Preparation of Individual Budgets During the first calendar quarter of 2016, ClintonCorporation is planning to manufacture a new product and introduce it in two regions. Marketresearch indicates that sales will be 6,000 units in the urban region at a price of $53 and 5,000units in the rural region at $48 each. Because the sales manager expects the product to catchon, he has asked for production sufficient to generate a 4,000-unit ending inventory. Theproduction manager has furnished the following estimates related to manufacturing costs andoperating expenses:VariableFixed(per unit)(total)Manufacturing costs:Direct materials:A (4 lb. @ $3.15/lb.)B (2 lb. @ $4.65/lb.)Direct labor (0.5 hr. Per unit)Manufacturing overhead:DepreciationFactory suppliesSupervisory salariesOther$12.609.307.50$ 7,6504,50028,80022,9500.900.75Operating expenses:Selling:Advertising22,50015,0003,000Sales salaries and commissions*1.50Other*0.90Administrative:Office salariesSuppliesOther2,7001,0501,9500.150.08*Varies per unit sold, not per unit produced.Requireda. Assuming that the desired ending inventories of materials A and B are 4,000 and 6,000pounds, respectively, and that work-in-process inventories are immaterial, preparebudgets for the calendar quarter in which the new product will be introduced for each ofthe following operating factors:1. Total sales2. Production3. Material purchases cost4. Direct labor costs5. Manufacturing overhead costs6. Selling and administrative expensesb. Using data generated in requirement (a), prepare a budget income statement for thecalendar quarter. Assume an overall effective income tax rate of 30%.

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Description: Preparation of Individual Budgets During the first calendar quarter of 2016, ClintonCorporation is planning to manufacture a new product and introduce it in two regions. Marketresearch indicates that sales will be 6,000 units in the urban region at

Working: Sales Units Price per unit Total Sales Urban 6000 53 318,000.00 Rural…

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a. Assuming that the desired ending inventories of materials A and B are 4,000 and 6,000 pounds, respectively, and that work-in-process inventories are immaterial, prepare budgets for the calendar quarter in which the new product will be introduced for each of the following operating factors: 1. Total sales 2. Production 3. Material purchases cost 4. Direct labor costs 5. Manufacturing overhead costs 6. Selling and administrative expenses b. Using data generated in requirement (a), prepare a budget income statement for the calendar quarter. Assume an overall effective income tax rate of 30%.

a. Assuming that the desired ending inventories of materials A and B are 4,000 and 6,000 pounds, respectively, and that work-in-process inventories are immaterial, prepare budgets for the calendar quarter in which the new product will be introduced for each of the following operating factors: 1. Total sales 2. Production 3. Material purchases cost 4. Direct labor costs 5. Manufacturing overhead costs 6. Selling and administrative expenses b. Using data generated in requirement (a), prepare a budget income statement for the calendar quarter. Assume an overall effective income tax rate of 30%.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 4P

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