Question

Preparation of Individual Budgets

During the first calendar quarter of 2019, Clinton Corporation is planning to manufacture a new product and introduce it in two regions. Market research indicates that sales will be 6,000 units in the urban region at a unit price of $53 and 5,000 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 4,000-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. @ $3.15/lb.)			$12.60		-
B (2 lb. @ $4.65/lb.)			9.30		-
Direct labor (0.5 hours per unit)			7.50		-
Manufacturing overhead:
Depreciation			-		$7,650
Factory supplies			0.90		4,500
Supervisory salaries			-		28,800
Other			0.75		22,950
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
Other			0.08		1,950

*Varies per unit sold, not per unit produced.

a. Assuming that the desired ending inventories of materials A and B are 4,000 and 6,000 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

($Answer)

2. Production

(Answer units)

3. Material purchase cost

				Material A	Material B
Total pounds (lbs.) required for production				-	-
Desired ending materials inventory				-	-
Total pounds to be available				-	-
Beginning materials inventory				-	-
Total material to be purchased (lbs.)				-	-
Total material purchases ($)				-	-

4. Direct labor costs

($Answer)

5. Manufacturing overhead costs

			Fixed	Variable	Total
Depreciation			-	-	-
Factory supplies			-	-	-
Supervisory salaries			-	-	-
Other			-	-	-
Total manufacturing overhead					-

6. Selling and administrative expenses

			Fixed	Variable	Total
Selling expenses:
Advertising			-	-	-
Sales salaries and commissions			-	-	-
Other			-	-	-
Total selling expenses					-
Administrative expenses:
Office salaries			-	-	-
Supplies			-	-	-
Other			-	-	-
Total administrative expenses					-
Total selling and administrative expenses					-

b. Using data generated in requirement (a), prepare a budgeted income statement for the calendar quarter. Assume an overall effective income tax rate of 30%.

Round answers to the nearest whole number.
Do not use negative signs with your answers.

Clinton Corporation Budgeted Income Statement For the Quarter Ended March 31, 2019
Sales					-
Cost of Goods Sold:				-
Beginning Inventory - Finished Goods			-
Material:			-
Beginning Inventory - Material			-
Material Purchases			-
Material Available			-
Ending Inventory - Material			-
Direct Material			-
Direct Labor			-
Manufacturing Overhead			-
Total Manufacturing Cost				-
Cost of Goods Available for Sale				-
Ending Inventory - Finished Goods				-
Cost of Goods Sold					-
Gross Profit					-
Operating Expenses:
Selling Expenses				-
Administrative Expenses				-
Total Operating Expenses					-
Income before Income Taxes					-
Income Tax Expense					-
Net Income					-

the spots with a(    - ) in the boxes (not including the ones in the top box with the numbers). or the word Answer (question 1,2,4) is what I need help figuring out can you plans include how you got the answers like the steps to get the answers so I can know how to solve future problems

Answer 1

Requirement a:

Requirement 1: Total Sales:

Total sales include the sales of both the urban region and rural region.

Total sales of urban region = Units sold × Selling price per unit

= 6,000 units × $53 = $318,000

Total sales of rural region = Units sold × Selling price per unit

= 5,000 units × $48 = $240,000

So, Total sales = Sales of urban region + Sales of rural region

= $318,000 + $240,000

= $558,000 (answer)

Requirement 2: Production:

Production in units is calculated by the following formula,

Production in units = Sales in units + Desired ending inventory – Beginning inventory

But in this case, there is no beginning inventory as it is a new product.

So, Production in units = Total sales in units + Desired ending inventory

= 11,000 units + 4,000 units

= 15,000 units (answer)

Note:

Total sales in units = Units sales of urban region + Units sales of rural region

= 6,000 units + 5,000 units = 11,000 units

Requirement 3: Material Purchase Cost:

	Material A	Material B
Total pounds (lbs.) required for production (see note 1)	60,000	30,000
Desired ending materials inventory	4,000	6,000
Total pounds to be available	64,000	36,000
Beginning materials inventory (see note 2)	-	-
Total material to be purchased (lbs.)	64,000	36,000
Total material purchases (see note 3)	$ 201,600	$ 167,400

Note:

1. Total pounds (lbs.) required for production = Units produced × Materials requirement per unit

Material A = 15,000 units × 4 lbs. = 60,000 lbs.

Material B = 15,000 units × 2 lbs. = 30,000 lbs.

2. Beginning inventory is nil as it is a new product and nothing is mentioned in the problem regarding the beginning raw material inventory.

3. Total material purchases = Materials required × cost per pound

Material A = 64,000 lbs. × $3.15 = $201,600

Material B = 36,000 lbs. × $4.65 = $167,400

Requirement 4: Direct Labor Costs:

In general, direct labor cost is calculated by the following formula,

Direct labor cost = Direct labor hours × Direct labor and Direct labor hours = Units produced × Labor hours required per unit

But in this problem as Direct labor cost per unit is given (i.e., $7.50 per unit) Direct labor cost can be calculated by,

Direct labor cost = Units produced × Direct labor cost per unit

= 15,000 units × $7.50

= $112,500 (answer)

Requirement 5: Manufacturing Overhead Costs:

	Fixed	Variable	Total
Depreciation	$ 7,650	$ 0	$ 7,650
Factory supplies	$ 4,500	$ 13,500	$ 18,000
Supervisory salaries	$ 28,800	$ 0	$ 28,800
Other	$ 22,950	$ 11,250	$ 34,200
Total manufacturing overhead			$ 88,650

Note: Variable cost = Units produced (i.e., 15,000 units) × Variable cost per unit

Requirement 6: Selling and administrative expenses:

	Fixed	Variable	Total
Selling expenses:
Advertising	$ 22,500	$ 0	$ 22,500
Sales salaries and commissions	$ 15,000	$ 16,500	$ 31,500
Other	$ 3,000	$ 9,900	$ 12,900
Total selling expenses			$ 66,900
Administrative expenses:
Office salaries	$ 2,700	$ 0	$ 2,700
Supplies	$ 1,050	$ 2,250	$ 3,300
Other	$ 1,950	$ 1,200	$ 3,150
Total administrative expenses			$ 9,150
Total selling and administrative expenses			$ 76,050

Note: Variable cost of salaries & commission and other of selling expenses = Units sold × Variable cost per unit and Variable cost of supplies and other of administrative expenses = Units produced × Variable cost per unit as, it is clearly mentioned in the question.

Note: It a lengthy question with multiple parts I have answered the first part (i.e., a) with all sub-parts (i.e., 1 to 6). Please upload the question again for the remaining part.