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Anne Stafford is preparing the 2022 budget for one of her Trademark ships. Extensive meetings with members of the sales department and executive management have resulted in the following unit sales projections for 2022.

For quarter 1 the projected sales are 1000 ships and each quarter the number increases by 10% from the previous quarter. They expect to sell each ship for $200 in quarter one and a 20% increase in each quarter after that.

Second designs policy is to have finished goods inventory in a quarter equal to 20% of the next quarters anticipated Sales. Preliminary Sales projections for 2023 are 500 ships for the first quarter and 600 ships for the second quarter. Ending finished goods in December 2021 are 300 ships.

Production of each ship requires 50 pounds of acute material. Company policy is that the ending inventory for acute material should be 25% of the amount needed in production for the next quarter. Assume that the ending inventory of acute material in December 2022 is 12000 pounds and for the first quarter in 2023 is 14000 pounds. The finishing kit can be assembled as they are needed based on production. As a result, Stafford does not maintain a significant inventory (opening and closing) of the finishing kits. The acute material used in the production of the ship cost $1.50 per pound.

Production of a single ship requires 3 hours of work by employees. Employees are paid $20 per hour. Selling and administrative are expected to be $45 per unit sold plus $7500 fixed costs per quarter. Manufacturing overhead is assigned at 150% of labour costs and additional fixed costs of $500 for depreciation and $300 for maintenance costs each quarter. Interest per quarter is expected to be $200 and taxes $400 per quarter. Overheads are measured by direct labour hour.

Requirements

Prepare the sales budget, production budget, direct material budget, labour budget, manufacturing overhead budget, selling and administrative budget for each quarter and for the year 2022 and prepare a Budgeted Income Statement for the year 2022.

• Your answer to be completed on an Excel sheet using formulas rather than a calculator

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