Reference no: EM132438365

The Scarborough Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2011, Scarborough's budget department gathered the

following data to prepare budgets for 2012:

Product Units Price

Thing one 60,000 $165

Thing two 40,000 $250

2012 Inventories in Units:

Expected Target

Product January 1, 2012 December 31, 2012

Thingone 20,000 25,000

Thing two 8,000 9,000

The following direct materials are used in the two products:

Amount Used per Unit

Direct Material Unit Thingtone Thingtwo

A pound 4 5

B pound 2 3

C each 0 1

Projected data for 2012 with respect to direct materials are as follows:

Expected Inventories Target Inventories

Direct Material Anticipated Purchase Price January 1, 2012 December 31, 2012

A $12 32,000 lb. 36,000 lb

B 5 29,000 lb. 32,000 lb.

C 3 6,000 units 7,000 units

Projected direct manufacturing labor requirements and rates for 2012 are as follows

Product Hours per Unit Rate per Hour

Thingone 2 $12

Thingtwo 3 16

Required:

Manufacturing overhead is allocated at the rate of $20 per direct manufacturing labor-hour.

Based on the preceding projections and budget requirements for Thingone and Thingtwo, prepare the following budgets for 2012:

1. Revenues budget (in dollars)

2. Production budget (in units)

3. Direct material purchases budget (in quantities)

4. Direct material purchases budget (in dollars)

5. Direct manufacturing labor budget (in dollars)

6. Budgeted finished goods inventory at December 31, 2012 (in dollars)