirect labor $0.70 per direct labor hour Utilities $0.45 per direct labor hour Maintenance $0.20 per direct labor hour Supervisory salaries $168,000 per year Depreciation $5,000 per month Facility rent $10,500 per month 6. Selling and Administrative Variable selling and administrative costs per unit are expected to be $0.35, which includes sales commissions of $0.25 per unit and freight-out of $0.10 per unit. Fixed selling and administrative costs are as follows: Advertising Office salaries Insurance $10,000 per month $102,000 per year $500 per month 7. Other Information Cost of goods sold should be calculated by multiplying the expected sales units by the cost per jar. Each month, JAMZ Company incurs $35,000 of interest expense. The corporate tax rate is 21 percent. The manufacturing overhead and selling and administrative budgets have already been prepared. Instructions: For the first quarter of 2021, prepare the following items by month and cumulative quarter total. a. Prepare a sales budget. b. Prepare a production budget. c. Prepare a direct materials budget (separate budgets for apples and sugar). d. Prepare a direct labor budget. e. Prepare a standard cost card for one unit of product. f. Prepare a budgeted multi-step income statement (for the quarter). g. Prepare a schedule for expected cash collections from customers. h. Prepare a schedule for expected payments for materials purchases. Variance analysis: Based on the standards used during the budgeting process and the following information, compute the total, price, and quantity variances for material and labor (separate computations should be made for apples and sugar). During the first quarter of 2021, JAMZ Company produced and sold 445,000 jars of premium organic apple jam. The quantities of materials purchased during the quarter were also used. The actual quantities and costs incurred during production were as follows: Direct materials: Apples Sugar 890,000 lbs @ $1.50 per lb 222,500 lbs @ $1.10 per Ib Direct labor: 44,500 hrs @ $17.00 per hr