Saless: Quarter 1. 40.000 bags; Quarter 2. S6.000 bags. Seling price is dollar 1

Question

Saless: Quarter 1. 40.000 bags; Quarter 2. S6.000 bags. Seling price is dollar 160 per bag. Direct material each bag of Srare reputes 4 pounds of Gumm at a cost of dollar 3 8 per pound and Directed inventery levels Direct lobour: direct labor time 1.5 minutes per bag at an hourl rate of dollar 16 per hour. Selling and administrative expenses are expected to be 15% of sales plus dollar 175.000 per quartec Interest expense is dollar 100.000. Income taxes are expected to be 30% of income before income taxes. Your assrstant has prepared two budgets: (1) the manufacturing overhead budget shows costs to be 125% of direct labour cost, and the direct materials budget for Tarr shows the cost of Tarr purchases to be dollar 297,000 m Quarter I and 1439.500 m Quarter 2. Your answer is partly correct. Try again Prepare the sates budget Prepare the production budget.

Explanation / Answer

Production Budget:

Quarter 1 Quarter 2 Six months Expected unit sales 40,000 56,000 Add Desired ending finished goods inventory 15,000 18,000 Total units required 55,000 74,000 Less Beginning finished goods inventory 8,000 15,000 Production required in units 47,000 59,000 106,000

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