Question

PREVIOUS PROBLEM!

40. Selling and Administrative Budget and Budgeted Income Statement. CThe previous problem must be completed before working this problem.) Sports Bars, Inc., produces energy bars. Management estimates all selling and administrative costs are fixed. Quarterly selling and administrative cost estimates for the coming year follow Salaries Rent Advertising $120,000 Depreciation 75,000 Other $170,000 $ 65,000 36,000 Required: a Use the information presented previously to prepare a selling and administrative budget. Refer to the format shown in Figure 9.8. b. Use the information from the previous problem and from requirement a of this problem to prepare a budgeted income statement. Refer to the format shown in Figure 9.9. c. How will management use the information presented in the budgeted income statementi? ROBLEMS (continued) . Selling and Administrative Budget and Budgeted Inceme Statement Selling and administrative budget a. Sports Bars, Inc. Selling and Administrative Budget Year b arter Salaries Rent Advertising Other Total selling and administrative costs Doduct deprociation Cash payments fer selling and administrative 391,000 ROBLEMS (continued) Selling and Administrative Bedget and Budgeted Iacome Statement (continued h. Budgeted inceme statement Sports Bars, Inc. Budgeted Income Statement Year F Sales (from sales budgct) Deduct cost of goods sold Gross margin Deduct selling and administrative costs Net income (loss) $2,024,200 Per unit cost of goods sold calkculation: Year Direet materials (from direct materials purchases budget) Direct labor (frem direct labor budget) Manufacturing overhead (from manufacturing overhead budget) Total cost of goeds sold per unit C. 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead. Sports Bars, Inc., produces energy bars and sells them by the case (1 unit 1 case). Information to be used for the operating budget this coming vear follows: Average sales price for each case is estimated to be $25. Unit sales for this coming year, ending December 31, are expected to be as follows First quarter 8o,o0o Second quarter 84,000 Third quarter 88,000 Fourth quarter 97,000 Finished goods inventory is maintained at a level equal to 15 percent of the next quarter's sales. Finished goods inventory at the end of the fourth quarter budget period is estimated to be 13,000 units. Each unit of product requires 5 pounds of direct materials, at a cost of $3 per pound. Management prefers to maintain ending raw materials inventory equal to 10 percent of next quarter's materials needed in production. Raw materials inventory at the end of the fourth quarter budget period is estimated to be 43,000 pounds Each unit of product requires o.1o direct labor hours at a cost of $14 per hour Variable manufacturing overhead costs are . Indirect materials $0.20 per unit Indirect labor Other Fixed manufacturing overhead costs per quarter are $o.15 per unit $o.10 per unit Salaries $80,000 Other $70,000 Depreciation $55,625 Required: a. Prepare a sales budget using the format shown in Figure 9.3 b. Prepare a production budget using the format shown in Figure 9.4 c. Prepare a direct materials purchases budget using the format shown in Figure 9.5. d. Prepare a direct labor budget using the format shown in Figure 9.6. e. Prepare a manufacturing overhead budget using the format shown in Figure 9.7. Round to the nearest dollar f. As the production manager, what concerns, if any, do you have about production requirements for each of the four quarters?

Answer 1

(Since it is not specified as to which question is to be solved, so as per HOMEWORKLIB POLICY , the first question appearing that is Problem 40. is solved)

Selling and Administrative Budget	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Salaries	170000	170000	170000	170000	680000
Rent	65000	65000	65000	65000	260000
Advertising	120000	120000	120000	120000	480000
Depreciation	75000	75000	75000	75000	300000
Other	36000	36000	36000	36000	144000
Total Selling and Administrative costs	466000	466000	466000	466000	1864000
Deduct: Depreciation	75000	75000	75000	75000	300000
Cash Payments for selling and administrative	391000	391000	391000	391000	1564000
Budgeted Income Statement	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Sales	2000000	2100000	2200000	2425000	8725000
Deduct : Cost of goods sold	1540000	1617000	1694000	1867250	6718250
Gross Margin	460000	483000	506000	557750	2006750
Deduct:Selling and Administrative cost	466000	466000	466000	466000	1864000
Net Income	-6000	17000	40000	91750	142750

Per unit of goods sold calculation
Direct material cost	=5*3	15
Direct labor cost	=0.1*14	1.4
Manufacturing overhead cost	=(0.2+0.15+0.1)+2.4	2.85
Total Cost of goods sold per unit		$19.25

Salaries	80000
others	70000
Depreciation	55625
Total Fixed manufacturing cost per quarter	205625
Total Fixed manufacturing cost for the year	822500
Total units sold	349000
Fixed manufacturing cost per unit	$2.4