Question

Thunder Creek Company expects sales of 18,000 units in January 2018, 24,000 units in February, 30,000 units in March, 34,000 in April, and 36,000 in May. The sales price is $34 per unit. Prepare a sales budget 2018 Budget #1: Sales Budget Feb Q1 Total Аpril Jan Mar May Budgeted units to be sold Sales price per unit Total Sales Thunder Creek wants to finish each month with 20 % of next month's sales in units. Prepare a production budget. (When entering answers in the production budget, use the sales budget for your cell references. Enter all values as positive-without a minus sign--in row 18.) Hint: Beginning inventory for the period is equal to the ending inventory of the previous period. 2017 2018 Budget # 2: Production Budget Dec Jan Feb Mar Q1 Total Аpril May Budgeted units to be sold Plus: Desired units in ending inventory Total units needed Less: Units in beginning inventory Budgeted units to be produced Thunder Creek Company uses 2 pounds of direct materials for each unit it produces, at a cost of $4.00 per pound. The company begins the year with 9,500 pounds of material in Raw Materials Inventory. Management desires an ending inventory of 25 % of next month's materials requirements Prepare a Direct Materials Budget. (When entering answers in the direct materials budget, use the production budget for your cell references. Enter all values as positive-without a minus sign--in row 3 2018 Q1 Total Budget #3: Direct Materials Budget Feb April Jan Mar Budgeted units to be produced Direct materials (pounds) per unit Direct materials needed for production Plus: Desired direct materials in ending inventory (pounds) Total direct materials needed Less: Direct materials in beginning inventory (pounds) Budgeted purchase of direct materials Direct material cost per pound Budgeted cost of direct materials purchases Thunder Creek Company's workers require 30 minutes of labor to produce each unit of product. The labor cost is $20 per hour Prepare a Direct Labor Budget. (When entering answers in the direct labor budget, use the direct materials budget for your cell references.) 2018 Budget # 4: Direct Labor Budget Feb Q1 Total Jan Mar Budgeted units to be produced Direct labor hours per unit Direct labor hours needed for production Direct labor cost per hour

Answer 1

	2018
Budget #1: Sales budget	Jan	Feb	Mar	Q1 Total	April	May
Budgeted units to be sold	18,000	24,000	30,000	72,000	34,000	36,000
Sales price per unit	$                   34	$                   34	$                   34	$                      34	$                  34	$                  34
Total sales	$       6,12,000	$       8,16,000	$     10,20,000	$       24,48,000	$    11,56,000	$    12,24,000

	2017	2018
Budget #2: Production budget	Dec	Jan	Feb	Mar	Q1 Total	April	May
Budgeted units to be sold		18,000	24,000	30,000	72,000	34,000	36,000
Plus: Desired units in ending inventory	3,600	4,800	6,000	6,800	6,800	7,200
Total units needed		22,800	30,000	36,800	78,800	41,200
Less: Units in beginning inventory		3,600	4,800	6,000	3,600	6,800
Budgeted units to be produced		19,200	25,200	30,800	75,200	34,400

	2018
Budget #3: Direct material budget	Jan	Feb	Mar	Q1 Total
Budgeted units to be produced	19,200	25,200	30,800	75,200
Direct materials (pounds) per unit	2	2	2	2
Direct materials needed for production	38,400	50,400	61,600	1,50,400
Plus: Desired direct material in ending inventory (pounds)	12,600	15,400	8,600	8,600
Total direct materials needed	51,000	65,800	70,200	1,59,000
Less: Desired direct material in begining inventory (pounds)	9500	12,600	15,400	9,500
Budgeted purchase of direct material	41,500	53,200	54,800	1,49,500
Direct material cost per pound	4	4	4	4
Budgeted cost of direct materials purchases	$       1,66,000	$       2,12,800	$       2,19,200	$          5,98,000

	2018
Budget #4: Direct labor budget	Jan	Feb	Mar	Q1 Total
Budgeted units to be produced	19,200	25,200	30,800	75,200
Direct labor hours per unit	0.5	0.5	0.5	0.5
Direct labor hours needed for production	9,600	12,600	15,400	37,600
Direct labor cost per hour ($)	$                   20	$                   20	$                   20	$                      20
Budgeted direct labor cost	$       1,92,000	$       2,52,000	$       3,08,000	$          7,52,000

	2018
Budget #5: Manufacturing overhead budget	Jan	Feb	Mar	Q1 Total
Budgeted units to be produced	19,200	25,200	30,800	75200
VOH cost per unit	$               3.50	$               3.50	$               3.50	$                  3.50
Budgeted VOH	$           33,600	$           44,100	$           53,900	$          1,31,600
Budgeted FOH
Depreciation	$           20,000	$           20,000	$           20,000	$             60,000
Salaries and maintenance (40000+10000)	$           50,000	$           50,000	$           50,000	$          1,50,000
Total budgeted FOH	$           70,000	$           70,000	$           70,000	$          2,10,000
Budgeted manufacturing overhead costs	$       1,03,600	$       1,14,100	$       1,23,900	$          3,41,600
Direct labor hours (DLHr)	9,600	12,600	15,400	37600
Predetermined overhead allocation rate per DLHr				$                  9.09

	Cost per unit
Direct material cost per unit	$               7.95
Direct labor cost per unit	$             10.00
Manufacturing overhead cost per unit	$               9.09
Total projected manufacturing cost per unit	$             27.04

	2018
Budget #6: Cost of goods sold budget	Jan	Feb	Mar	Q1 Total
Beginning Finished goods inventory,3600	86400			86400
Units produced and sold in 2018
Cost per unit	27.04	27.04	27.04
Units per month	14,400	24,000	30,000
Total cost of units produced and sold in 2018	3,89,376	6,48,960	8,11,200
Total budgeted cost of goods sold	$       4,75,776	$       6,48,960	$       8,11,200	$       19,35,936

	2018
Budget #7: Selling and administrative expense budget	Jan	Feb	Mar	Q1 Total
Salaries expense	$       2,45,000	$       2,45,000	$       2,45,000	$          7,35,000
Advertising expense	$           30,000	$           30,000	$           30,000	$             90,000
Depreciation expense	$           28,000	$           28,000	$           28,000	$             84,000
Supplies expense	$       3,60,000	$       4,80,000	$       6,00,000	$       14,40,000
Total budgeted S&A expense	$       6,63,000	$       7,83,000	$       9,03,000	$       23,49,000