Step 1: Sales Budget

Instructions: Provided below is the expected selling price and expected unit sales for the four quarter of 2017. Use this information to complete the sales budget.

Expected selling price: $88.00

Expected sales volume (in units): Quarter 1 1,800 Quarter 2 1,700 Quarter 3 2,300 Quarter 4 2,800

Buff Company Sales Budget Sales Budget For the year ending December 31, 2017 Expected unit sales Quarter 1_________

Quarter 2_________

Quarter 3_________

Quarter 4_________

Unit selling price Quarter 1_________

Quarter 2_________

Quarter 3_________

Quarter 4_________

Total sales Quarter 1_________

Quarter 2_________

Quarter 3_________

Quarter 4_________

Step 2: Production Budget

Buff Company expects to meet future sales requirements by maintaining an ending inventory equal to 60% of the next quarter's budgeted sales volume. Use this and the information below to complete the Production Budget

Ending finished goods inventory on december 31, 2016 $1,000 Expected sale volume for quarter 1 of year 2018: $2,500

Buff Company Production BuSales Budget For the year ending December 31, 2017

Expected unit sales Q1 1,800 Q2 1,700 Q3 2,300 Q4 2,800 Add: Desired ending finished goods units Q1_________ Q2_________ Q3_________ Q4_________

Total required units Q1_________ Q2_________ Q3_________ Q4_________

Less: Beginning finished goods Units Q1_________ Q2_________ Q3_________ Q4_________

Required production units Q1_________ Q2_________ Q3_________ Q4_________

Step 3: Direct Materials Budget

Buff Company maintains an ending inventory equal to20% of the next quarter's production requirements. Use this and the information below to prepare the Direct Materials Budget.

Number of pounds of direct materials required for each product 1.50 Expected cost per pound $1.00 Beginning inventory of direct materials for quarter 1 of 2017 in pounds: 1,400 Desired ending inventory of direct materials for quarter 4 of 2017 in pounds: 1,800

Buff Company Direct Materials Sales Budget For the year ending December 31, 2017 Units to be produced Q1_________ Q2_________ Q3_________ Q4_________ Direct materials per unit Q1_________ Q2_________ Q3_________ Q4_________ Total pounds needed for production Q1_________ Q2_________ Q3_________ Q4_________ Add: Desired ending direct materials (pounds) Q1_________ Q2_________ Q3_________ Q4_________ Total materials required Q1_________ Q2_________ Q3_________ Q4_________ Less: Beginning direct materials (pounds) Q1_________ Q2_________ Q3_________ Q4_________ Direct materials purchases Q1_________ Q2_________ Q3_________ Q4_________ Cost per pound Q1_________ Q2_________ Q3_________ Q4_________ Total cost of direct materials purchases Q1_________ Q2_________ Q3_________ Q4_________

Step 4: Direct Labor Budget

Use the information below to prepare the Direct Labor Budget.

Number of direct labor hours required to produce each unit of finished goods 2.50 Expected cost per direct labor hour $12.00

Buff Company Direct Labor Bud Sales Budget For the year ending December 31, 2017 Units to be produced

Q1_________ Q2_________ Q3_________ Q4_________

Direct labor time (hours) per unit

Q1_________ Q2_________ Q3_________ Q4_________

Total required direct labor hours

Q1_________ Q2_________ Q3_________ Q4_________

Direct labor cost per hour

Q1_________ Q2_________ Q3_________ Q4_________

Total direct labor cost

Q1_________ Q2_________ Q3_________ Q4_________

Step 5: Manufacturing Overhead Budget

Buff Company expects variable overhead costs to fluctuate with production volume according to the following rates:

Indirect materials: $0.90 per direct labor Indirect labor: $1.70 per direct labor Utilities: $0.30 per direct labor Maintenance: $0.10 per direct labor

Buff Company also incurs fixed overhead costs. The amounts of fixed overhead costs are already provided in the budget below. Use this information to complete the manufacturing overhead budget.

