Sales Budget

XYZ Company 2018 sales forecast is as follows:

Quarter 1: 7,000 Product Ace units. Quarter 2: 9,000 Product Aceunits. Quarter 3: 10,000 Product Ace units. Quarter 4: 12,000Product Ace units

Each unit sells for $60

Production Budget

The January 1, 2018 beginning inventory of Product Ace is 4,000units. Management desires an ending inventory each quarter equal to30% of the next Quarter's sales. Sales in the first and secondquarter of 2019 are expected to be 10% higher than sales in thesame quarter in 2018.

Direct Materials Budget

Each unit requires 3 pounds of raw materials costing $1 perpound. On December 31, 2017 the ending raw materials inventory was1,000 pounds. Management wants to have raw materials inventory atthe end of each quarter equal to 15% of the next quarter'sproduction requirements.

Direct Labor Budget

Each unit requires 2.5 hours of direct labor. Wage rates areexpected to be $10 per hour for the year.

Manufacturing overhead budget

Relevant data consists of the following:

Variable overhead costs per direct labor hour: indirectmaterials: $0.90; indirect labor: $1.40; and maintenance:$0.60.

Fixed overhead costs per quarter: supervisory salaries: $30,000;depreciation: $10,000 and property taxes on factory: $15,000.

Round the predetermined overhead rate to two decimal places.

Selling and administrative expense budget

Variable costs per dollar of sales: sales commission 4%;delivery expense 1%; advertising 55; fixed costs per quarter: salessalaries $11,000; depreciation $3,000; insurance $1,500

Prepare each budget listed above by quarter and thenprepare a budgeted income statement for the year 2018. Round thecost per unit to two decimal places. Round cost of goods sold tothe nearest dollar assume interest expense to be $210,000. Assumethe income tax rate to be 25%.