Question

Haney Batting Company manufactures wood baseball bats. Haney's two primary products are a youth bat, designed for children and young teens, and an adult bat, designed for high school and college-aged players. Haney sells the bats to sporting goods stores and all sales are on account. The youth bat sells for $35; the adult bat sells for $55. Haney's highest sales volume is in the first three months of the year as retailers prepare for the spring baseball season.Haney's balance sheet for December 31, 2016, follows:

Haney Batting Company

Balance Sheet

December 31, 2016

Assets

Current Assets: Cash $ 40,000

Accounts Receivable 17,900

Raw Materials Inventory 9,000

Finished Goods Inventory 16,450

Total Current Assets $ 83,350

Property, Plant, and Equipment: Equipment 140,000

Less: Accumulated Depreciation (10,000) 130,000

Total Assets $ 213,350

Liabilities

Current Liabilities:

Accounts Payable $ 10,500

Stockholders' Equity

Common Stock, no par $ 140,000

Retained Earnings 62,850

Total Stockholders' Equity 202,850

Total Liabilities and Stockholders' Equity $ 213,350

Liabilities Current Liabilities:

Accounts Payable $ 10,500

Stockholders' Equity Common Stock, no par $ 140,000

Retained Earnings 62,850

Total Stockholders' Equity 202,850

Total Liabilities and Stockholders' Equity $ 213,350

a. Budgeted sales are 1,300 youth bats and 3,100 adult bats.

b. Finished Goods Inventory on December 31 consists of 200 youth bats at $11 each and 750 adult bats at $19 each.

c. Desired ending Finished Goods Inventory is 250 youth bats and 550 adultbats; FIFO inventory costing method is used.

d. Direct materials cost is $13 per youth bat and $15 per adult bat.

e. Desired ending Raw Materials Inventory is $9,000 (indirect materials are insignificant and not considered for budgeting purposes).

f. Each bat requires 0.3 hours of direct labor; direct labor costs average$32 per hour.

g. Variable manufacturing overhead is $0.40 per bat.

h. Fixed manufacturing overhead includes $600 per quarter in depreciation and $1,525 per quarter for other costs, such as insurance and property taxes.

i. Fixed selling and administrative expenses include $14,000 per quarter forsalaries; $2,500 per quarter for rent; $1,900 per quarter for insurance; and $100 per quarter for depreciation.

j. Variable selling and administrative expenses include supplies at 1% of sales.

1. Prepare Haney's sales budget for the first quarter of 2017.

2. Prepare Haney's production budget for the first quarter of 2017.

3. Prepare Haney's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of 2017. Round the predetermined overhead allocation rate to two decimal places. The overhead allocation base is direct labor hours.

4. Prepare Haney's cost of goods sold budget for the first quarter of 2017.

5. Prepare Haney's selling and administrative expense budget for the first quarter of 2017.

Answer 1

As per policy, only four parts of a question can be answered, so answering 1 - 4,

1) Sales Budget budget for the first quarter of 2017 :

	Youth bat	Adult bat	Total
Sales desired	1300	3100
Selling price @	35	55
Total Sales Amount $	45500	170500	216000

2) Production Budget :

	Youth bat	Adult bat
Sales desired	1300	3100
add: expected C Stock	250	550
Total Stock required	1550	3650
less: opening stock of FG	-200	-750
Expected Production units	1350	2900

3) Raw Material Budget :

	Youth bat	Adult bat	Total
Sales desired	1350	2900
R M cost @	13	15
Expected RM Amount $	17550	43500	61050

Direct Labor Budget :

	Youth bat	Adult bat	Total
Sales desired	1350	2900
DL hours required per bat	0.3	0.3
Total DL hours required	405	870
D L rate per hour $	32	32
Expected DL costs $	12960	27840	40800

Manufacturing Overhead Budget :

	Youth bat	Adult bat	Total
Sales desired	1350	2900
Variable Manuf OH cost per bat $	0.4	0.4
Expected Variable OH cost $ (A)	540	1160	1700
Fixed OH Pre-deter rate $(2125/1275=$1.67/bat)	1.67	1.67
D L Hours	405	870
Expected Fixed overhead cost $ (B)	676	1452	2128
Total Manufacturing OH cost $ (A+B)	1216	2612	3828

4) Cost of Goods Sold Budget :

	Youth bat	Adult bat	Total
Expected DM used	17550	43500	61050
Expected DL used	12960	27840	40800
Expected Manuf. OH required	1216	2612	3828
Total Manufacturing Cost $	35554	73952	109506
Desired Production	1350	2900
Production cost per bat	26.34	25.50
Closing FG stock	250	550
Expected FG cost $	6585	14025	20610
COGS from present production	28969	59927	88896
Add: Cost of Opening Stock	2200	14250	16450
Total COGS	31169	74177	105346