Buff Company Manufacturing Ov Sales Budget For the year ending December 31, 2017 Variable costs Indirect materials ($0.90/hour)

Q1_________ Q2_________ Q3_________ Q4_________

Indirect labor ($1.70/hour)

Q1_________ Q2_________ Q3_________ Q4_________

Utilities ($0.30/hour)

Q1_________ Q2_________ Q3_________ Q4_________

Maintenance ($0.10/hour)

Q1_________ Q2_________ Q3_________ Q4_________

Total variable costs

Q1_________ Q2_________ Q3_________ Q4_________

Fixed costs Supervisory salaries Q1 $37,600 Q2 $37,600 Q3 $37,600 Q4 $37,600 Total in a year $150400 Depreciation Q1 $2,900 Q2 $2,900 Q3 $2,900 Q4 $2,900 Total in a year $11600 Property taxes and insurance Q1 $1,600 Q2 $1,600 Q3 $1,600 Q4 $1,600 Total in a year $6,400 Maintenance Q1 $3,400 Q2 $3,400 Q3 $3,400 Q4 $3,400Total in a year $13,600 Total fixed costs

Q1_________ Q2_________ Q3_________ Q4_________

Total manufacturing overhead

Q1_________ Q2_________ Q3_________ Q4_________

Direct labor hours

Q1_________ Q2_________ Q3_________ Q4_________

Using the yearly amounts, what is the annual budgeted overhead rate per direct labor hour?

Step 6: Selling and Administrative Expense Budget

Buff Company expects variable selling and administrative expenses to fluctuate with unit sales volume according to the following rates:

Sales commission $3.60 per unit sold Freight-out: $2.80 per unit sold

Buff Company also incurs fixed selling and administrative expenses. The amounts of fixed selling and administrative expenses are already provided in the budget below. Use this information to complete the selling and admin. expense budget

Buff Company Selling and Admi Sales Budget For the year ending December 31, 2017 Budgeted sales in units Q1 1,800 Q2 1,700 Q3 2,300 Q4 2,800 Total in a year 8,600 Variable expenses Sales commissions ($3.60 per unit)

Q1_________ Q2_________ Q3_________ Q4_________

Freight-out ($2.80 per unit)

Q1_________ Q2_________ Q3_________ Q4_________

Total variable expenses

Q1_________ Q2_________ Q3_________ Q4_________

Fixed expenses Advertising Q1 $3,200 Q2 $3,200 Q3 $3,200 Q4 $3,200 Total in a year $12,800 Sales salaries Q1 $13,600 Q2 $13,600 Q3 $13,600 Q4 $13,600 Total in a year $54,400 Office salaries Q1 $7,000 Q2 $7,000 Q3 $7,000 Q4 $7,000 Total in a year $28,000 Depreciation Q1 $800 Q2 $800 Q3 $800 Q4 $800 Total in a year $3,200 Property taxes and insurance Q1 $1,000 Q2 $1,000 Q3 $1,000 Q4 $1,000 Total in a year $4,000 Total fixed expenses

Q1_________ Q2_________ Q3_________ Q4_________

Total selling and administrative expenses

Q1_________ Q2_________ Q3_________ Q4_________

Step 7: Budgeted Income Statement

Complete the following schedule to determine the cost of goods sold:

Cost to produce one product Direct materials Quantity 1.50 Unit cost $1.00 Direct labor Quantity 2.50 Unit cost $12.00 Manufacturing overhead Quantity 2.50

Total unit cost _________

Cost of goods sold Total Unit cost Number of units budgeted to be sold during 2017 = Budgeted Cost of Goods Sold________

Additional information: Interest expense for 2017: $1,000 Income tax expense for 2017: $16,500

Use the information above as well as data from the other operating budgets to complete the Budgeted Income Statement

Buff Company Budgeted Income Statement For the Year Ending December 31, 2017 Sales________ Cost of goods sold_______ Gross profit_______ Selling and administrative expenses______ Income from operations________ Interest expense______ Income before income taxes______ Income tax expense_______ Net income_______