Spring Manufacturing Company makes two components identified as C12 and D57. Selected budgetary data for 2019 follow:

	Finished Components
	C12				D57
Requirements for each finished component:
RM 1		10	pounds			8	pounds
RM 2		0				4	pounds
RM 3		2	pounds			1	pound
Direct labor		2	hours			3	hours
Product information:
Sales price	$	190			$	230
Sales (units)		12,000				9,000
Estimated beginning inventory (units)		410				130
Desired ending inventory (units)		300				200

	Direct Materials Information
	RM1				RM2				RM3
Cost per pound	$	4			$	3.50			$	0.50
Estimated beginning inventory in pounds		3,000				1,800				1,500
Desired ending inventory in pounds		4,100				1,500				2,000

The firm expects the average wage rate to be $25 per hour in 2019. Spring Manufacturing uses direct labor hours to apply overhead. Each year the firm determines the overhead application rate for the year based on budgeted direct labor hours for the year. The firm maintains negligible Work-in-Process Inventory and expects the cost per unit for both beginning and ending inventories of finished products to be identical.

	Factory Overhead Information
Indirect materialsvariable	$	7,000
Miscellaneous supplies and toolsvariable		4,800
Indirect laborvariable		42,000
Supervisionfixed		110,000
Payroll taxes and fringe benefitsvariable		200,000
Maintenance costsfixed		15,000
Maintenance costsvariable		10,080
Depreciationfixed		71,380
Heat, light, and powerfixed		43,440
Heat, light, and powervariable		15,000
Total	$	518,700

	Selling and Administrative Expense Information
Advertising	$	65,000
Sales salaries		190,000
Travel and entertainment		61,000
Depreciationwarehouse		4,900
Office salaries		63,000
Executive salaries		300,000
Supplies		4,100
Depreciationoffice		5,500
Total	$	693,500

The effective income tax rate for the company is 30%.

Required:

1	SALES BUDGET	PRODUCT
			C12	D57	Total
	A	Unit Sales	12000	9000
	B	Sales Price	$190	$230
	C=A*B	Sales Revenue	$2,280,000	$2,070,000	$4,350,000
	2	PRODUCTION BUDGET
			PRODUCT
			C12	D57
	D	Unit sales	12000	9000
	E	Ending Inventory(Units)	300	200
	F	Beginning Inventory(Units)	410	130
	G=D+E-F	Budgeted Production in units	11890	9070
	3	DIRECT MATERIALS PURCHASE BUDGET
			PRODUCT
			C12	D57	Total
	G	Budgeted Production in units	11890	9070
		Raw Material RM1:
	H	Quantity required per unit(Pound)	10	8
	I=G*H	Total Quantity required (Pound)	118900	72560	191460
	J	Ending Inventory(Pounds)			4100
	K	Beginning Inventory(Pounds)			3000
	L=I+J-K	Budgeted Purchase of RM1			192560
	M	Cost Per Pound			$4
	N=L*M	Budgeted Purchase In dollars for RM1			$770,240
		Raw Material RM2:
		Quantity required per unit(Pound)	0	4
		Total Quantity required (Pound)	0	36280	36280
		Ending Inventory(Pounds)			1500
		Beginning Inventory(Pounds)			1800
		Budgeted Purchase of RM2			35980
		Cost Per Pound			$3.50
	P	Budgeted Purchase In dollars for RM2			$125,930
		Raw Material RM3:
		Quantity required per unit(Pound)	2	1
		Total Quantity required (Pound)	23780	9070	32850
		Ending Inventory(Pounds)			2000
		Beginning Inventory(Pounds)			1500
		Budgeted Purchase of RM3			33350
		Cost Per Pound			$0.50
	Q	Budgeted Purchase In dollars for RM3			$16,675
	R=N+P+Q	Total Budgeted Purchase of Direct Materials			$912,845
	4	DIRECT LABOR BUDGET
			PRODUCT
			C12	D57	Total
	G	Budgeted Production in units	11890	9070
	S	Direct Labor Hour per Unit	2	3
	T=G*S	Total Direct Labor Hour	23780	27210	50990
	U	Direct Labor Wage Rate			$25
	V=T*U	Budgeted Direct Labor Expenses			$1,274,750

5. Prepare the Factory overhead budget for 2019.

6. Prepare the Cost of goods sold and ending finished goods inventory budgets for 2019.

7. Prepare the Selling and administrative expense budget, broken down into two components: Selling Expenses, and Administrative Expenses for 2019.

8. Prepare the Budgeted income statement, the last item of which is labeled After-tax Operating Income for 2019.