Sales BudgetJanuary - JuneMonthJanuaryFebruaryMarchAprilMayJuneTotalsBudgeted Unit Sales5008007001500160015506650Unit Selling Price $ 30 $ 30 $ 30 $ 30 $ 30 $ 30 $ 30Total Budgeted Sales $ 15,000 $ 24,000 $ 21,000 $ 45,000 $ 48,000 $ 46,500 $ 199,500 Production Budget January - June JanuaryFebruaryMarchAprilMayJuneTotalsExpected Unit Sales 500 800 700 1,500 1,600 1,550 6,650ADD: Desired Ending Finished Goods inventory 40 35 75 80 780 Total Required Units 540 835 775 1,580 1,678 1,550 6,650Less: Beginning Finshed Goods Inventory040357580780Required Production Units 540 795 740 1,505 1,598 1,473 6,650 Direct Materials BudgetJanuary - June Wood:JanuaryFebruaryMarchAprilMayJuneTotalsUnits to be produced (from production budget)540795740150515981472.56650Direct materials per unit Total board feet needed for production0000000Add: desired ending inventory00000 0Total materials Required0000000Less: beginning Inventory0000000Required Material Purchases0000000cost per board foot $ - total cost of wood Purchases $ - $ - $ - $ - $ - $ - $ - Wheels:JanuaryFebruaryMarchAprilMayJuneTotalsUnits to be produced (from production budget)540795740150515981472.56650Direct materials per unit Total wheels needed for production0000000Add: desired ending inventory00000 0Total materials Required0000000Less: beginning Inventory0000000Required Material Purchases0000000cost per wheel total cost of wheel Purchases $ - $ - $ - $ - $ - $ - $ - Total cost of Direct material Purcahses $ - $ - $ - $ - $ - $ - $ - Direct Labor BudgetJanuary - June JanuaryFebruaryMarchAprilMayJuneTotalsUnits to be produced (from production budget)540795740150515981472.56650direct Labor Hours Per Unit Total Required DL Hours0000000Cost Per DL Hour Total Monthly DL Cost$0$0$0$0$0$0 $ - Toodle Train Company makes toy trains for children. The trains are made of paintedwood with rubber wheels that really turn. The budget for unit sales for the first half of2010:January500February 800March700AprilMayJune150016001550Toodle expects July sales to be 1,750 units. Each train sells for $30. There were 25trains in Inventory on December 31, 2010. It is the company's policy to maintain afinished goods inventory at the end of each month equal to 5% of next month'santicipated sales.Each train requires two types of direct materials: wood and wheels. At December 31,2010 there was 23 board feet of wood and 206 wheels on hand.MaterialDesired EndingInventoryWood.3 board feet15% * next month's useWheels4 wheels10%* next month's useEach train requires .25 direct labor hours to produce. The average hourly wage includingbenefits is $20 per hour.Units used pertrainManufacturing Overhead costs for Toodle Train Company are as follows:$1.00 per direct labor hour$1.40 per direct labor hourIndirect MaterialsIndirect LaborUtilitiesMaintenanceSupervisory SalariesDepreciationProperty TaxesCost per unit$3 per boardfoot$ 0.10 perwheelDepreciationProperty Taxes.10 per direct labor hour and $800 per month.03 per direct labor hour and $400 per month$2,500 per month$1500 per month$80 per monthSelling and Administrative Expenses are as follows:Advertising$2,500 per monthOffice Salaries$1,800 per month$75 per month$50 per month(continued) 10% of sales are for cash; the rest are sold on account. 70% of sales on account arecollected in the month following the sale, 20% in the next month and 10% in thefollowing month. So far, Toodle Train has had no trouble with collecting all AccountsReceivable.Direct materials are all purchased on account and paid for in the month following thepurchase. Manufacturing overhead, direct labor and selling and administrative expensesare paid in the month they occur. Accounts Payable on December 31, 2010 was $400.Toodle Train Company currently has no debt. The cash balance December 31, 2010was $9,000 and company policy is to keep cash balance of at least $5,000. If the line ofcredit must be used, interest of 1% per month is paid in the following month on thebalance of the line of credit at the end of the prior month.

