Question

The Jarrad Corporation's management team is getting ready to prepare its master budget for one its product lines for the year 2019. The company produces caramel lollipops which are basically cooked down sugar on a stick, a diabetics nightmare along with many other sweet treats.

Budgeted sales of the lollipops for each quarter of 2019 are as follows:

1st Quarter-12,500 cases

2nd Quarter-14,000 cases

3rd Quarter-25,500 cases

4th Quarter-34,900 cases

There are 100 lollipops in a case and each sells for $200. Jarrad is budgeting a 5% sales price increase effective July 1,2019

The 4th Quarter 2018 sales have been budgeted at 32,000 cases and Jarrad wants to have an ending inventory carried over into 2019 of 2,000 cases.

At the end of 2019 they desire an ending inventory of 2,250 cases. Each quarter an additional 10% of that quarter's sales is to be produced as an ending inventoy to be carried over into the following quarter.

Materials:

Sugar costs the company $3.20 per lb. (16 ounces) Each lolllipop is 2 ounces of sugar which is melted down into caramel. The caramel is coated in 2 ounces of Belgian chocolate which costs the company $.28 per ounce. Each lollipop stick costs $.03

Direct Labor and Machine Hours:

The production of these lollipops is a highly automated one requring only 45 minutes to produce one case of lollipops. Of this 45 minutes, 30 minutes are automated and 15 minutes requires human interaction. The cost of running the machines during the year based on 4,500 hours is $8.75 per hour. Budget these hours evenly over the four quarters of 2019. The direct labor rate per hour is $11. The budgeted cost of operating the machinery is included in the manufacturing overhead budget for the year.

-What is the budgeted amount of sales revenues for 2019?

1st Quarter $.......................................

2nd Quarter $.....................................

3rd Quarter $......................................

4th Quarter $......................................

Total Budgeted Sales for 2019 $...............................................................

-How many cases of lollipops should be produced in 2019?

1st Quarter .......................................

2nd Quarter ......................................

3rd Quarter ......................................

4th Quarter ......................................

Total Production of Lollipops in 2019? .............................................

-What is the budgeted cost of the sugar which is required to produce the total number of lollipops to be produced in 2019? Ignore any beginning inventory which is not given. $.......................................

-What is the budgeted cost of the choclate which is required to produce the total number of lollipops budgeted in 2019? Ignore any beginning inventory which is not given. $........................................

-What is the budgeted cost of the lollipop sticks which are required to produce the lollipops in 2019? Ignore any beginning inventory which is not given $........................

-How many budgeted direct labor hous will be required to produce the total number of cases of lollipops for 2019? ................................. hours

-What is the budgeted direct labor cost for 2019? $..................................

Manufactoring Overhead Costs:

-What is the budgeted amount of machine_maintenance and operational costs for 2019?

$..............................................................

The other budgeted overhead costs include

Supervisors salaries are $40,000 per quarter (there are 2 plant supervisors)

Insurance on the factory-$22,700 annually

Rent on the warehouse-$2,000 per month

Quality Control Inspections-$5 per each case produced

Depreciation of factory equipment=$6,000 per year

Janitorial and Maintenance staff wages are budgeted at $15,000 per quarter

-What is the total budgeted overhead costs for 2019? $.................................

-What is the total budgeted manufacturing cost for the units to be produced in 2019? $.................................

-What is the budgeted cost per unit to be produced? $...................................

-What will be the budgeted cost of goods to be sold in 2019? $..................................

Selling and Administrative Expenses:

Sales Salaries are budgeted at $50,000 per quarter

Sales Commissions are budgeted at 7% of sales

Advertising is budgeted at 5% of sales

Officers and Administrative Salaries are budgeted at $110,000 per quarter

Rent on the corporate and sales offices is $2,700 per month

Depreciation on selling and office furniture and equipment=$4,200 per year

Other corporate expenses are budgeted at $7,500 per quarter

Other Nonoperating Income, Expenses, Gains and Losses:

Jarrad has an outstanding banl loan of $500,000 and it pays 8% interest each year with the principal coming due in 2020.

Jarrad is planning to replace some outdated equipment which has an estimated residual value of $32,000 in 2019. Another cpompany has offered to purchase it for $45,000 in March after all depreciation will have been taken.

Jarrad budgets income taxes based on its income before taxes at the rate of 35%.

-What will be the total budgeted selling and administrative expenses of 2019? $................................

-What will be the budgeted Income from Operations for the Jarrad Corporation for 2019? $..............................

-What will be the budgeted Non-Operating Income for Jarrad Corporation for 2019? $.........................................

-What will be the budgeted Income after taxes for the Jarrad Corporation for 2019? $..........................................

Answer 1