You have recently been hired by Pull Company as a managerial accountant. It has not used budgets in the past, but is expecting large growth in the next year and needs to get a loan to pay for the expansion. In order to determine the loan amount, your manager asks you to prepare the following budgets:

Sales budget

Production budget

Direct materials purchases budget

Direct labor budget

Overhead budget

Directions: Prepare each budget of this assignment in one Excel file. Be sure to show your calculations and label your work for full credit.

The Pull Company estimates for the next year are as follows:

Quarter 1 Sales: 500,000 units

Quarter 2 Sales: 750,000 units

Quarter 3 Sales: 1,000,000 units

Quarter 4 Sales: 800,000 units

Quarter 1 of the following year Sales: 600,000 units

Price of the product: $20

Beginning finished goods inventory: 50,000 units

The company policy is to have 10% of next quarters sales in ending inventory

The product contains only 2 materials (Material A and Material B)

The product requires 4 units of Material A costing $2

The product requires 2 units of Material B costing $1

The beginning materials inventory for Material A is 315,000

The beginning materials inventory for Material B is 157,500

Company policy is to have 15% of next quarters material needs in ending inventory

Desired Ending Inventory for the year in Material A is 450,000

Desired Ending Inventory for Material B is 240,000

The Direct Labor required for each product is .25 hours at an average rate of $9 per hour

Variable overhead rate is $4 per direct labor hour

Fixed Overhead is expected to be $50,000 per quarter