Preparation of Individual Budgets During the first calendar quarter of 2016, Clinton Corporation is planning to manufacture a new product and introduce it in two regions. Market research indicates that sales will be 10,000 units in the urban region at a unit price of $53 and 9,000 units in the rural region at $48 each. Because the sales manager expects the product to catch on, he has asked for production sufficient to generate a 8,000-unit ending inventory. The production manager has furnished the following estimates related to manufacturing costs and operating expenses: Variable Fixed (per unit) (total) Manufacturing costs: Direct materials A (4 lb. @ $3.15/lb.) $12.60 - B (2 lb. @ $4.65/lb.) 9.30 - Direct labor (0.5 hours per unit) 7.50 - Manufacturing overhead: Depreciation - $7,650 Factory supplies 0.90 4,500 Supervisory salaries - 28,800 Other 0.75 22,950 Operating expenses: Selling: Advertising - 22,500 Sales salaries& commissions* 1.50 15,000 Other* 0.90 3,000 Administrative: Office salaries - 2,700 Supplies 0.15 1,050 Other 0.08 1,950 *Varies per unit sold, not per unit produced. a. Assuming that the desired ending inventories of materials A and B are 8,000 and 10,000 pounds, respectively, and that work-in-process inventories are immaterial, prepare budgets for the calendar quarter in which the new product will be introduced for each of the following operating factors: Do not use negative signs with any of your answers below. 1. Total sales $Answer 2. Production Answer: _____units
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Preparation of Individual Budgets
During the first calendar quarter of 2016, Clinton Corporation is planning to manufacture a new product and introduce it in two regions.
|
Variable |
Fixed |
||||
|---|---|---|---|---|---|
|
(per unit) |
(total) |
||||
| Manufacturing costs: | |||||
| Direct materials | |||||
| A (4 lb. @ $3.15/lb.) | $12.60 | - | |||
| B (2 lb. @ $4.65/lb.) | 9.30 | - | |||
| Direct labor (0.5 hours per unit) | 7.50 | - | |||
| Manufacturing |
|||||
| - | $7,650 | ||||
| Factory supplies | 0.90 | 4,500 | |||
| Supervisory salaries | - | 28,800 | |||
| Other | 0.75 | 22,950 | |||
| Operating expenses: | |||||
| Selling: | |||||
| Advertising | - | 22,500 | |||
| Sales salaries& commissions* | 1.50 | 15,000 | |||
| Other* | 0.90 | 3,000 | |||
| Administrative: | |||||
| Office salaries | - | 2,700 | |||
| Supplies | 0.15 | 1,050 | |||
| Other | 0.08 | 1,950 |
*Varies per unit sold, not per unit produced.
a. Assuming that the desired ending inventories of materials A and B are 8,000 and 10,000 pounds, respectively, and that work-in-process inventories are immaterial, prepare budgets for the calendar quarter in which the new product will be introduced for each of the following operating factors:
Do not use negative signs with any of your answers below.
1. Total sales
$Answer
2. Production
Answer: _____units
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
