Sparty Manufacturing Company is a very large producer of an electrical part used in power generating plants. The company uses a traditional (full absorption) costing approach. Projected sales in units of the electrical part for four months of the calendar year for Sparty are:

July	45,920
August	48,460
September	62,710
October	67,400

The following data pertain to production policies and manufacturing specifications followed by Sparty: a. Finished goods inventory on July 1 is 36,736. The desired ending inventory for each month is 80 percent of the next month's sales. b. Direct Materials: Each electrical part is comprised of 10 feet of wire at a unit cost of $8 per foot. Inventory policy dictates that sufficient materials be on hand at the beginning of the month to produce 50 percent of that month's sales. This is exactly the amount of material on hand on July 1. c. Direct labor: The direct labor used per unit of output is 4 hours. The average direct labor cost per hour is $9.25. d. Manufacturing Overhead: Manufacturing overhead each month is applied on the basis of direct labor hours and is estimated as follows:

	Fixed Overhead	Variable Overhead
	Cost ($ per mo.)	Cost ($ per direct labor hour)
Supplies		1.00
Power		0.50
Maintenance	34,520	0.40
Supervision	16,000
Depreciation	200,000
Taxes	12,000
Other	80,000	1.50

Required: 1. How many units need to be produced in the third quarter?

2. What is the budgeted cost of direct materials purchased for the third quarter?

3. What is the budgeted cost of direct labor for the third quarter?

4. What is the budgeted cost for total manufacturing overhead (i.e., fixed plus variable costs) for the third quarter? HINT: Consider the number of direct labor hours each of the units you decide need to be produced from requirement #1. Note that fixed cost data are for one month.

5. What is the budgeted cost of goods sold for the third quarter? HINT: Use the direct approach and multiple the unit product cost by the number of units sold in the quarter.