Shaw Inc. has gathered the following budgeting information for next year and has asked you to prepare their master budget. a. b. Sales for the final quarter of the prior year total 2,600 units. Expected sales (in units) for the current year are: 2,340 (Quarter 1), 1,560 (Quarter 2), 2,080 (Quarter 3), and 2,080 (Quarter 4). Sales for the first quarter of the following year total 3,120 units. The selling price is $590 per unit in the first three quarters of the year, and $620 per unit in the final quarter. Company policy calls for a given quarter's ending finished goods inventory to equal 50% of the next quarter's expected unit sales. The finished goods inventory at the end of the prior year is 1,170 units, which complies with the policy. The product's manufacturing cost is $175 per unit, including per unit costs of $96 for materials (8 lbs. at $12 per lb.). $60 for direct labor (3 hours x $20 direct labor rate per hour). $15 for variable overhead, and $4 for fixed overhead. Annual fixed overhead consists, incurred evenly throughout the year, consist of depreciation on production equipment, $13,500; factory utilities, $16,900, and other factory overhead of $3,400. C. Company policy also calls for a given quarter's ending raw materials inventory to equal 30% of next quarter's expected materials needed for production. The prior year-end inventory is 4,680 lbs of materials, which complies with the policy. The company expects to have 7,488 lbs. 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 12% of sales and are paid in the quarter of the sales. The sales manager's quarterly salary will be $113,000 in the first three quarters of the year, and $120,000 in the final quarter. e. Quarterly general and administrative expenses include $48,000 administrative salaries, rent expense of $29,000 per quarter, insurance expense of $23,000 per quarter, straight- line depreciation of $23,000 per quarter, and 1% monthly interest on the $250,000 long-term note payable (12% annually). Income taxes will be assessed at 20%, and are paid in the quarter incurred. f. Sales Budget Production Budget Direct Mtis Budget Direct Lbr Factory OH Selling Exp Admin Exp Budget Budget Budget Budget Cost of Goods Sold Income Statement Requirement Prepare the Factory Overhead Budget for Shaw Inc.. The product's manufacturing cost is $175 per unit, including per unit costs of $96 for materials (8 lbs. at $12 per lb.), $60 for direct labor (3 hours * $20 direct labor rate per hour), $15 for variable overhead, and $4 for fixed overhead. Annual fixed overhead consists, incurred evenly throughout the year, consist of depreciation on production equipment, $13,500; factory utilities, $16,900, and other factory overhead of $3,400. Show less Shaw Inc. Factory Overhead Budget For the year ended December 31, 2018 First Qtr. Second Qtr. 1,950 1,820 Fourth Qtr. Total Third Qtr. 2,080 2,600 8,450 Budgeted variable overhead Budgeted total overhead Production Direct Mtls Direct Lbr Factory OH Selling Exp Admin Exp Cost of Income Sales Budget Budget Budget Budget Budget Budget Budget Goods Sold Statement Requirement Prepare the selling expense budget for the Shaw Inc.. Sales representatives' commissions are 12% of sales and are paid in the quarter of the sales. The sales manager's quarterly salary will be $113,000 in the first three quarters of the year, and $120,000 in the final quarter. Shaw Inc. Selling Expense Budget For the year ended December 31, 2018 First Qtr. Second Qtr. Third Qtr. Fourth Qtr. $ 1,380,600 S 920,400 $ 1,227,200 S 1,289,600 s 4,817,800 Total Sales commissions 113,000 113,000 113,000 120,000 459,000 Total budgeted selling expenses Sales Budget Production Budget Direct Mtls Budget Direct Lbr Budget Factory OH Selling Exp Admin Exp Budget Budget Budget Cost of Income Goods Sold Statement Requirement Prepare the Administrative Expense Budget for Shaw Inc. Quarterly general and administrative expenses include $48,000 administrative salaries, rent expense of $29,000 per quarter, insurance expense of $23,000 per quarter, straight-line depreciation of $23,000 per quarter, and 1% monthly interest on the $250,000 long-term note payable (3% quarterly). Show less Shaw Inc. General and Administrative Budget For the year ended December 31, 2018 First Qtr. Second Qtr. Third Qtr. Fourth Qtr. Total Total budgeted general and administrative expenses Sales Budget Production Budget Direct Mtls Budget Direct Lbr Factory OH Selling Exp Admin Exp Budget Budget Budget Budget Cost of Goods Sold Income Statement Requirement Using information from the sales budget and the following information, calculate the budgeted cost of goods sold for Shaw Inc. The product's manufacturing cost is $175 per unit, including per unit costs of $96 for materials (8 lbs. at $12 per Ib.), $60 for direct labor (3 hours x $20 direct labor rate per hour), $15 for variable overhead, and $4 for fixed overhead. Annual fixed overhead consists, incurred evenly throughout the year, consist of depreciation on production equipment, $13,500; factory utilities, $16,900, and other factory overhead of $3,400. Show less Shaw Inc. Cost of Goods Sold Budget For the year ended December 31, 2018 First Qtr. Second Qtr. 2,340 1,560 Third Qtr. Fourth Qtr. 2,080 Total 8,060 2,080 Cost of goods sold Sales Budget Production Budget Direct Mtls Budget Direct Lbr Budget Factory OH Selling Exp Admin Exp Budget Budget Budget Cost of Goods Sold Income Statement Requirement Prepare the Budgeted Income Statement for the year for Shaw Inc. Interest on the $250,000 long- term note payable is 1% per month (12% annually). Income taxes will be assessed at 20%, and are paid in the quarter incurred. Shaw Inc. Budgeted Income Statement For the year ended December 31, 2018 Sales Cost of goods sold Gross profit Operating expenses: Selling expenses Administrative expenses Interest expense Total operating expenses Income before income taxes Income tax expense Net income