Question

Sales BudgetJanuary - JuneMonthJanuaryFebruaryMarchAprilMayJuneTotalsBudgeted Unit Sales5008007001500160015506650Unit Selling Price $          30 $          30 $          30 $          30 $          30 $          30 $               30Total Budgeted Sales $  15,000 $  24,000 $  21,000 $  45,000 $  48,000 $  46,500 $     199,500  Production Budget January - June          JanuaryFebruaryMarchAprilMayJuneTotalsExpected Unit Sales             500           800           700        1,500        1,600        1,550          6,650ADD: Desired Ending Finished Goods inventory               40              35              75              80              780 Total Required Units             540           835           775        1,580        1,678        1,550          6,650Less: Beginning Finshed Goods Inventory040357580780Required Production Units             540           795           740        1,505        1,598        1,473          6,650   Direct Materials BudgetJanuary - June                        Wood:JanuaryFebruaryMarchAprilMayJuneTotalsUnits to be produced (from production budget)540795740150515981472.56650Direct materials per unit       Total board feet needed for production0000000Add: desired ending inventory00000 0Total materials Required0000000Less: beginning Inventory0000000Required Material Purchases0000000cost per board foot       $         -  total cost of wood Purchases $           -   $           -   $           -   $           -   $           -   $           -   $         -          Wheels:JanuaryFebruaryMarchAprilMayJuneTotalsUnits to be produced (from production budget)540795740150515981472.56650Direct materials per unit       Total wheels needed for production0000000Add: desired ending inventory00000 0Total materials Required0000000Less: beginning Inventory0000000Required Material Purchases0000000cost per wheel       total cost of wheel Purchases $           -   $           -   $           -   $           -   $           -   $           -   $         -          Total cost of Direct material Purcahses $           -   $           -   $           -   $           -   $           -   $           -   $         -    Direct Labor BudgetJanuary - June         JanuaryFebruaryMarchAprilMayJuneTotalsUnits to be produced (from production budget)540795740150515981472.56650direct Labor Hours Per Unit       Total Required DL Hours0000000Cost Per DL Hour        Total Monthly DL Cost$0$0$0$0$0$0 $                - Toodle Train Company makes toy trains for children. The trains are made of paintedwood with rubber wheels that really turn. The budget for unit sales for the first half of2010:January500February 800March700AprilMayJune150016001550Toodle expects July sales to be 1,750 units. Each train sells for $30. There were 25trains in Inventory on December 31, 2010. It is the company's policy to maintain afinished goods inventory at the end of each month equal to 5% of next month'santicipated sales.Each train requires two types of direct materials: wood and wheels. At December 31,2010 there was 23 board feet of wood and 206 wheels on hand.MaterialDesired EndingInventoryWood.3 board feet15% * next month's useWheels4 wheels10%* next month's useEach train requires .25 direct labor hours to produce. The average hourly wage includingbenefits is $20 per hour.Units used pertrainManufacturing Overhead costs for Toodle Train Company are as follows:$1.00 per direct labor hour$1.40 per direct labor hourIndirect MaterialsIndirect LaborUtilitiesMaintenanceSupervisory SalariesDepreciationProperty TaxesCost per unit$3 per boardfoot$ 0.10 perwheelDepreciationProperty Taxes.10 per direct labor hour and $800 per month.03 per direct labor hour and $400 per month$2,500 per month$1500 per month$80 per monthSelling and Administrative Expenses are as follows:Advertising$2,500 per monthOffice Salaries$1,800 per month$75 per month$50 per month(continued) 10% of sales are for cash; the rest are sold on account. 70% of sales on account arecollected in the month following the sale, 20% in the next month and 10% in thefollowing month. So far, Toodle Train has had no trouble with collecting all AccountsReceivable.Direct materials are all purchased on account and paid for in the month following thepurchase. Manufacturing overhead, direct labor and selling and administrative expensesare paid in the month they occur. Accounts Payable on December 31, 2010 was $400.Toodle Train Company currently has no debt. The cash balance December 31, 2010was $9,000 and company policy is to keep cash balance of at least $5,000. If the line ofcredit must be used, interest of 1% per month is paid in the following month on thebalance of the line of credit at the end of the prior month.

Accepted Answer

Budgets are guidelines for manufacturing units and companies. With the help of a budget, a company…

Sales Budget
January - June
Month	January	February	March	April	May	June	Totals
Budgeted Unit Sales	500	800	700	1500	1600	1550	6650
Unit Selling Price	$ 30	$ 30	$ 30	$ 30	$ 30	$ 30	$ 30
Total Budgeted Sales	$ 15,000	$ 24,000	$ 21,000	$ 45,000	$ 48,000	$ 46,500	$ 199,500

Production Budget
January - June

	January	February	March	April	May	June	Totals
Expected Unit Sales	500	800	700	1,500	1,600	1,550	6,650
ADD: Desired Ending Finished Goods inventory	40	35	75	80	78	0
Total Required Units	540	835	775	1,580	1,678	1,550	6,650
Less: Beginning Finshed Goods Inventory	0	40	35	75	80	78	0
Required Production Units	540	795	740	1,505	1,598	1,473	6,650

Direct Materials Budget
January - June



Wood:	January	February	March	April	May	June	Totals
Units to be produced (from production budget)	540	795	740	1505	1598	1472.5	6650
Direct materials per unit
Total board feet needed for production	0	0	0	0	0	0	0
Add: desired ending inventory	0	0	0	0	0		0
Total materials Required	0	0	0	0	0	0	0
Less: beginning Inventory	0	0	0	0	0	0	0
Required Material Purchases	0	0	0	0	0	0	0
cost per board foot							$ -
total cost of wood Purchases	$ -	$ -	$ -	$ -	$ -	$ -	$ -

Wheels:	January	February	March	April	May	June	Totals
Units to be produced (from production budget)	540	795	740	1505	1598	1472.5	6650
Direct materials per unit
Total wheels needed for production	0	0	0	0	0	0	0
Add: desired ending inventory	0	0	0	0	0		0
Total materials Required	0	0	0	0	0	0	0
Less: beginning Inventory	0	0	0	0	0	0	0
Required Material Purchases	0	0	0	0	0	0	0
cost per wheel
total cost of wheel Purchases	$ -	$ -	$ -	$ -	$ -	$ -	$ -

Total cost of Direct material Purcahses	$ -	$ -	$ -	$ -	$ -	$ -	$ -

Direct Labor Budget
January - June

	January	February	March	April	May	June	Totals
Units to be produced (from production budget)	540	795	740	1505	1598	1472.5	6650
direct Labor Hours Per Unit
Total Required DL Hours	0	0	0	0	0	0	0
Cost Per DL Hour
Total Monthly DL Cost	$0	$0	$0	$0	$0	$0	$ -