Reference no: EM132978257
1 Sales: quarter 1, 36,00 bags; quarter 2, 50,000 bags. Selling price is $80 per bag.
2 Direct materials: each bag of Snare requires 2 pounds of Gumm at a cost of $3.00 per pound and 6 pounds of Tarr at $1.75 per pound.
3 Desired inventory levels:
| Type of Inventory |
01-Jan |
|
01-Apr |
|
01-Jul |
| Snare (bags) |
|
8,400 |
|
12,300 |
|
18,100 |
| Gumm (pounds) |
9,200 |
|
10,200 |
|
13,400 |
| Tarr (pounds) |
14,500 |
|
20,200 |
|
25,300 |
4 Direct labor: direct labor time is 15 minutes per bag at an hourly rate of $16 per hour.
5 Selling and administrative expenses are expected to be 15% of sales plus $176,000 per quarter.
6 Interest expense is $100,000.
7 Income taxes are expected to be 30% of income before income taxes.
Your assistant has prepared two budgets: (1) the manufacturing overhead budget shows expected costs to be 125% of direct labor cost, and (2) the direct materials budget for Tarr shows the cost of Tarr purchases to be $303,000 in quarter 1 and $425,500 in quarter 2.
(Note: Do not prepare the manufacturing overhead budget or the direct materials budget for Tarr.)
Prepare the sales budget.
Attachment:- Project.rar