Mauti Inc. has gathered the following budgeting information for next year and ha

Question

Mauti Inc. has gathered the following budgeting information for next year and has asked you to prepare their master budget. Sales for the final quarter of the prior year total 1,800 units. Expected sales (in units) for the current year are: 1,620 (Quarter 1), 1,080 (Quarter 2), 1,440 (Quarter 3), and 1,440 (Quarter 4) Sales for the first quarter of the following year total 2,160 units. The selling price is $510 per unit in the first three quarters of the year, and $540 per unit in the final quarter. a. Company policy calls for a given quarter's ending finished goods inventory to equal 90% of the next quarter's expected unit sales. The finished goods inventory at the end of the prior year is 1,458 units, which complies with the policy. The product's manufacturing cost is $119 per unit, including per unit costs of $48 for materials (4 lbs. at $12 per lb.), $40 for direct labor (2 hours $20 direct labor rate per hour), $23 for variable overhead, and $8 for fixed overhead. Annual fixed overhead consists, incurred evenly throughout the year, consist of depreciation orn production equipment, $19,400; factory utilities, $24,300, and other factory overhead of $4,828. b. Company policy also calls for a given quarter's ending raw materials inventory to equal 50% of next quarter's expected materials needed for production. The prior year-end inventory is 2,268 lbs of materials, which complies with the policy. The company expects to have 4,320 lbs. of materials in inventory at year-end. The company has no work in process inventory at the end of any quarter. d. Sales representatives, commissions are 12% of sales and are paid in the quarter of the sales. The sales manager's quarterly salary will be $68,000 in the first three quarters of the year, and $72,000 in the final quarter e. Qarterly general and administrative expenses include $29,000 administrative salaries, rent expense of $17,000 per quarter, insurance expense of $14,000 per quarter, straight- line depreciation of $14,000 per quarter, and 1% monthly interest on the $200,000 long-term note payable (12% annually). f. Income taxes will be assessed at 20%, and are paid in the quarter incurred

Explanation / Answer

working Production Budget Qtr 1 Qtr 2 QTR 3 Qtr 4 Total Following year 1qtr expected sales in units 1620 1080 1440 1440 5580 2160 Add Desired Ending Inventory (90%*next month sales) 972 1296 1296 1944 1944 Total Needs 2592 2376 2736 3384 7524 Less Beginning Inventory 1458 972 1296 1296 1458 Budgeted production in units 1134 1404 1440 2088 6066 ans Qtr 1 Qtr 2 QTR 3 Qtr 4 Total Budgeted factory overhead Budgeted production in units 1134 1404 1440 2088 6066 Variable overhead per unit $23 $23 $23 $23 $23 Total variable overhead 26082 32292 33120 48024 139518 Add: fixed Factory overhead (19400+24300+4828)/3 12137 12137 12137 12137 48548 Budgeted factory overhead 38219 44429 45257 60161 188066 ans Qtr 1 Qtr 2 QTR 3 Qtr 4 Total Sales revenue A 826200 550800 734400 777600 2889000 Rate of sales commission B 12% 12% 12% 12% 12% Sales Commission A*B 99144 66096 88128 93312 346680 Sales manager salary $68,000 $68,000 $68,000 $72,000 276000 Total budgeted selling expenses $167,144 $134,096 $156,128 $165,312 $622,680 If any doubt please comment

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