The management team at Sheffield Corporation is capitalizing on the trend for live-edge cedar fireplace mantels-beautiful, simple, organic. In fact, sales are so strong they are running out of inventory. This means that budgeting for next year will be extremely important, to ensure sure that Sheffield can source enough cedar. With budgeted sales as the starting point for the entire process, the management team agrees that the following levels present the most likely scenario for the first five months of the upcoming year. January February March April May Budgeted number of mantels to be sold 380 420 460 440 450 In addition to sales volume, many other specifics are required in order to complete the company's operating budgets. Key details associated with prices, costs, and usage are as follows. e Budgeted selling price is $500 per mantel. Each mantel measures 3 inches x 12 inches x 4 feet. e Target ending inventory of finished mantels is 20% of next month's budgeted sales. However, beginning inventory on January 1 is expected to be only 38 units. Sheffield' primary DM, rough-cut cedar, is purchased from the supplier already at the desired height and depth (3 inches high, 12 inches deep). Sheffield cuts the cedar planks to the desired 4-foot lengths. Each rough-cut board costs Sheffield $50 per foot. e Target ending DM inventory (rough-cut cedar) is 50% of next month's production needs. 9 e DL to sand, stain, and treat the rough-cut cedar costs $20 per hour. Each mantel requires one hour of labor time. MOH resources include variable costs budgeted to be $10/board foot, plus budgeted monthly Fixed MOH costs of $4,900. Depreciation of $1,800 is included in that monthly fixed cost. SG&A costs are also broken down into their variable and fixed components: budgeted variable SG&A costs are $50/unit sold, while budgeted fixed monthly SG&A costs are $57,000, which includes $8,500 of depreciation. Prepare the MOH budget for Sheffield Corp. Budgeted DM Quantity Needed (Board Feet) Budgeted Fixed MOH Costs Budgeted Units to be Produced January February Budgeted Variable MOH Rate per Board Foot $ $ Depreciation on Plant Assets Non-cash MOH Costs Other Fixed MOH Costs Property Taxes and Insurance Quantity of DM per Unit (Board Feet) Less : Total Budgeted Cash Needs for MOH Total Budgeted MOH Cost $ $ $ +A $ $ $ (a1) MOH resources include variable costs budgeted to be $10/board foot, plus budgeted monthly Fixed MOH costs of $4,900. Depreciation of $1,800 is included in that monthly fixed cost. SG&A costs are also broken down into their variable and fixed components: budgeted variable SG&A costs are $50/unit sold, while budgeted fixed monthly SG&A costs are $57,000, which includes $8,500 of depreciation. All sales are made on account, with 25% paying in the month of sale and 70% paying in the month following the sale. The remainder is considered uncollectible. December sales in the prior year were budgeted to be $221,000. Beginning finished goods inventory was held at a cost of $270/unit from the prior year. 9 January February March Quarter S $ +A $ $ Budgeted Fixed SG&A Costs Budgeted Variable SG&A Cost per Unit Budgeted Sales Volume Depreciation Non-cash Depreciation Other Fixed SG&A Costs 3 Total Budgeted Cash Needs for SG&A Add Total Budgeted SG&A Costs Teal Budgeted Variable SG&A Costs January 619 February S SA $ S February March Quarter Prepare the SG&A budget for Sheffield Corp. January $ $ SA 59 tA 5 5 S epare the Sales forecast (and corresponding schedule of cash receipts) for Sheffield Corp. January February Budgeted Sales Volume Budgeted Selling Price Budgeted Sales Revenue 59 EA Collections from December 31 A/R Balance Collections from January Sales Collections from February Sales Collections from March Sales Total Cash Receipts tf 380 420 500 $ 500 190000 January 221000 47500 March 460 SA $ 500 210000 $ 230000 February 0 $ 133000 0 52500 0 0 268500 $ 185500 $ $ February 420 March 460 500 $ 500 210000 5 February March 133000 Quarter 1260 SA $ 500 230000 $ 630000 0 Quarter 221000 0 180500 52500 147000 199500 57500 57500 185500 204500 658500 Budgeted Sales Volume Add : Target Ending Units in FG Inventory Total Units Needed Less Beginning FG Inventory Budgeted Units to be Produced January 38 88 380 84 464 426 February 420 22 92 512 84 i 428 Attempts: 2 of 2 used January 380 3B 84 464 426 get fo Corp. February 420 84 22 92 512 428 March 92 460 88 548 456 Quarter 1260 38 88 1348 1310 Attempts: 2 of 2 used Fabric January Budgeted Units to be Produced Quantity of DM per Unit (Board Feet) Total Production Needs (Board Feet) 426 4 February 428 4 1704 1712 Add Desired Ending DM Inventory (Board Feet) 856 912 Total DM Inventory Needs (Board Feet) Less Beginning DM Inventory (Board Feet) 852 Total Budgeted Cost of DM Purchases Budgeted Board Feet of DM to be Purchased Total Budgeted Cost of DM Purchases 2560 1708 50.00 856 2624 1768 50.00 $ 85400 $ 88400 January 426 4 February 428 4 March 456 4 Quarter 1310 1704 1712 1824 5240 856 912 884 884 2560 852 1708 2624 2708 856 i 912 1768 1796 50.00 $ 50.00 $ 50.00 SA $ 85400 SA 88400 $ SA 89800 6124 852 i 5272 50.00 SA $ 263600 Budgeted Units to be Produced January Quantity of DL per Unit (Hours) Total Budgeted DL Hours Needed V Budgeted DL Cost per Hour Total Budgeted DL Cost SA $ tA 426 1 426 20 +A $ $ 8520 SA February 428 1 428 20 8560 $ $ March Attempts: 2 of 2 used