Reference no: EM132789849

Question - Ring The Bells, Co. makes one product and it provided the following information to help prepare the master budget for the next several months of operations:

The budgeted selling price per unit is $86. Budgeted unit sales for January, February, March, April, and May are 19,400; 19,100; 18,700; 19,200; and 18,600 units, respectively. All sales are on credit.

Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month.

The ending finished goods inventory equals 20% of the following month's sales.

The ending raw materials inventory equals 40% of the following month's raw materials production needs. Each unit of finished goods requires 2 pounds of raw materials. The raw materials cost $5.50 per pound.

Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month.

The direct labor wage rate is $14.00 per hour. Each unit of finished goods requires 1.5 direct labor-hours.

Variable overhead is $6.00 per direct labor-hour. Assume there is no Fixed OH.

The variable selling, general, and administrative expense per unit sold is $1.20. The fixed selling, general and administrative expense per month is $17,200.

a. Prepare the sales budget for January, February, and March.

b. Prepare the production budget for January, February, and March. Assume December's ending finished inventory is 3,880 units.

c. Calculate the budgeted direct material cost for February.

d. Calculate the budgeted direct labor cost for February.

e. Calculate the budgeted OH cost for February.

f. Calculate the budgeted per unit product cost.

g. Calculate the budgeted Selling, General and Administrative expenses for February.

h. Prepare the budgeted income statement for the month of February. Assume interest expense is $200 for February and income taxes are assessed at 25%.