Preparation of Individual Budgets During the first calendar quarter of 2016, Clinton Corporation is planning to manufacture a new product and introduce it in two regions. Market research indicates that sales will be 10,000 units in the urban region at a unit price of $53 and 9,000 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 8,000-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 $7,650 Factory supplies 4,500 0.90 28,800 Supervisory salaries Other 0.75 22,950 Operating expenses: Selling: Advertising 22,500 Sales salaries& commissions* 1.50 15,000 Other* 0.90 3,000 Administrative: Office salaries 2,700 Supplies 0.15 1,050 Other 1,950 0.08 *Varies per unit sold, not per unit produced a. Assuming that the desired ending inventories of materials A and B are 8,000 and 10,000 pounds, respectively, and that work-in-process inventories are immaterial, prepare budgets for the calendar quarter in which the new product will be introduced for each of the following operating factors: Do not use negative signs with any of your answers below. Do not use negative signs with any of your answers below. 1. Total sales 0 2. Production units 0 3. Material purchase cost Material A Material B Total pounds (Ilbs.) required for production 0 0 Desired ending materials inventory 0 0 Total pounds to be available 0 Beginning materials inventory 0 0 Total material to be purchased (lbs.) 0 Total material purchases ($) 0 4. Direct labor costs 0 5. Manufacturing overhead costs Fixed Variable Total Depreciation $ 0 $ 0 Factory supplies 0 0 0 Supervisory salaries 0 0 0 Other 0 0 0 Total manufacturing overhead 0 C A O LA 6. Selling and administrative expenses Fixed Variable Total Selling expenses: Advertising 0 $ 0 $ 0 Sales salaries and commissions 0 0 0 Other 0 0 0 Total selling expenses $ 0 Administrative expenses: Office salaries $ 0 $ 0 $ 0 Rectangular Snip Supplies 0 0 0 Other Total administrative expenses $ Total selling and administrative expenses $ 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, 2016 Sales 0 Cost of Goods Sold: Beginning Inventory - Finished Goods $ 0 Material: Beginning Inventory - Material $ 0 Material Purchases 0 Material Available 0 Ending Inventory - Material Direct Material 0 Direct Labor 0 Manufacturing Overhead Total Manufacturing Cost Cost of Goods Available for Sale 0 Ending Inventory - Finished Goods 0 Cost of Goods Sold 0 Gross Profit 0 Operating Expenses: Selling Expenses 0 Administrative Expenses 0 Total Operating Expenses 0 Income before Income Taxes 0 Income Tax Expense 0 $ 0 Net Income
