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 invenroy 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 Mchine 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. $.......................................

Answer 1

1st quarter sales - $	2500000
2nd quarter sales - $	2800000
3rd quarter sales - $	5100000
4th quarter sales - $	6980000
Total budgeted Sales for 2019 - $	17380000

Working:

	Q 1	Q 2	Q 3	Q 4	Total
Budgeted sales - cases	12500	14000	25500	34900	86900
Unit selling price	200	200	200	200	200
Budgeted Sales - $	2500000	2800000	5100000	6980000	17380000

1st quarter	1175000
2nd quarter	1415000
3rd quarter	2665000
4th quarter	3460000
Budgeted production of lollipops for 2019	8715000

Working:

	Q 1	Q 2	Q 3	Q 4	Total
Budgeted sales - cases	12500	14000	25500	34900	86900
Add: Ending Inventory	1250	1400	2550	2250	2250
	13750	15400	28050	37150	89150
Less: Beginning Inventory	2000	1250	1400	2550	2000
Budgeted Production - cases	11750	14150	26650	34600	87150
number of lollipops per case	100	100	100	100	100
Budgeted production - lollipops	1175000	1415000	2665000	3460000	8715000

Cost of sugar required for the budgeted prosuction $3,486,000

Working:

Total number of lollipops produced	8715000
Sugar required for each lollipop (ounce)	2
Total sugar required for production (ounce)	17430000
Cost per lb (16 ounces) of sugar - $	3.2
Cost of sugar required for production - $	3486000