Prepare the following schedules or statements for 2016:           1. Sales budget             2. Production budget             3. Direct materials purchases budget (units and dollars)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Problem 10-50: Comprehensive Profit Plan  
Background          
Spring Manufacturing Company makes two components identified as C12 and D57.  Selected budgetary data for 2016 follow:  
 
               
        Finished Components  
        C12   D57  
               
  Requirements for each finished component:          
      RM1     10 pounds 8  
      RM2     0   4  
      RM3     2 pounds 1  
      Direct labor     2 hours 3  
  Product information:            
      Sales price     $150   $220  
      Sales units     12,000   9,000  
      Estimated beginning inventory (units)   400   150  
      Desired ending inventory (units)     300   200  
               
               
        Direct Materials Information  
        RM1 RM2 RM3  
  Cost per pound     $2.00 $2.50 $0.50  
  Estimated beginning inventory in pounds   3,000 1,500 1,000  
  Desired ending inventory in pounds   4,000 1,000 1,500  
               
               
The firm expects the average wage rate to be $25 per hour in 2016. Spring Manufacturing uses DLHs to apply overhead. Each         
year the firm determines the overhead application rate for the year based on the budgeted ouput for the year. The company 
maintains negligible WIP inventory and expects the cost per unit for both beginning and ending finished products inventories to 
be identical.             
               
               
                              Factory Overhead Information          
               
  Indirect materials-variable       $10,000    
  Miscellaneous supplies and tools-variable     $5,000    
  Indirect labor-variable       $40,000    
  Supervision-fixed       $120,000    
  Payroll taxes and fringe benefits-variable     $250,000    
  Maintenance costs-fixed       $20,000    
  Maintenance costs-variable       $10,080    
  Depreciation-fixed       $71,330    
  Heat, light, and power-fixed       $43,420    
  Heat, light, and power-variable       $11,000    
      Total       $580,830    
               
               
        Selling and Administrative Expense Information  
         
               
  Advertising       $60,000    
  Sales salaries       $200,000    
  Travel and entertainment       $60,000    
  Depreciation-warehouse       $5,000    
  Office salaries       $60,000    
  Executive salaries       $250,000    
  Supplies       $4,000    
  Depreciation-office       $6,000    
      Total       $645,000    
               
               
  Income Tax Rate 40%          
               
Requirements        
               
Prepare the following schedules or statements for 2016:          
1. Sales budget            
2. Production budget            
3. Direct materials purchases budget (units and dollars)          
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