Production Budget

Sales for the final quarter of the prior year total 1,300 units. Expected sales (in units) for the curren a. year are: 1,170 (Quarter 1), 780 (Quarter 2), 1,040 (Quarter 3), and 1,040 (Quarter 4). Sales for the first quarter of the following year total 1,560 units. The selling price is $460 per unit in the first thrt quarters of the year, and $480 per unit in the final quarter. b. Company policy calls for a given quarter's ending finished goods inventory to equal 70% of the nt quarter's expected unit sales. The finished goods inventory at the end of the prior year is 819 unit: which complies with the policy. The product's manufacturing cost is $215 per unit, including per unit costs of $90 for materials ( 6 lbs. at $15 per lb.), $88 for direct labor (4 hours $22 direct labor rate per hour), $25 for variable overhead, and $12 for fixed overhead. Annual fixed overhead consists, incurred evenly throughout the year, consist of depreciation on production equipment, $20,700; factory utilities, $25,800, and other factory overhead of $5,136. c. Company policy also calls for a given quarter's ending raw materials inventory to equal 50% of ne quarter's expected materials needed for production. The prior year-end inventory is 2,691lbs of materials, which complies with the policy. The company expects to have 4,680lbs. of materials in inventory at year-end. The company has no work in process inventory at the end of any quarter. d. Sales representatives' commissions are 18% of sales and are paid in the quarter of the sales. The sales manager's quarterly salary will be $66,000 in the first three quarters of the year, and $70,00 in the final quarter. e. Quarterly general and administrative expenses include $28,000 administrative salaries, rent expense of $17,000 per quarter, insurance expense of $14,000 per quarter, straight-line depreciation of $14,000 per quarter, and 1% monthly interest on the $300,000 long-term note payable ( 12% annually). Requirement: Prepare the production budget for Conlan Inc.. Company policy calls for a given quarter's ending finished goods inventory to equal 70% of the next quarter's expected unit sales. The finished goods inventory at the end of the prior year is 819 units, which complies with the policy. Expected sales (in units) for the current year are: 1,170 (Quarter 1), 780 (Quarter 2), 1,040 (Quarter 3), and 1,040 (Quarter 4). Sales for the first quarter of the following year total 1,560 units