Question

DUE SOON, PLEASE HELP!!!!
Sales for the final quarter of the prior year total 800 units. Expected sales in units) for the current year are: 720 (Quarter 1), 480 (Quarter 2), 640 (Quarter 3), and 640 (Quarter 4). Sales for the first quarter of the following year total 960 units. The selling price is $660 per unit in the first three quarters of the year, and $690 per unit in the final quarter. Company policy calls for a given quarter's ending finished goods inventory to equal 50% of the next quarter's expected unit sales. The finished goods inventory at the end of the prior year is 360 units, which complies with the policy. The product's manufacturing cost is $191 per unit, including per unit costs of $112 for materials (8 lbs. at $14 per lb.), $60 for direct labor (3 hours x $20 direct labor rate per hour), $15 for variable overhead, and $4 for fixed overhead. Annual fixed overhead consists, incurred evenly throughout the year, consist of depreciation on production equipment, $4,200; factory utilities, $5,200, and other factory overhead of $1,000. Company policy also calls for a given quarter's ending raw materials inventory to equal 50% of next quarter's expected materials needed for production. The prior year-end inventory is 2,400 lbs of materials, which complies with the policy. The company expects to have 3,840 lbs. of materials in inventory at year-end. The company has no work in process inventory at the end of any quarter. Sales representatives' commissions are 16% of sales and are paid in the quarter of the sales. The sales manager's quarterly salary will be $52,000 in the first three quarters of the year, and $55,000 in the final quarter. Quarterly general and administrative expenses include $22,000 administrative salaries, rent expense of $13,000 per quarter, insurance expense of $10,000 per quarter, straight- line depreciation of $10,000 per quarter, and 1% monthly interest on the $400,000 long-term note payable (12% annually). f. Income taxes will be assessed at 30%, and are paid in the quarter incurred.

Answer 1

Production Budget as follows:

Ham Inc.
Production Budget
For the year ended December 31, 2018
	First Quarter	Second Quarter	Third Quarter	Fourth Quarter	Total
Next Quarter Budgeted Sales (Units) (A)	480	640	640	960
Ratio of Inventory to Future Sales (B)	50%	50%	50%	50%
Budgeted Ending Inventory (Units) (A × B)= C	240	320	320	480	480
Budgeted Sales (Units) (D)	720	480	640	640	2480
Required Units available production (E= C+D)	960	800	960	1120	2960
Budgeted beginning inventory (F = C, But the first quarter is given i.e. 360)	360	240	320	320	360
Units to be produced (G = E-F)	600	560	640	800	2600

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Direct material budget as follows:

Ham Inc.
Direct materials Budget
For the year ended December 31, 2018
	First Quarter	Second Quarter	Third Quarter	Fourth Quarter	Total
Units to be produced (G)	600	560	640	800
Material per unit (pounds) (H)	8	8	8	8
Materials needed for production (pounds) (I = G×H)	4800	4480	5120	6400
Add: Desired ending inventory (J = 50%(4480/5120/6400/3840 given)	2240	2560	3200	3840
Total material requirements (pounds) (K = I+J)	7040	7040	8320	10240
Less: Beginning Balance (L)	2400	2240	2560	3200
Materials to be purchased (pounds) (M= K-L)	4640	4800	5760	7040
Material Price-per pound (N)	$14	$14	$14	$14
Total cost of direct materials purchases (O = M×N)	$64,960	$67,200	$80,640	$98,560	$311,360