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Operating Budget Create an operating budget for the first quarter of a new business. Projected Sales are: Month #1: $65,000 Month #2: $97,500 Month #3: $130,000 Month #4: $110,500 These sales are...

Operating Budget

Create an operating budget for the first quarter of a new business.

Projected Sales are:

Month #1: $65,000

Month #2: $97,500

Month #3: $130,000

Month #4: $110,500

These sales are based on selling one product with a selling price of $6.50

Create a Production Budget based on Units (not dollars).

· Desired Finished Goods Ending Inventory each month is 10% of the next month’s projected sales. (Use the Finished Goods Ending Inventory amount for the previous year for the Beginning Finished Goods Inventory to start this year).

Create a Direct Materials Purchase Budget

· Each unit produced requires 10# of direct materials at a cost of $0.08 per pound.

· Desired Ending Direct Materials Inventory is 10% of the next month’s material requirements.

Create a Direct Labor Budget

· Direct Labor Costs are $15/hour

· Each unit requires 5 minutes of labor

Create an Overhead Budget

· Variable Overhead Expenses are:

o Supplies ($.02 per unit)

o Inspection ($.10 per unit)

o Maintenance and Repair ($.03 per unit)

o Utilities ($.01 per unit)

· Fixed Overhead Expenses are $1100 monthly.

Create a Selling and Administrative Budget

· Variable Selling & Administrative Expenses are:

o Sales Commissions ($.03 per unit)

o Delivery ($.01 per unit)

o Office Support ($.02 per unit)

· Fixed Selling & Administrative Expenses are $2500 monthly.

Combine all Budgets to Create a Budgeted Income Statement

Complete a Budgeted Income Statement for months 1 through 3, and a Budgeted Income Statement that reflects the total first quarter.

Oct 05, 2019
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