prepare the direct materials budget for flour for the first quarter.

January February March Quarter

Dozens of cookies to be produced

Cups per dozen cookies

Production needs

Add: Desired ending inventory

Total needs

Less: Beginning inventory

Cups to be purchased

Cost per cup

Total cost of flour

EXHIBIT 1

Sales Price, Production Costs, and Operating Expenses

Sales Price

A dozen cookies sell for $12.05.

Direct Materials Costs

Material

Per Unit Cost

Flour

$.15

Sugar

$.15

Eggs

$.10

Shortening

$.50

Chocolate Chips

$ 1.25

Any other ingredients are indirect materials and are considered part of manufacturing overhead

Direct Labor Costs

Information regarding direct labor costs is not maintained because you are your only employee. In this case, labor costs are considered part of manufacturing overhead.

Manufacturing Overhead Costs

Variable costs per dozen

Fixed costs per month

Utilities

$ .50

N/a

Other indirect materials and labor

$ .75

N/a

Maintenance

N/a

$ 250

Depreciation

N/a

$ 500

Totals

$ 1.25

$ 750

Operating Expenses

Variable costs per dozen

Fixed costs per month

Shipping Costs

$ 1.50

N/a

Salaries

N/a

$ 2,000

Depreciation

N/a

$ 200

Other

N/a

$ 1,450

Totals

$ 1.50

$ 3,650