Question

V & T Faces, Inc. manufactures to types of makeup foundation. Type S is for sensitive skin and type N is for non-sensitive skin. The products have the following materials and labor requirements:

	Type N	Type S
Direct materials required per 100 bottles
Liquid medium	30 pounds	70 pounds
Pigment A	20 pounds	30 pounds
Direct labor required per 100 bottles ($12/hour)	.25 hour	.50 hour

The following production-overhead costs are anticipated for the next year. The predetermined overhead rate is based on the production volume of 495,000 bottles. Production overhead is applied on the basis of direct-labor hours.

Indirect material	$10,500
Indirect labor	49,000
Utilities	25,000
Property taxes	16,000
Insurance	18,000
Depreciation	30,000
Total	$148,500

The following selling and administrative expenses are anticipated for the next year:

Salaries and fringe benefits of sales personnel	$80,000
Advertising	15,000
Management salaries and fringe benefits	85,000
Clerical wages and fringe benefits	25,000
Miscellaneous administrative expenses	5,000
Total	$210,000

The sales forecast is as follows:

	Sales Volume	Sales Price
Type N	500,000 bottles	$90 per hundred bottles
Type S	500,000 bottles	$130 per hundred bottles

The following inventory information is available. The unit production costs for each product are expected to be the same this year and the following year.

	Expected Inventory January 1	Desired Ending Inventory December 31
Finished Goods
Type N	10,000 bottles	5,000 bottles
Type S	20,000 bottles	15,000 bottles
Raw Material
Pigment A	15,000 pounds	5,000 pounds
Liquid medium	5,000 pounds	10,000 pounds

Required:

Prepare a master budget for V & T Faces, Inc., for the next year. Assume an income tax rate of 40 percent. Include the following:

1. Sales budget
2. Production budget
3. Direct-material budget
4. Direct-labor budget
5. Production-overhead budget
6. Selling and administrative expense budget
7. Budgeted income statement

Answer 1

Sales Budget:	Next Year
	TypeN	Type S
Total units of sales (in bottles)	500,000	500,000
Selling price per 100 bottles	$90	$130
Total Sales Revenue (5,000 * $90); (5,000 * $130)	$450,000	$650,000
Producion Budget:	Next Year
	TypeN	Type S
Total units of sales (in bottles)	500,000	500,000
Add: Desired ending inventory Dec. 31	5,000	15,000
Total required units	505,000	515,000
Less: Beginning inventory Jan 1	10,000	20,000
Units required to produce (in bottles)	495,000	495,000
Direct materials Budget - Liquid Medium:	Next Year
	TypeN	Type S
Units required to produce (in bottles)	495,000	495,000
Direct materials required:
Liquid medium (4,950 * 30 pounds per 100 bottles); (4,950 * 70 pounds per 100 bottles) (in pounds)	148,500	346,500
Add: Desired Ending direct materials of Liquid medium	10,000	10,000
Total direct materials of Liquid medium requred in pounds	158,500	356,500
Less: Beginning direct materials of Liquid medium	5,000	5,000
Direct materials of Liquid Medium required to be purchased in pounds	153,500	351,500
Direct materials Budget - Liquid Medium:	Next Year
	TypeN	Type S
Units required to produce (in bottles)	495,000	495,000
Direct materials required:
Pigment A (4,950 * 20 pounds per 100 bottles); (4,950 * 30 pounds per 100 bottles) (in pounds)	99,000	148,500
Add: Desired Ending direct materials of Pigment A	5,000	5,000
Total direct materials of Pigment A requred in pounds	104,000	153,500
Less: Beginning direct materials of Pgment A	15,000	15,000
Direct materials of Pigment A required to be purchased in pounds	89,000	138,500
Direct Labor Budget:	Next Year
	TypeN	Type S
Units required to produce (in bottles)	495,000	495,000
Direct labor required per 100 bottles (4,950 * .25 hours); (4,950 * .50 hours) (in hours)	1,237.50	2,475
Cost per direct labor hour (in dollars)	$12	$12
Total required direct labor cost (1,237.50 hours * $12 per hour); (2,475 * $12 per hour)	$14,850	$29,700

Note: As per Chegg guidelines, the first four sub parts were answered, hence, please post the remaining sub parts separately.