Country Cookin\' Inc. begins the budgeting process for the following year in the
ID: 2545943 • Letter: C
Question
Country Cookin' Inc. begins the budgeting process for the following year in the 1st quarter of the current year. With the information provided below, prepare the sales, production and direct materials budgets for the 1st quarter of next year. Also determine the budgeted manufacturing cost per unit and prepare the budgeted income statement for January of next year. Country Cookin' Inc. sells the cooker/smokers they manufacture to various retailers for $130 each. Each cooker/smoker requires 11 ounces of raw material, which is purchased by Country Cookin' Inc. for $8.00 per ounce. To prepare for next month's production, Country Cookin' Inc. likes to maintain an ending stock of raw material equal to 10% of the production requirements for the current month. The company would also like to maintain an ending stock of finished cooker/smokers equal to 20% of next month's sales. Sales are projected to be 6,000 for January, 8,000 for February and 14,000 for March. Your Company expects to sell 12,000 cooker/smokers in April and needs 132,000 ounces of direct materials for production. 15% of sales from Country Cookin' Inc. to retailers are cash sales, while the remaining 85% are sold on account. Additional budgeted information includes: Month 1stQuarter Projections For Next Year January February March Direct labor $ 24,000 $ 34,500 $ 51,000 $ 109,500 Manufacturing overhead: Variable $ 28,800 $ 41,400 $ 61,200 $ 131,400 Fixed 1 $ 41,000 $ 41,000 $ 41,000 $ 123,000 Total operating expenses 2 $ 71,000 $ 74,000 $ 95,000 $ 240,000 Each cooker/smoker requires 0.25 of an hour of direct labor at the rate of $15.00. Country Cookin' Inc. estimated at the beginning of the year that it would produce 307,500 cooker/smokers next year. Interest expense is budgeted at zero since the company has no outstanding debt. Income tax expense is budgeted at 35% of income before taxes. Prepare next year's 1st quarter sales budget for Country Cookin' Inc. Country Cookin' Inc. Sales Budget For the Quarter Ended March 31 Month 1st
Quarter January February March Unit sales Unit selling price Total sales revenue Type of Sale Cash sales Credit sales Total sales revenue Prepare next year's 1st quarter production budget for Country Cookin' Inc. Country Cookin' Inc. Production Budget For the Quarter Ended March 31 Month 1st
Quarter January February March Unit sales Plus: Desired ending inventory Total needed Less: Beginning inventory Units to produce Prepare next year's 1st quarter direct materials budget for Country Cookin'. Country Cookin' Inc. Direct Materials Budget For the Quarter Ended March 31 Month 1st
Quarter January February March Units to be produced x Ounces of direct materials needed per unit Ounces needed for production Plus: Desired ending inventory of direct materials Total ounces needed Less: Beginning inventory of direct materials Ounces to purchase x Cost per ounce Total cost of direct materials purchases Prepare next year's budgeted manufacturing cost per unit for Country Cookin' Inc. Country Cookin' Inc. Budgeted Manufacturing Cost per Unit January Direct materials Direct labor Manufacturing overhead: Variable Fixed hint: you must take into account total annualized fixed costs in relation to total expected units for the year Cost of manufacturing each widget Prepare next year's budgeted income statement for the month ended January 31 for Country Cookin' Inc. Country Cookin' Inc. Budgeted Income Statement For the month ended January 31 Sales Revenue Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Less: Interest expense Less: Income tax expense Net income Country Cookin' Inc. begins the budgeting process for the following year in the 1st quarter of the current year. With the information provided below, prepare the sales, production and direct materials budgets for the 1st quarter of next year. Also determine the budgeted manufacturing cost per unit and prepare the budgeted income statement for January of next year. Country Cookin' Inc. sells the cooker/smokers they manufacture to various retailers for $130 each. Each cooker/smoker requires 11 ounces of raw material, which is purchased by Country Cookin' Inc. for $8.00 per ounce. To prepare for next month's production, Country Cookin' Inc. likes to maintain an ending stock of raw material equal to 10% of the production requirements for the current month. The company would also like to maintain an ending stock of finished cooker/smokers equal to 20% of next month's sales. Sales are projected to be 6,000 for January, 8,000 for February and 14,000 for March. Your Company expects to sell 12,000 cooker/smokers in April and needs 132,000 ounces of direct materials for production. 15% of sales from Country Cookin' Inc. to retailers are cash sales, while the remaining 85% are sold on account. Additional budgeted information includes: Month 1st
