P10.34A (LO 2, 3) Greish Inc. is preparing its annual budgets for the year ending December 31, 2020. Accounting assistants have provided the following data:

Prepare sales, production, direct materials, direct labour, and income statement budgets.

	Product LN 35	Product LN 40
Sales budget
Expected volume in units	400,000	240,000
Unit selling price	$30	$35
Production budget
Desired ending finished good units	30,000	20,000
Beginning finished goods units	20,000	15,000
Direct materials budget:
Direct materials per unit (kilograms)	2	3
Desired kilograms of ending direct materials	50,000	15,000
Beginning kilograms of direct materials	40,000	10,000
Cost per kilogram	$2	$3
Direct labour budget
Direct labour time per unit (hours)	0.5	0.7
Direct labour rate per hour	$12	$12
Budgeted income statement
Total unit cost	$11	$20

An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expenses budget. The latter shows selling expenses of $850,000 for product LN 35 and $390,000 for product LN 40, and administrative expenses of $520,000 for product LN 35 and $180,000 for product LN 40. Income taxes are expected to be 30%.

Instructions

Prepare the following budgets for the year. Show data for each product. Quarterly budgets should not be prepared.

• a. Sales
• b. Production

  c. Direct materials

• d. Direct labour
• e. Income statement

  (Note: Income taxes are not allocated to the products.)