Question

During the first calendar quarter of 2016, Clinton Corporation is planning to manufacture a new product and introduce it in two regions. Market research indicates that sales will be 8,000 units in the urban region at a unit price of $53 and 7,000 units in the rural region at $48 each. Because the sales manager expects the product to catch on, he has asked for production sufficient to generate a 6,000- unit ending inventory. The production manager has furnished the following estimates related to manufacturing costs and operating expenses: Variable Fixed (per unit) (total) Manufacturing costs: Direct materials A (4 lb. @s3.15/1lb.) $12.50 B (2 lb.$4.65/lb.) 9.30 Direct labor (0.5 hours per unit) 7.50 Manufacturing overhead S7,550 Depreciation Factory supplies Supervisory salaries 0.90 4,500 28,800 0.75 22,950 Other Operating expenses Selling Advertising 22,500 Sales salaries& commissions* 1.50 15,000 Other 0.90 3,000 Administrative: Office salaries 2,700 Supplies 0.15 1,050 0.08 1,950 Other Varies per unit sold, not per unit produced. a. Assuming that the desired ending inventories of materials A and B are 6,000 and 8,000 pounds, respectively, and that work-in-process inventories are immaterial, prepare budgets for the calendar quarter in which the new product will be introduced for each of the following operating factors: Do not use negative signs with any of your answers below. 1. Total sales 0 2. Production units
Kindly answer the questions with work. Thank you

Answer 1

Answer is given below with working

Sales $760,000 Working Urban Units 8,000 7,000 SP Total Sales $53 $424,000 $48 $336,000 Rural Production 21,000 Units Sales Add: Desired closing inventory Total Requirement 15,000 6,000 21,000 Material purchase cost Material A Material B 84,000 42,000 6,000 8,000 90,000 50,000 Total points(lbs) required of production Desired ending material inventory Total pounds to be available Beginning materials inventory Total material to be purchased (lbs) Cost per unit Total Material purchases ($) 90,000 $3.15 $283,500 50,000 $4.65 $232,500 4. Direct Labor Cost $157,500 5. Manufacturing overhead costs Variable $18,900 Depreciation Factory Supplies Supervisory salaries Other Total manufacturing expenses | Fixed $7,650 $4,500 $28,800 $22,950 $63,900 Total $7,650 $23,400 $28,800 $38,700 $98,550 $15,750 $34,650 Selling and administrative budget Fixed Variable Total $22,500 $15,000 $3,000 $40,500 $22,500 $37,500 $16,500 $76,500 $13,500 $36,000 Selling expense Advertising sales salaries and commission other Total selling expenses Administrative expenses Office salaries Supplies Other Total Administrative expenses Total Selling and administrative expenses $2,700 $1,050 $1,950 $5,700 $46,200 $3,150 $1,680 $4,830 $40,830 $2,700 $4,200 $3,630 $10,530 $87,030 7. $760,000 Clinton Corporation Budgeted Income Statement For the Quarter Ended March 31st, 2016 Sales Cos of Goods Sold Beginning Inventory - Finished Goods Material Beginning Inventory Material purchase $516,000 Material available $516,000 Ending Inventory-Material $56,100 Direct Material $459,900 Direct Labor $157,500 Manufacturing Overhead $98,550 Total Manufacturing Cost $715,950 Cost of Goods available for Sale $715,950 Ending Inventory- Finished Goods $204,557 Cost of Goods sold Gross Profit Operating Expenses Selling expenses $76,500 Administrative expense $10,530 Total Operating expenses Income before Income tax Income tax expense at 30% Net Income $511,393 $248,607 $87,030 $161,577 $48,473 $113,104