Tina's Fine Juices is a bottle of orange juice located in the Northeast. The company produces bottled orange juice from fruit concentrate purchased from suppliers in Florida, Arizona, and California. The only ingredients in the juice are water and concentrate. The juice is blended, pasteurized, and bottled for sale in 12-ounce plastic bottles. The process is heavily automated and is centered on five machines that control the mixing and bottling of the juice. The amount of labor required is very small per bottle of juice. The average worker can process 10 bottles of juice per minute, or 600 bottles per hour. The juice is sold by a number of grocery stores under their store brand name and in smaller restaurants, delis, and bagel shops under the name of Tina's Fine Juices. Tina's has been in business for several years and uses a sophisticated sales forecasting model based on previous sales, expected changes in demand, and economic factors affecting the industry. Sales of juice are highly seasonal, peaking in the first quarter of the calendar year. 600 Forecasted sales for the last two months of 2017 and all of 2018 are shown in the table below, and on the next worksheet. Other information about the company follows: 1 Juice is sold for $1.10 per 12-ounce bottle, in cartons that hold 50 bottles each. $1.10 2 Tina's Fine Juices tries to maintain at least 12 percent of the next month's estimated sales in inventory at the end of each month. 12% 3 The company needs to prepare two purchases budgets: one for the concentrate used in its orange juice and one for the bottles that are purchased from an outside supplier. Tina's has determined that it takes 1 gallon of orange concentrate for every 32 bottles of finished product. Each gallon of concentrate costs $4.50. Tina's also requires 18 percent of next month's direct material needs to be on hand at the end of the budget period. Bottles can be purchased from an outside supplier for $0.15 each. $4.50 18% $0.15 4 Factory workers are paid an average of $18 per hour, including fringe benefits and payroll taxes. If the production schedule doesn't allow for full utilization of the workers and machines, one or more workers are temporarily moved to another department. $18.00 5 Most of the production process is automated, the juice is mixed by machine, and machines do the bottling and packaging. Overhead costs are incurred almost entirely in the mixing and bottling process. Consequently, Tina's has chosen to use a plantwide cost driver (machine hours) to apply manufacturing overhead to products. 6 Variable overhead costs will be in direct proportion to the number of bottles of juice produced, but fixed overhead costs will remain constant, regardless of production. For budgeting purposes, Tina's separates variable overhead from fixed overhead and calculates a predetermined overhead rate for variable manufacturing overhead costs. 7 Tina's uses a predetermined rate for variable overhead of $55 per machine hour. Use this to calculate variable overhead. $55.00 8 Tina's has also estimated fixed overhead to be $123,000 per month of which $103,000 per month is depreciation on existing property, plant, and equipment. $123,000.00 $103,000.00 9 All of the company's sales are on credit. On the basis of the company's experience in previous years, the company estimates that 40 percent of the sales each month will be paid for in the month of sale. The company also estimates that 50 percent of the month's sales will be collected in the month following sale and that 10 percent of each month's sales will be collected in the second month following sale. 40% 50% 10% 10 Tina's has a policy of paying 80 percent of the direct material purchases in the month of purchase and the 20 percent balance in the month after purchase. Overhead costs are also paid 80 percent in the month they are incurred and 20 percent in the next month. 80% 20% 11 Selling and administrative expenses are $100,000 per month and are paid in cash as they are incurred. $100,000.00 Sales 2017 Sales 2018 November 375,000 January 350,000 December 370,000 February 425,000 March 400,000 April 395,000 May 375,000 June 350,000 July 375,000 August 385,000 September 395,000 October 405,000 November 400,000 December 365,000

