Question

The Mullins Company finished their sales projections for the coming year. The company produces one product. Part of next year's sales projections are as follows.

Projected Sales in Units

July	150,000
August	170,000
September	164,000
October	180,000
November	205,000

The budget committee has also completed the following information on inventories.

Raw Materials

Ending Balance, June, 25,000 lbs

Desired ending levels (monthly 5% of next month's production needs)

Work-In-Progress

None

Finished Goods Inventory

Ending Balance, June, 14,000 units

Desired ending levels: 15% of next month's sales

The Engineering Department has developed the following standards upon which the production budgets will be developed.

Item	Standard
Material usage	4 pounds per unit
Material price per pound	$1.80 per pound
Labor usage	0.4 hours per unit
Labor rate	$35 per hour
Machine hours	3 machine hours per unit

The Mullins Company uses a modified allocation method for allocating overhead costs. The rates that will be used in the coming year are as follows.

Overhead Item	Allocation Rate
Utilities	$0.60 per machine hour
Inspection	$11 per unit produced
Factory supplies	$3 per unit produced
Depreciation	$40,000 per month
Supervision	$15,000 per month

Prepare the following production budgets for July, August, and September for the Mullins Company.

1. Production Budget
2. Materials Purchases Budget
3. Direct Labor Budget
4. Overhead Budget
5. Manufactured Budget (for the quarter, quarter totals only)

Answer 1