Tammis Cookies produces cookies for resale at grocery stores throughout North America. The company is currently in the process of establishing a master budget on a quarterly basis for this coming fiscal year, which ends December 31. Prior year quarterly sales were as follows (1 unit= 1 batch):

First quarter: 64,000 units Second quarter: 76,800 units Third quarter: 96,000 units Fourth quarter: 83,200 units

Unit sales are expected to increase 25 percent, and each unit is expected to sell for $8. Management prefers to maintain ending finished goods inventory equal to 10 percent of next quarter's sales. Assume finished goods inventory at the end of the fourth quarter budget period is estimated to be 9,000 units.

Tammi's Cookies is now preparing the budget for direct materials purchases, direct labor, and manufacturing overhead. Direct Materials Purchases Budget Information Each unit of product requires 1.5 pounds of direct materials per unit, and the cost of direct materials is $2 per pound. Management prefers to maintain ending raw materials inventory equal to 30 percent of next quarter's materials needed in production. Assume raw materials inventory at the end of the fourth quarter budget period is estimated to be 41,000 pounds. Direct Labor Budget Information

Each unit of product requires 0.20 direct labor hours at a cost of $12 per hour.

Manufacturing Overhead Budget Information

Variable overhead costs are: Indirect materials: $0.20 per unit

Indirect labor: $0.15 per unit

Other: $0.35 per unit Fixed overhead costs each quarter are:

Salaries: $28,000 Rent: $22,000 Depreciation: $16,165

Tammi's Cookies estimates that all selling and administrative costs are fixed. Quarterly selling and administrative cost estimates for the coming year are:

Salaries: $60,000 Rent: $7,000 Advertising: $10,000 Depreciation: $8,000 Other: $1,000

Tammi's Cookies has the following information pertaining to the capital expenditures and cash budgets. Capital Expenditures The company plans to purchase selling and administrative equipment totaling

$20,000 and production equipment totaling $28,000. Both will be purchased at the end of the fourth quarter, and will not affect depreciation expense for the coming year. Cash Budget All sales are on credit. The company expects to collect 70 percent of sales in the quarter of sale, 25 percent of sales in the quarter following the sale, and S percent will not be collected (bad debt). Accounts receivable at the end of last year totalled $200,000, all of which will be collected in the first quarter of this coming year.

All direct materials purchases are on credit. The company expects to pay 80 percent of purchases in the quarter of purchase and 20 percent the following quarter. Accounts payable at the end of last year totalled $50,000, all of which will be paid in the first quarter of this coming year.

Assume Tammi's Cookies will collect 25 percent of fourth quarter budgeted sales in full next year (this represents accounts receivable at the end of the fourth quarter). The following account balances are expected at the end of the fourth quarter:

Property, plant, and equipment (net): $320,000

Common stock: $450,000 Retained earnings at the end of last year totalled $56,180, and no cash dividends are anticipated for the budget period ending December 31.

Required:

Prepare a sales budget for Tammi's Cookies. (Hint: Be sure to increase last year's unit sales by 25 percent.)

Prepare a production budget for Tammi's Cookies.

Prepare a direct materials purchases budget for Tammi's Cookies.

Prepare a direct labor budget for Tammi's Cookies.

Prepare a manufacturing overhead budget for Tammi's Cookies using the format

shown in Exhibit 9.5. Prepare a selling and administrative budget for Tammi's

Cookies.

Prepare a budgeted income statement for Tammi's Cookies.

Prepare a capital expenditures budget for Tammi's Cookies.

Prepare a cash budget for Tammi's Cookies.

Prepare a budgeted balance sheet for Tammi's Cookies.