BUSINESS

Exercise 22-18 Merchandising: Budgeted income statement LO P2

Fortune, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are forecasted at 40,000 for January, 60,000 for February, and 50,000 for March. Cost of goods sold is $12 per unit. Other expense information for the first quarter follows.

 

         
  Commissions   9 %  of sales
  Rent $ 18,000    per month
  Advertising   15 %  of sales
  Office salaries $ 76,000    per month
  Depreciation $ 49,000    per month
  Interest   12 %  annually on a $230,000 note payable
  Tax rate   30 %  

 

Prepare a budgeted income statement for this first quarter.

 

 

Exercise 22-19A Manufacturing: Direct labor budget LO P3

The production budget for Manner Company shows units to be produced as follows: July, 600; August, 660; September, 520. Each unit produced requires two hours of direct labor. The direct labor rate is currently $15 per hour but is predicted to be $15.75 per hour in September.

 

Prepare a direct labor budget for the months July, August, and September. (Round your “Labor rate” to 2 decimal places.)

 

 

Exercise 22-20A Manufacturing: Production budget LO P3

Hospitable Co. provides the following sales forecast for the next four months:

 

  April May June July
  Sales (units) 690 770 720 720

 

The company wants to end each month with ending finished goods inventory equal to 20% of next month’s sales. Finished goods inventory on April 1 is 138 units. Assume July’s budgeted production is 730 units.

 

 

Exercise 22-21A Direct materials budget LO P3

Hospitable Co. provides the following sales forecast for the next four months:

 

  April May June July
  Sales (units) 580 660 610 610

 

The company wants to end each month with ending finished goods inventory equal to 20% of next month’s sales. Finished goods inventory on April 1 is 116 units. Assume July’s budgeted production is 620 units. Assume each finished unit requires five pounds of raw materials and the company wants to end each month with raw materials inventory equal to 20% of next month’s production needs. Beginning raw materials inventory for April was 596 pounds.

 

 

Prepare a direct materials budget for April, May, and June.

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