9-4 Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2014 sales forecast is as follows. QUARTER HD 240 1 5,100

9-4 Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2014 sales forecast is as follows.

QUARTER HD 240

1 5,100

2 7,180

3 8,310

4 10,140

The January 1, 2014, inventory of HD-240 is 2,040 units. Management desires an ending inventory each quarter equal to 40% of the next quarter’s sales. Sales in the first quarter of 2015 are expected to be 25% higher than sales in the same quarter in 2014.

Prepare quarterly production budgets for each quarter and in total for 2014.

9-1a

Glendo Farm Supply Company manufactures and sells a pesticide called Snare. The following data are available for preparing budgets for Snare for the first 2 quarters of 2014.

1. Sales: Quarter 1, 28,900 bags; quarter 2, 42,700 bags. Selling price is $63 per bag.

2. Direct materials: Each bag of Snare requires 5 pounds of Gumm at a cost of $4 per pound and 7 pounds of Tarr at $1.50 per pound.

3. Desired inventory levels:

Type of Inventory

January 1

April 1

July 1

Snare (bags) 8,100 12,300 18,300

Gumm (pounds) 9,400 10,300 13,300

Tarr (pounds) 14,300 20,400 25,400

4. Direct labor: Direct labor time is 15 minutes per bag at an hourly rate of $14 per hour.

5. Selling and administrative expenses are expected to be 15% of sales plus $177,000 per quarter.

6. Income taxes are expected to be 30% of income from operations.

Your assistant has prepared two budgets: (1) The manufacturing overhead budget shows expected costs to be 150% of direct labor cost. (2) The direct materials budget for Tarr shows the cost of Tarr purchases to be $303,000 in quarter 1 and $425,000 in quarter 2.

prepare sales budget and production budget

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