1. The company expects to sell 40,000 bottles in quarter 1, 50,000 in quarter 2, 93,000 quarter 3 and 36,000 in quarter 4.
2. Each bottle requires 6 ounces of Chemical A and 10 ounces of Chemical B.
3. The desired ending inventory in finished goods is 20 percent of next quarters sales and the desired ending inventory for material is 15 percent of next quarters production requirements.
4. There are 11,000 bottles of stain remover, 57,000 ounces of chemical A, and 97,000 ounces of chemical B on hand at the beginning of the first quarter.
5. At the end of the fourth quarter, the company must have 12,000 bottles of stain remover, 60,000 ounces of Chemical A and 102,000 ounces of Chemical B to meet its needs in the first quarter of 2008.
6. The cost of Chemical A is $.12 per ounce and the cost of Chemical B is $.09 per ounce. The selling price is $9.95 per bottle.
7. Direct labor cost is $.60 per bottle and variable cost of overhead is $.90 per bottle. Fixed manufacturing overhead is $40,000 per quarter.
8. Variable selling and administrative expense is 4 percent of sales, and fixed selling and administrative expenses is $50,000 per quarter.

Required; Using the template provided:

Prepare a production budget for each quarter.

Prepare a direct materials purchases budget for each quarter (one for Chemical A and one for Chemical B).

Prepare a budgeted income statement for each quarter of 2009.

	q1	q2	q3	q4	total
Unit Sales	40,000	50,000	93,000	36,000	219,000
Desired End	10,000	18,600	7,200	12,000	12,000
Less Begin	11,000	10,000	18,600	7,200	11,000
Units Produced	39,000	58,600	81,600	40,800	220,000
	39,000	58,600	81,600	40,800

C D E F G H J 91 92 BE 40,000 10,000 11 000 39,000 39,000 50,000 18,600 10,000 58,600 58,600 A B 1 Production Budget 2 3 4 5 6 Unti Sales 7 7 Desired End 8 8 Less Begin 9 Units Produced 10 11 12 13 14 15 Purchases A 16 Units Produced 17 Ounces Per Bottle 18 Ounces for Production 19 20 Desired End 21 15% of next month 22 23 Less Begin In A 24 Ounces Purchased 25 39,000 6 234000 58,600 6 351600 52,740 73,440 57,000 229,740 52,740 372,300 26 39,000 10 390000 58,600 10 586000 87,900 0 97,000 380,900 87,900 498, 100 93 Sales COGS GM S&A NI 91 92 40,000 50,000 93,000 398000 497500 925350 164.800 233,200 65920 167,280 27 28 Purchases B 29 Units Produced 30 Ounces Per Bottle 31 Ounces for Production 32 33 Desired End 34 15% of next month 35 36 Less Begin Inv B 37 Ounces Purchased 38 39 40 41 Income Statement 42 43 44 45 46 47 48 49 COGS 50 A 6 ounces X.12 x 40,000 51 B 10 ounces X.09 x 40,000 52 DL per bot.60 X 40,000 53 Variable O.90 x 40,000 54 Fixed OVH $40,000 55 COGS 56 57 S&A 58 Variable SE.04 x $398,000 59 Fixed S&A 60 S&A 61 62 63 64 65 66 67 68 69 70 71 28800 36000 24000 36000 40,000 164800 $15,920 $50,000 $65,920 N19 B E F G H J K L Production Budget 1 2 q2 93 04 total O OVOU AWN 9 92 93 94 total 42 93 94 total 4 91 5 6 Unti Sales 7 Desired End 8 Less Begin Units Produced 10 11 12 13 14 15 Purchases A 91 16 Units Produced 17 Ounces Per Bottle 18 Ounces for Production 19 20 Desired End 21 15% of next month 22 28 23 Less Begin In A 24 Ounces Purchased 25 26 27 28 Purchases B 91 29 Units Produced 30 Ounces Per Bottie 31 Ounces for Production 32 33 Desired End 34 15% of next month 35 36 Less Begin in B 37 Ounces Purchased 38 39 40 41 Income Statement 42 43 Sales 44 COGS 45 GM 46 S&A 47 AR NI 48 49 COGS 50 A 6 ounces X.12 x 40,000 51 B 10 ounces X.09 x 40,000 52 DL per bottl.60 x 40,000 53 Variable O\.90 x 40,000 54 Fixed OVH $40,000 55 COGS 56 57 S8A 58 Variable S&.04x $398,000 59 Fixed S&A 60 S&A 61 62 63 91 92 40,000 23 50,000 94 93,000 36,000 28800 36000 24000 36000 40,000 164800 $15,920 $50,000 $65,920