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PART 1: Consider the following data in preparing Ballarat Furniture Company's budget for 2013:
Product specification for each table for 2013
Direct Materials
Particle Board (PB)
9 board feet (bf)per table
Red Oak (RO)
10 board feet (bf) per table
Direct Manufacturing Labour
Laminating labour
0.25 hours per table
Machining labour
3.75 hours per table
Inventory information for 2013
Beginning Inventory
TargetEnding Inventory
PB
20,000 bf
18,000bf
RO
25,000 bf
22,000 bf
Finished goods - tables (units)
5,000
3,000
Sales forecast for 2013
Sales volume
52,000 tables
Sales price
$392 per table
Cost information:
2012
2013
PB per board feet
$3.90
$4.00
RO per board feet
$5.80
$6.00
Laminating labour per hour
$24.00
$25.00
Machining labour per hour
$29.00
$30.00
Variable manufacturing overhead costs
$1,900,000
Fixed manufacturing overhead costs
$1,600,000
Manufacturing overhead application base
Expected Direct Labour hours
Inventoriable (manufacturing) cost per table
$275
In addition to the above, the following selling and administrative expenses are expected for 2013:
Salaries of Sales personnel
$555,760
Marketing
$1, 920,720
Distribution
$729,600
Customer service
$504,992
Administrative
$440,768
Required:
Prepare an annual budget for Ballarat Furniture Company for 2013. Assume an income tax rate of 40 percent. Include the following schedules:
a. Sales budget
b. Production budget (in units)
c. Direct materials usage budget (in units and in dollars)
d. Direct labour budget
e. Budgeted income statement.
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