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Preparation of Individual Budgets During the first calendar quarter of the year, Clinton Corporation is planning to manufacture a new product and introduce it in

Preparation of Individual Budgets
During the first calendar quarter of the year, Clinton Corporation is planning to manufacture a new product and introduce it in two regions. Market research indicates that sales will be 7,000 units in the urban region at a unit price of $53 and 6,000 units in the rural region at $48 each. Because the sales manager expects the product to catch on, he has asked for production sufficient to generate a 5,000-unit ending inventory. The production manager has furnished the following estimates related to manufacturing costs and operating expenses:
Variable
Fixed
(per unit)
(total)
Manufacturing costs:
Direct materials
A (4 lb. @ $3.15/lb.) $12.60-
B (2 lb. @ $4.65/lb.)9.30-
Direct labor (0.5 hours per unit)7.50-
Manufacturing overhead:
Depreciation - $7,650
Factory supplies 0.904,500
Supervisory salaries -28,800
Other 0.7522,950
Operating expenses:
Selling:
Advertising -22,500
Sales salaries& commissions*1.5015,000
Other*0.903,000
Administrative:
Office salaries -2,700
Supplies 0.151,050
Other 0.081,950
*Varies per unit sold, not per unit produced.
a. Assuming that the desired ending inventories of materials A and B are 5,000 and 7,000 pounds, respectively, and that work-in-process inventories are immaterial, prepare budgets for the calendar quarter in which the new product will be introduced for each of the following operating factors:
Do not use negative signs with any of your answers below.
1. Total sales
$Answer 1
0
2. Production
Answer 2
0
units
3. Material purchase cost
Material A Material B
Total pounds (lbs.) required for production Answer 3
0
Answer 4
0
Desired ending materials inventory Answer 5
0
Answer 6
0
Total pounds to be available Answer 7
0
Answer 8
0
Beginning materials inventory Answer 9
0
Answer 10
0
Total material to be purchased (lbs.) Answer 11
0
Answer 12
0
Total material purchases ($) Answer 13
0
Answer 14
0
4. Direct labor costs
$Answer 15
0
5. Manufacturing overhead costs
Fixed Variable Total
Depreciation Answer 16
0
Answer 17
0
Answer 18
0
Factory supplies Answer 19
0
Answer 20
0
Answer 21
0
Supervisory salaries Answer 22
0
Answer 23
0
Answer 24
0
Other Answer 25
0
Answer 26
0
Answer 27
0
Total manufacturing overhead Answer 28
0
6. Selling and administrative expenses
Fixed Variable Total
Selling expenses:
Advertising Answer 29
0
Answer 30
0
Answer 31
0
Sales salaries and commissions Answer 32
0
Answer 33
0
Answer 34
0
Other Answer 35
0
Answer 36
0
Answer 37
0
Total selling expenses Answer 38
0
Administrative expenses:
Office salaries Answer 39
0
Answer 40
0
Answer 41
0
Supplies Answer 42
0
Answer 43
0
Answer 44
0
Other Answer 45
0
Answer 46
0
Answer 47
0
Total administrative expenses Answer 48
0
Total selling and administrative expenses Answer 49
0
b. Using data generated in requirement (a), prepare a budgeted income statement for the calendar quarter. Assume an overall effective income tax rate of 30%.
Round answers to the nearest whole number.
Do not use negative signs with your answers.
Clinton Corporation
Budgeted Income Statement
For the Quarter Ended March 31
Sales Answer 50
0
Cost of Goods Sold:
Beginning Inventory - Finished Goods Answer 51
0
Material:
Beginning Inventory - Material Answer 52
0
Material Purchases Answer 53
0
Material Available Answer 54
0
Ending Inventory - Material Answer 55
0
Direct Material Answer 56
0
Direct Labor Answer 57
0
Manufacturing Overhead Answer 58
0
Total Manufacturing Cost Answer 59
0
Cost of Goods Available for Sale Answer 60
0
Ending Inventory - Finished Goods Answer 61
0
Cost of Goods Sold Answer 62
0
Gross Profit Answer 63
0
Operating Expenses:
Selling Expenses Answer 64
0
Administrative Expenses Answer 65
0
Total Operating Expenses Answer 66
0
Income before Income Taxes Answer 67
0
Income Tax Expense Answer 68
0
Net Income Answer 69
0
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