The sabat corporation manufactures and sells two ... Question: The Sabat Corporation manufactures and sells two p... The Sabat Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2013, Sabats budget department gathered the following data to prepare budgets for 2014:

2014 Projected Sales

Product Units Price

Thingone 62,000 $172

Thingtwo 46,000 $264

2014 Inventories in Units

Expected Target

Product January 1, 2014 December 31, 2014

Thingone 21,000 26,000

Thingtwo 13,000 14,000

The following direct materials are used in the two products:

Amount used per unit

Direct Material Unit Thingone Thingtwo

A Pound 5 6

B Pound 3 4

C Each 0 2

Projected data for 2014 for direct materials are:

Direct material Anticipated purc. price Expected inventories 01/01/14 Target inventories December 31, 2014

A $11 37,000lb 40,000lb

B 6 32,000lb 35,000lb

C 5 10,000 units 12,000 units

Projected direct manufacturing labor requirements and rates for 2014 are:

Product Hours per unit Rate per hour

Thingone 3 $11

Thingtwo 4 14

Manufacturing overhead is allocated at the rate of $ 19 per direct manufacturing labor-hour.

Based on the preceding projections and budget requirements for Thingone and Thingtwo, prepare the following budgets for 2014:

6. Direct manufacturing labor budget (in dollars)

7. Budgeted finished goods inventory at December 31, 2014 ( in dollars)

8. What questions might the CEO ask the production manager when reviewing the production, direct materials, and direct manufacturing labor budgets?

9. How does preparing a budget help Sabat Corporations top management better manage the company?