Sales Budget

XYZ Company 2018 sales forecast is as follows:

Quarter 1: 7,000 Product Ace units. Quarter 2: 9,000 Product Ace units. Quarter 3: 10,000 Product Ace units. Quarter 4: 12,000 Product Ace units

Each unit sells for $60

Production Budget

The January 1, 2018 beginning inventory of Product Ace is 4,000 units. Management desires an ending inventory each quarter equal to 30% of the next Quarter's sales. Sales in the first and second quarter of 2019 are expected to be 10% higher than sales in the same quarter in 2018.

Direct Materials Budget

Each unit requires 3 pounds of raw materials costing $1 per pound. On December 31, 2017 the ending raw materials inventory was 1,000 pounds. Management wants to have raw materials inventory at the end of each quarter equal to 15% of the next quarter's production requirements.

Direct Labor Budget

Each unit requires 2.5 hours of direct labor. Wage rates are expected to be $10 per hour for the year.

Manufacturing overhead budget

Relevant data consists of the following:

Variable overhead costs per direct labor hour: indirect materials: $0.90; indirect labor: $1.40; and maintenance: $0.60.

Fixed overhead costs per quarter: supervisory salaries: $30,000; depreciation: $10,000 and property taxes on factory: $15,000.

Round the predetermined overhead rate to two decimal places.

Selling and administrative expense budget

Variable costs per dollar of sales: sales commission 4%; delivery expense 1%; advertising 55; fixed costs per quarter: sales salaries $11,000; depreciation $3,000; insurance $1,500

Prepare each budget listed above by quarter and then prepare a budgeted income statement for the year 2018. Round the cost per unit to two decimal places. Round cost of goods sold to the nearest dollar assume interest expense to be $210,000. Assume the income tax rate to be 25%.