1. The Hobbit Corporation manufactures and sells a product called Montigo. In 2018 Hobbit plans to sell 60,000 units of Montigo at a projected price of $200. Beginning and target ending inventories for the product are 10,000 and 15,000 respectively. The cost of the beginning finished goods inventory is $1,500,000. 5 kgs of direct materials are used in each Montigo produced and the cost per kg is $10. Beginning and target ending inventories for the direct materials are 30,000 kgs and 40,000 kgs respectively. The cost of the beginning direct materials inventory is $270,000. Each unit requires 3 direct labor hours to be produced and the cost of direct labor is $15/hour. Manufacturing overhead is allocated at the rate of $20 per direct manufacturing labor-hour. Selling costs are projected to be $100,000 and general and administrative expenses are projected to be $150,000. Based on the preceding projections and budget requirements for Montigo, prepare the revenues budget (in dollars), production budget (in units and in dollars), direct material usage and purchases budget, direct manufacturing labor budget, budgeted finished-goods inventory at December 31, 2018 (in dollars). Prepare Hobbits budgeted (proforma) income statement for 2018. (30 points)

Production Budget

Number of Products to be Produced =

Direct Material Usage Budget

Direct Materials to be Used in the Production in the Coming Period =

Direct Material Purchase Budget

Quantity of the Direct Materials to be Purchased =

The Cost of the Direct Materials to be Purchased =

Ending Inventories Budget for Direct Materials

The Cost of the Direct Materials Ending Inventory =

Direct Labour Budget

Direct Labour Hours Needed =

Direct Labour Costs =

Manufacturing Overhead Budget

Manufacturing Overhead Costs =

Cost of the Goods Sold Budget

Direct Materials Costs (Under FIFO assumption) =

Cost of the Production =

Cost of the Goods Sold =

Ending Finished Goods Inventory =

Direct Materials Cost per Unit =

Direct Labour Cost per Unit =

Unit Manufacturing Overhead Costs =

Product Cost per Unit =

Ending Finished Goods Inventory =

Cost of the Goods Sold =

Budgeted (Pro Forma) Income Statement