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Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead. Hershel's Chocolate produces chocolate bars and

sells them by the case $(1$ unit $=1$ case$).$ Information to be used for the operating budget this coming year follows:

Average sales price for each case is estimated to be $$25.$ Unit sales for this coming year, ending December $31,$ are expected to be as follows:

First quarter $,80,000$

Second quarter $,84,000$

Third quarter $,88,000$

Fourth quarter $,97,000$

Finished goods inventory is maintained at a level equal to $15$ percent of the next quarter's sales. Finished goods inventory at the end of the fourth quarter

budget period is estimated to be $13,000$ units.

Each unit of product requires $5$ pounds of cocoa beans for direct materials, at a cost of $$3$ per pound. Management prefers to maintain ending raw materials

inventory equal to $10$ percent of next quarter's materials needed in production. Raw materials inventory at the end of the fourth quarter budget period is

estimated to be $43,000$ pounds.

Each unit of product requires $0\mathrm{.}10$ direct labor hours at a cost of $$14$ per hour.

Variable manufacturing overhead costs are

Indirect materials $,$$$0\mathrm{.}20$ per unit

Indirect labor

$$0\mathrm{.}15$ per unit

Other

$$0\mathrm{.}10$ per unit

Fixed manufacturing overhead costs per quarter are

Salaries $$80,000$

Other

$$70,000$

Depreciation

$$55,625$

Required:

Prepare a sales budget

Prepare a production budget

Prepare a direct materials purchases budget

Prepare a direct labor budget

Prepare a manufacturing overhead budget

As the production manager, what concerns, if any, do you have about production requirements for each of the four quarters? po

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