Question

Need Help creating Sales Budget and Budgeted Income Statement

Sharp Products is a manufacturing company. It uses absorption costing for budgeting. unit amount Budgeted sales: Q1 of 2019 26,000 cases Q2 30,000 cases 28,000 cases Q3 Q4 12,000 cases Unit selling price $23.00 dollars per unit All sales are on account (on credit) Collection pattern: Cash collected in the quarter of sale Cash collected in the quarter following sale 78% 22% Beginning FG inventory (in units) Desired ending FG inventory/next quarter's sales Desired ending FG inventory at year end 2,000 cases 30% 11,000 cases Beginning RM inventory (in units) Quantity of DM needed per unit DM cost per pound 21,000 pounds 15.00 pounds $0.25 dollars Desired ending RM inventory/next quarter's RM nee Desired ending RM inventory at year end 10% 23,000 pounds Cash payments to suppliers: 22% of the purchases 78% of the purchases paid in the quarter of purchase paid in the quarter following purchase DL hours per unit 0.50 hours DL rate per hour $15.00 dollars Manufacturing overhead $5.00 per DLH Variable MOH Fixed MOH $24,000 per quarter Noncash MOH $17,000 per quarter Depreciation Budgets Budgeted IS Introduction Key Est

Answer 1

1.a.

Sales Budget
	Q1	Q2	Q3	Q3	Year
Budgeted Sales in Cases	26,000	30,000	28,000	12,000	96,000
Unit Selling Price	$ 23	$ 23	$ 23	$ 23	$ 23
Budgeted Sales Revenue	$ 598,000	$ 690,000	$ 644,000	$ 276,000	$ 2,208,000

b.

Production Budget
	Q1	Q2	Q3	Q4	Year
Budgeted Sales in Units	26,000	30,000	28,000	12,000	96,000
Add: Desired Ending Inventory	9,000	8,400	3,600	11,000	11,000
Total Needed	35,000	38,400	31,600	23,000	107,000
Less: Beginning Inventory	2,000	9,000	8,400	3,600	2,000
Budgeted Production in Units	33,000	29,400	23,200	19,400	105,000

2.

Budgeted Income Statement
	Q1	Q2	Q3	Q3	Year
Budgeted Sales Revenue	$ 598,000	$ 690,000	$ 644,000	$ 276,000	$ 2,208,000
Less: Cost of Goods Sold
Variable Cost of Goods Sold
Beginning Inventory	27,500	123,750	115,500	49,500	27,500
Cost of Goods Manufactured	453,750	404,250	319,000	266,750	1,443,750
Ending Inventory	123,750	115,500	49,500	151,250	151,250
Variablle Cost of Goods Sold	357,500	412,500	385,000	165,000	1,320,000
Fixed MOH	41,000	41,000	41,000	41,000	164,000
Total Cost of Goods Sold	398,500	453,500	426,000	206,000	1,484,000
Gross Profit	199,500	236,500	218,000	70,000	724,000

Variable Cost of Goods Sold per unit:

Direct Materials ( 15 pounds * $ 0.25 )	$ 3.75
Direct labor ( 0.50 DLH * $ 15)	7.50
Variable MOH ( $ 5 x 0.5 DLH )	2.50
Variable Cost of Goods Sold per Unit	$ 13.75