Haggstrom, Inc., manufactures steel fittings. Each fittingrequires both steel and an alloy that allows the fitting to be usedunder extreme conditions. The following data apply to theproduction of the fittings:

     

Direct materials per unit
3 pounds of steel at $0.55 per pound
0.5 pounds of alloy at $2.30 per pound
Direct labor per unit
0.02 hours at $27 per hour
Overhead per unit
Indirect materials	$	0.60
Indirect labor		0.70
Utilities		0.45
Plant and equipment depreciation		0.95
Miscellaneous		0.65
Total overhead per unit	$	3.35

The plant and equipment depreciation and miscellaneous costs arefixed and are based on production of 250,000 units annually. Allother costs are variable. Plant capacity is 300,000 units annually.All other overhead costs are variable.

The following are forecast for year 2. Contract negotiationswith the union are expected to lead to an increase in hourly directlabor costs of 4 percent, mostly in the form of additionalbenefits. Commodity prices, including steel, are expected todecline by 10 percent due to the economic slowdown. Alloy pricesare expected to remain constant. Plant and equipment depreciationcosts are expected to increase by 6 percent. All other unitoverhead costs are expected to remain constant.

Haggstrom expects to sell 290,000 units in year 2. The currentinventory of fittings is 20,000 units, and management would like tosee a reduction of inventory of 10,000 units by the end of the year2. Steel and alloy inventories will not change. Sales areapproximately uniform over the year.

Required:

Prepare a production budget for the year 2.

expected sales

add: Desired ending inventory of finished goods

total needs

Less: Beginning inventory of finished goods

Units to be produced

Estimate the materials, labor, and overhead costs for year 2.(Do not round intermediate calculations.)

material costs

labor costs

overhead costs