Operating Budget

Create an operating budget for the first quarter of a new business.

Projected Sales are:

Month #1: $65,000

Month #2: $97,500

Month #3: $130,000

Month #4: $110,500

These sales are based on selling one product with a selling price of $6.50

Create a Production Budget based on Units (not dollars).

Desired Finished Goods Ending Inventory each month is 10% of the next months projected sales. (Use the Finished Goods Ending Inventory amount for the previous year for the Beginning Finished Goods Inventory to start this year).

Create a Direct Materials Purchase Budget

Each unit produced requires 10# of direct materials at a cost of $0.08 per pound.

Desired Ending Direct Materials Inventory is 10% of the next months material requirements.

Create a Direct Labor Budget

Direct Labor Costs are $15/hour

Each unit requires 5 minutes of labor

Create an Overhead Budget

Variable Overhead Expenses are:

Supplies ($.02 per unit)

Inspection ($.10 per unit)

Maintenance and Repair ($.03 per unit)

Utilities ($.01 per unit)

Fixed Overhead Expenses are $1100 monthly.

Create a Selling and Administrative Budget

Variable Selling & Administrative Expenses are:

Sales Commissions ($.03 per unit)

Delivery ($.01 per unit)

Office Support ($.02 per unit)

Fixed Selling & Administrative Expenses are $2500 monthly.

Combine all Budgets to Create a Budgeted Income Statement

Complete a Budgeted Income Statement for months 1 through 3, and a Budgeted Income Statement that reflects the total first quarter.

**********TEMPLATE FOR ASSIGNMENT IS BELOW, COPIED FROM EXCEL***********************

DMATERIALS
	Month #1	Month #2	Month #3	Month #4
Sales
Projected Quantity
Beginning FG Inventory
Desired FG Inventory
Items Produced
Material Quantity Needed
Material Cost
DLABOR
	Month #1	Month #2	Month #3	Month #4
Sales
Projected Quantity
Beginning FG Inventory
Desired FG Inventory
Items Produced
Direct Labor
OVERHEAD
	Month #1	Month #2	Month #3	Month #4
Sales
Projected Quantity
Beginning FG Inventory
Desired FG Inventory
Items Produced
Variable Manufacturing Overhead
Supplies
Inspection
Maintenance & Repair
Utilities
Fixed Overhead
S&A
	Month #1	Month #2	Month #3	Month #4
Sales
Projected Quantity
Beginning FG Inventory
Desired FG Inventory
Items Produced
Variable S&A
Commission
Delivery
Office Supplies
Fixed S&A
BUDGETED INCOME STATEMENT
	Month #1	Month #2	Month #3	Month #4	First Quarter
Sales
Projected Quantity
Beginning FG Inventory
Desired FG Inventory
Items Produced
Material Cost
Direct Labor Cost
Gross Margin
Manufacturing Overhead
Supplies
Inspection
Maintenance & Repair
Utilities
Fixed Overhead
S&A
Commission
Delivery
Office Supplies
Fixed S&A
Net Income