Question 1 Partially correct Mark 0.32 out of 1.00 P Flag question 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 8,000 units in the urban region at a unit price of $53 and 7,000 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 6,000 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. @ $4.65/1b.) 9.30 Direct labor (0.5 hours per unit) 7.50 Manufacturing overhead: Depreciation - $7,650 Factory supplies 0.90 4,500 Supervisory salaries - 28,800 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 0.08 1,950 "Varies per unit sold, not per unit produced, a. Assuming that the desired ending inventories of materials A and Bare 6,000 and 8,000 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 $ 424,000 2. Production 18,000 X units 3. Material purchase cost Material A 72,000 x 5,000 X 77,000 X Material B 36,000 X 7,000 X 43,000 X Total pounds (lbs.) required for production Desired ending materials inventory Total pounds to be available Beginning materials inventory Total material to be purchased (lbs.) Total material purchases ($) 77,000 X 242,550 X $ 430,000 x 199,950 X $ 4. Direct labor costs $ 135,000 S 5. Manufacturing overhead costs Fixed Depreciation $ 7,650 Factory supplies 4,500 Supervisory salaries 28,800 Other 22,950 Total manufacturing overhead Variable 0 16,200 x $ Total 7,650 20,700 x 28,800 36,450 X 93,600 x 13,500 X $ 6. Selling and administrative expenses Fixed variable Total $ $ 22.500 15,000 3,000 0 19,500 X 11,700 X 22,500 34,500 * 14,700 x 71,700 X $ Selling expenses: Advertising Sales salaries and commissions Other Total selling expenses Administrative expenses: Office salaries Supplies Other Total administrative expenses $ $ 2,700 1,050 1.950 0 2,700 * 1,440 X 2,700 3,750 X 3,390 X 9,840 x $ 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 $ 659,000 X Cost of Goods Sold: Beginning Inventory - Finished Goods Material: Beginning Inventory - Material Material Purchases 44,250 x Material Available 442,500 X Ending Inventory - Material 48,300 x Direct Material 394,200 x Direct Labor 135,000 x Manufacturing Overhead 93,600 X Total Manufacturing Cost 622,800 x Cost of Goods Available for Sale 622,800 x Ending Inventory - Finished Goods 173,000 x Cost of Goods Sold 449,800 x Gross Profit 209,200 x Operating Expenses Selling Expenses 71,700 X Administrative Expenses 81,540 X Total Operating Expenses 153,240 X Income before Income Taxes 55,960 * Income Tax Expense 16,788 x Net Income $ 39,172 X Check Question 1 Partially correct Mark 0.32 out of 1.00 P Flag question 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 8,000 units in the urban region at a unit price of $53 and 7,000 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 6,000 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. @ $4.65/1b.) 9.30 Direct labor (0.5 hours per unit) 7.50 Manufacturing overhead: Depreciation - $7,650 Factory supplies 0.90 4,500 Supervisory salaries - 28,800 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 0.08 1,950 "Varies per unit sold, not per unit produced, a. Assuming that the desired ending inventories of materials A and Bare 6,000 and 8,000 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 $ 424,000 2. Production 18,000 X units 3. Material purchase cost Material A 72,000 x 5,000 X 77,000 X Material B 36,000 X 7,000 X 43,000 X Total pounds (lbs.) required for production Desired ending materials inventory Total pounds to be available Beginning materials inventory Total material to be purchased (lbs.) Total material purchases ($) 77,000 X 242,550 X $ 430,000 x 199,950 X $ 4. Direct labor costs $ 135,000 S 5. Manufacturing overhead costs Fixed Depreciation $ 7,650 Factory supplies 4,500 Supervisory salaries 28,800 Other 22,950 Total manufacturing overhead Variable 0 16,200 x $ Total 7,650 20,700 x 28,800 36,450 X 93,600 x 13,500 X $ 6. Selling and administrative expenses Fixed variable Total $ $ 22.500 15,000 3,000 0 19,500 X 11,700 X 22,500 34,500 * 14,700 x 71,700 X $ Selling expenses: Advertising Sales salaries and commissions Other Total selling expenses Administrative expenses: Office salaries Supplies Other Total administrative expenses $ $ 2,700 1,050 1.950 0 2,700 * 1,440 X 2,700 3,750 X 3,390 X 9,840 x $ 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 $ 659,000 X Cost of Goods Sold: Beginning Inventory - Finished Goods Material: Beginning Inventory - Material Material Purchases 44,250 x Material Available 442,500 X Ending Inventory - Material 48,300 x Direct Material 394,200 x Direct Labor 135,000 x Manufacturing Overhead 93,600 X Total Manufacturing Cost 622,800 x Cost of Goods Available for Sale 622,800 x Ending Inventory - Finished Goods 173,000 x Cost of Goods Sold 449,800 x Gross Profit 209,200 x Operating Expenses Selling Expenses 71,700 X Administrative Expenses 81,540 X Total Operating Expenses 153,240 X Income before Income Taxes 55,960 * Income Tax Expense 16,788 x Net Income $ 39,172 X Check