Question

1.       Prepare a Sales Budget. Apple is Preparing bugets for the quarter that ends in December 31st. Budget Sales of iPhone for the next months are: September 144,000 units October 190,000 units November 260,000 units December 150,000 units January 150,000 units Selling Price is $699 per unit.

2.       The Management of Apple wants ending inventory to be equal to 10,000 sales units. On September 30, 20,000 units were on hand. Prepare a production budget.

3.       Prepare a Direct Material Budget, using the amount of $370 for the Direct Materials required per unit. Management don’t want material on hand at the end of each month.

4.       Prepare a Direct Labor Budget. For the three months, the direct labor workforce will be paid for a flat rate of $15/hour. Required work hours are 3,000 hours per month.

5.       Prepare the Overhead Budget for the Quarter with the following information: Indirect labor Oct = $20,000; Nov = $16,000; Dec = $16,000 Indirect Material Oct = $12,000; Nov = $12,000; Dec = $12,000 Utilities Oct = $7,000; Nov = $9,000; Dec = $10,000 Rent Oct = $150,000; Nov = $150,000; Dec = $150,000 Insurance Oct = $1,100; Nov = $1,000; Dec = $1,200 Maintenance Oct = $20,000; Nov = $21,000; Dec = 20,500

Answer 1

1)

Sales Budget
	Month
	October	November	December	Quarter
Budget unit sales	190,000.00	260,000.00	150,000.00	600,000.00
Budget sales price per unit	699.00	699.00	699.00	699.00
Total Budgeted Sales	132,810,000.00	181,740,000.00	104,850,000.00	419,400,000.00

2)

Production Budget
	October	November	December	Quarter
Budget unit sales	190,000.00	260,000.00	150,000.00	600,000.00
Desired Ending Inventory (in units)	10,000.00	10,000.00	10,000.00	30,000.00
Total needs	200,000.00	270,000.00	160,000.00	630,000.00
Beginning Inventory	(20,000.00)	(10,000.00)	(10,000.00)	(40,000.00)
Budget Production	180,000.00	260,000.00	150,000.00	590,000.00

3)

Direct Material Budget
	October	November	December	Quarter
Budget production units	180,000.00	260,000.00	150,000.00	590,000.00
Direct Material cost per unit	370.00	370.00	370.00	370.00
Direct Material Budget	66,600,000.00	96,200,000.00	55,500,000.00	218,300,000.00

4)

Direct Labor Budget
	October	November	December	Quarter
Direct Labor Hours per month	3,000.00	3,000.00	3,000.00	9,000.00
Direct Labor cost per hour	15.00	15.00	15.00	15.00
Direct Material Budget	45,000.00	45,000.00	45,000.00	135,000.00

5)

Overhead Budget
	October	November	December	Quarter
Indirect Labor	20,000.00	16,000.00	16,000.00	52,000.00
Indirect Material	12,000.00	12,000.00	12,000.00	36,000.00
Utilities	7,000.00	9,000.00	10,000.00	26,000.00
Rent	150,000.00	150,000.00	150,000.00	450,000.00
Insurance	1,100.00	1,000.00	1,200.00	3,300.00
Maintenance cost	20,000.00	21,000.00	20,500.00	61,500.00
Direct Material Budget	210,100.00	209,000.00	209,700.00	628,800.00