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omplete the gray boxes. Sales 2014 November December 375,000 370,000 Prepare a Sales Budget for the first quarter of 2018. Sales 2018 Sales Budget February March January 1st Quarter Projected sales (bottles) x price per unit Projected Sales (in Dollars) January February March April |May June July August September October November December 350,000 425,000 400,000 395,000 375,000 350,000 375,000 385,000 395,000 405,000 400,000 365,000 Prepare a production budget for the first quarter of 2018. January 1st Quarter (Bottles) Projected sales plus desired ending inventory Projected needs Less beginning inventory Projected production needed December 370,000.00 42,000.00 412,000.00 -44,400.00 367,600.00 Production Budget February March April 395,000.00 45,000.00 440,000.00 0.00 440,000.00 Prepare a Purchases budget for the first quarter of 2018. Prepare a Purchases budget for the first quarter of 2018. January 1st Quarter (Bottles) Projected production divided 32 bottles per gal raw materials needed December 367,600.00 32 11,487.50 Purchases Budget - Concentrate February March April 440,000.00 32 13,750.00 For Financial Statements: Total Beginning Inventory $ Value Concentrate Bottles Total n/a Plus desired ending inventory Less beginning inventory Need to purchase 0.00 -2,067.75 9,419.75 Total Ending Inventory $ Value Concentrate Bottles Total n/a n/a n/a x price per gallon Projected purchases in $ $4.50 $42,388.88 n/a January 1st Quarter (Bottles) Projected production Plus desired ending inventory Less beginning inventory Need to purchase December 367,600.00 0.00 -66,168.00 301,432.00 Purchases Budget - Bottles February March April 440,000.00 n/a n/a n/a n/a x price per bottle Projected purchases in $ $0.15 $45,214.80 n/a Total Purchases $87,603.68 n/a Direct Labor Budget February March January 1st Quarter (Bottles) Projected production needed Divided by: bottles per hour DL hours needed (3 decimal places) Direct Labor hour rate Projected direct labor cost (disbursements for DL) Prepare a Overhead budget for the first quarter of 2018. January February 1st Quarter (Bottles) Projected production Divided by: bottles per hour Total machine hours (3 decimal places) December 367,600.00 600.00 612.667 Overhead budget March April 440,000.00 600.00 733.333 Variable overhead rate total variable overhead 55.00 $33,696.69 55.00 $40,333.32 Projected Fixed overhead Total projected overhead 123,000.00 156,696.69 123,000.00 $163,333.32 Less noncash items (depreciation) Budgeted Cash out for overhead - 103,000.00 53,696.69 -103,000.00 60,333.32 omplete the gray boxes. Sales 2014 November December 375,000 370,000 Prepare a Sales Budget for the first quarter of 2018. Sales 2018 Sales Budget February March January 1st Quarter Projected sales (bottles) x price per unit Projected Sales (in Dollars) January February March April |May June July August September October November December 350,000 425,000 400,000 395,000 375,000 350,000 375,000 385,000 395,000 405,000 400,000 365,000 Prepare a production budget for the first quarter of 2018. January 1st Quarter (Bottles) Projected sales plus desired ending inventory Projected needs Less beginning inventory Projected production needed December 370,000.00 42,000.00 412,000.00 -44,400.00 367,600.00 Production Budget February March April 395,000.00 45,000.00 440,000.00 0.00 440,000.00 Prepare a Purchases budget for the first quarter of 2018. Prepare a Purchases budget for the first quarter of 2018. January 1st Quarter (Bottles) Projected production divided 32 bottles per gal raw materials needed December 367,600.00 32 11,487.50 Purchases Budget - Concentrate February March April 440,000.00 32 13,750.00 For Financial Statements: Total Beginning Inventory $ Value Concentrate Bottles Total n/a Plus desired ending inventory Less beginning inventory Need to purchase 0.00 -2,067.75 9,419.75 Total Ending Inventory $ Value Concentrate Bottles Total n/a n/a n/a x price per gallon Projected purchases in $ $4.50 $42,388.88 n/a January 1st Quarter (Bottles) Projected production Plus desired ending inventory Less beginning inventory Need to purchase December 367,600.00 0.00 -66,168.00 301,432.00 Purchases Budget - Bottles February March April 440,000.00 n/a n/a n/a n/a x price per bottle Projected purchases in $ $0.15 $45,214.80 n/a Total Purchases $87,603.68 n/a Direct Labor Budget February March January 1st Quarter (Bottles) Projected production needed Divided by: bottles per hour DL hours needed (3 decimal places) Direct Labor hour rate Projected direct labor cost (disbursements for DL) Prepare a Overhead budget for the first quarter of 2018. January February 1st Quarter (Bottles) Projected production Divided by: bottles per hour Total machine hours (3 decimal places) December 367,600.00 600.00 612.667 Overhead budget March April 440,000.00 600.00 733.333 Variable overhead rate total variable overhead 55.00 $33,696.69 55.00 $40,333.32 Projected Fixed overhead Total projected overhead 123,000.00 156,696.69 123,000.00 $163,333.32 Less noncash items (depreciation) Budgeted Cash out for overhead - 103,000.00 53,696.69 -103,000.00 60,333.32