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The firm expects the average wage rate to be $25 per hour in 2019. Spring Manufacturing uses direct labor hours to apply overhead. Each year the firm determines the overhead application rate for the year based on budgeted direct labor hours for the year. The firm maintains negligible Work-in-Process Inventory and expects the cost per unit for both beginning and ending inventories of finished products to be identical.

	Factory Overhead Information
Indirect materialsvariable	$	10,000
Miscellaneous supplies and toolsvariable		5,000
Indirect laborvariable		40,000
Supervisionfixed		120,000
Payroll taxes and fringe benefitsvariable		250,000
Maintenance costsfixed		20,000
Maintenance costsvariable		10,080
Depreciationfixed		71,330
Heat, light, and powerfixed		43,420
Heat, light, and powervariable		11,000
Total	$	580,830

	Selling and Administrative Expense Information
Advertising	$	60,000
Sales salaries		200,000
Travel and entertainment		60,000
Depreciationwarehouse		5,000
Office salaries		60,000
Executive salaries		250,000
Supplies		4,000
Depreciationoffice		6,000
Total	$	645,000

The effective income tax rate for the company is 40%.

Required:

1.Prepare the Sales budget for 2019.

2. Prepare the Production budget for 2019.

3. Prepare the Direct materials purchases budget (units and dollars) for 2019.

4. Prepare the Direct labor budget for 2019.

5. Prepare the Factory overhead budget for 2019.

6. Prepare the Cost of goods sold and ending finished goods inventory budgets for 2019.

7. Prepare the Selling and administrative expense budget, broken down into two components: Selling Expenses, and Administrative Expenses for 2019.

8. Prepare the Budgeted income statement, the last item of which is labeled After-tax Operating Income for 2019.

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