1. |
1. |
Sales were 20,000 units in June 2015. Forecasted sales in units are as |
follows: July, 18,000; August, 22,000; September, 20,000; October, 24,000. The | ||
sales price per unit is $ 18.00 and the total product cost is $ 14.35 per unit. | ||
2. |
2. |
The June 30 finished goods inventory is 16,800 units. |
3. |
3. |
Company policy calls for a given month ' s ending finished goods inventory |
to equal 70 % of the next month ' s expected unit sales. | ||
4. |
4. |
The June 30 raw materials inventory is 4,600 units. The budgeted |
September 30 raw materials inventory is 1,980 units. Raw materials cost $ 7.75 | ||
per unit. Each finished unit requires 0.50 units of raw materials. Company policy | ||
calls for a given month’ s ending raw materials inventory to equal 20 % of the next | ||
month’ s materials requirements. | ||
5. |
5. |
Each finished unit requires 0.50 hours of direct labor at a rate of $ 16 per |
hour. | ||
6. |
6. |
Overhead is allocated based on units of production. The predetermined |
variable overhead rate is $ 1.35 per unit produced. Depreciation of $ 20,000 per | ||
month is treated as fixed factory overhead. | ||
7. |
7. |
Monthly general and administrative expenses include $ 12,000 |
administrative salaries and 0.9 % monthly interest on the long-term note payable. | ||
8. |
8. |
Sales commissions are 12 % of sales and are paid in the month of the |
sales. The sales manager’ s monthly salary is $ 3,750 per month. The following | ||
critical elements must be addressed by completing the budget templates found | ||
on the“ Budgets” tab. | ||