Question

The Bear Corporation will begin business operations on January 1, 2015. Below is the anticipated SALES BUDGET (in units):

Jan.                 30,000

Feb.                 30,000

Mar.                60,000

Apr.                 20,000

ADDITIONAL INFORMATION     

a.         Ending finished goods inventory should be equal to 10% of next month's sales projection.

b.         Each unit requires 3 pounds of material at a raw material cost of $5 per pound.

c:         Labor cost is $10 per unit produced.

d.         Ending raw material inventory should be equal to 20% of next month's material requirement.

e.         Factory overhead is $18,000 per month of which $8,000 is for depreciation.

f.          All costs are paid in the month incurred except for purchases which is paid in the following month.

g.         The selling price per unit is $100.

REQUIRED:   Using Excel, in good form:

Prepare a SALES BUDGET for the first quarter (January through March).
Prepare a PRODUCTION BUDGET for the first quarter (January through March).

Prepare a Raw Materials PURCHASES BUDGET for the first quarter (Jan. through Mar.)

Prepare a CASH DISBURSEMENTS budget for the first quarter (January through March).

Answer 1

Sales Budget

Particulars	Jan	Feb	March	Quarter
Sales units	30,000	30,000	60,000	1,20,000
Selling Price	$ 100	$ 100	$ 100	$ 100
Total sales	$ 30,00,000	$ 30,00,000	$ 60,00,000	$ 120,00,000

Production Budget

Particulars	Jan	Feb	March	Quarter
Sales units	30,000	30,000	60,000	1,20,000
Add :closing stock	3,000	6,000	2,000	2,000
Less: Opening Stock	(0)	(3,000)	(6,000)	(0)
Production units	33,000	33,000	56,000	122,000

Raw Materials Purchase Budget

Particulars	Jan	Feb	March	Quarter
Materials Used	99,000	99,000	168,000	366,000
Add :closing stock of materials	19,800	33,600	12600	12600
Less: Opening Stock of materials	(0)	19,800	33,600	0
Materials Purchases	118800	112800	147,000	378,600
Cost of materials purchased (price/pound=$5/pound)	$594000	$564000	$735000	$ 18,93,000