Prepare a Sales Budget; Production Budget, Direct Materials Budget;

Early this morning the controller Dave informed you that you would be responsible for preparing the master budget for the quarter ended December 31, 2021. You have assembled the following information:

The statuettes sell for $700 each. Recent and forecasted sales (in units) are as follows:

July (actual) 3,500

August (actual) 3,700

September (actual) 3,800

October 2,200

November 2,800

December 4,500

January 1,000

February 1,500

March 1,800

Inventories of finished goods on hand at the end of each month are to be equal to 50% of the following months budgeted sales. As of September 30^th the company had 1,100 statuettes in inventory.

Each statuette requires 75 ounces of bronze, which the company purchases for $.45 per ounce. Rock Solid keeps an ending inventory of bronze at the end of each month equal to 75% of the next month’s production needs. As of September 30^th the company had 140,625 ounces of bronze on hand.

Purchases of raw materials are paid for as follows: 50% in the month of purchase and the remaining 50% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 40% of a month’s sales are collected by month-end. An additional 45% is collected in the month following, and the remaining 15% is collected in the second month following. Bad debts have been negligible.

Each statuette requires 15 hours to mould and polish. Employees who make the statuettes are paid $25 per hour and never work overtime (i.e. the company has enough casual workers that they can call in if additional work is required).

Manufacturing overhead includes all the costs of production other than direct materials and direct labour. The variable component is $45 per statuette in production and the fixed component is $117,000 per month (this amount includes depreciation of $22,000 per month on the furnaces, moulds and polishing equipment). Manufacturing overhead costs are allocated to statuettes on a per-unit basis.

Prepare a Sales Budget; Production Budget, Direct Materials Budget