Quarter Projections For Next Year January February March Direct labor $ 24,000 $ 34,500 $ 51,000 $ 109,500 Manufacturing overhead: Variable $ 28,800 $ 41,400 $ 61,200 $ 131,400 Fixed 1 $ 41,000 $ 41,000 $ 41,000 $ 123,000 Total operating expenses 2 $ 71,000 $ 74,000 $ 95,000 $ 240,000 Each cooker/smoker requires 0.25 of an hour of direct labor at the rate of $15.00. Country Cookin' Inc. estimated at the beginning of the year that it would produce 307,500 cooker/smokers next year. Interest expense is budgeted at zero since the company has no outstanding debt. Income tax expense is budgeted at 35% of income before taxes. Prepare next year's 1st quarter sales budget for Country Cookin' Inc. Country Cookin' Inc. Sales Budget For the Quarter Ended March 31 Month 1st
Quarter January February March Unit sales Unit selling price Total sales revenue Type of Sale Cash sales Credit sales Total sales revenue Prepare next year's 1st quarter production budget for Country Cookin' Inc. Country Cookin' Inc. Production Budget For the Quarter Ended March 31 Month 1st
Quarter January February March Unit sales Plus: Desired ending inventory Total needed Less: Beginning inventory Units to produce Prepare next year's 1st quarter direct materials budget for Country Cookin'. Country Cookin' Inc. Direct Materials Budget For the Quarter Ended March 31 Month 1st
Quarter January February March Units to be produced x Ounces of direct materials needed per unit Ounces needed for production Plus: Desired ending inventory of direct materials Total ounces needed Less: Beginning inventory of direct materials Ounces to purchase x Cost per ounce Total cost of direct materials purchases Prepare next year's budgeted manufacturing cost per unit for Country Cookin' Inc. Country Cookin' Inc. Budgeted Manufacturing Cost per Unit January Direct materials Direct labor Manufacturing overhead: Variable Fixed hint: you must take into account total annualized fixed costs in relation to total expected units for the year Cost of manufacturing each widget Prepare next year's budgeted income statement for the month ended January 31 for Country Cookin' Inc. Country Cookin' Inc. Budgeted Income Statement For the month ended January 31 Sales Revenue Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Less: Interest expense Less: Income tax expense Net income
Explanation / Answer
Country Cookin' Inc. Sales Budget For the Quarter Ended March 31 Month 1st January February March Quarter Unit sales 6000 8000 14000 28000 Unit selling price $130 $130 $130 $130 Total sales revenue $780,000 $1,040,000 $1,820,000 $3,640,000 Type of Sale Cash sales (15% *T) $117,000 $156,000 $273,000 $546,000 Credit sales (85%*T) $663,000 $884,000 $1,547,000 $3,094,000 Total sales revenue $780,000 $1,040,000 $1,820,000 $3,640,000 Prepare next year's 1st quarter production budget for Country Cookin' Inc. Country Cookin' Inc. Production Budget For the Quarter Ended March 31 Month 1st January February March Quarter April Unit sales 6000 8000 14000 28000 12000 Plus: Desired ending inventory (20%*next month sales) 1600 2800 2400 2400 Total needed 7600 10800 16400 30400 Less: Beginning inventory 0 1600 2800 0 Units to produce 7600 9200 13600 30400 Prepare next year's 1st quarter direct materials budget for Country Cookin'. Country Cookin' Inc. Direct Materials Budget For the Quarter Ended March 31 Month 1st January February March Quarter Units to be produced 7600 9200 13600 30400 x Ounces of direct materials needed per unit 11 11 11 11 Ounces needed for production O 83600 101200 149600 334400 Plus: Desired ending inventory of direct materials O*10% 8360 10120 14960 14960 Total ounces needed 91960 111320 164560 349360 Less: Beginning inventory of direct materials 0 8360 10120 0 Ounces to purchase 91960 102960 154440 349360 x Cost per ounce 8 8 8 8 Total cost of direct materials purchases 735680 823680 1235520 2794880 Prepare next year's budgeted manufacturing cost per unit for Country Cookin' Inc. Country Cookin' Inc. Budgeted Manufacturing Cost per Unit January Direct materials (11*8) $88 Direct labor (.25*15) 3.75 Manufacturing overhead: Variable (41400/9200 from Feb calculation) 4.50 Fixed (41000*12)/307500 1.60 Cost of manufacturing each widget $97.85 Prepare next year's budgeted income statement for the month ended January 31 for Country Cookin' Inc. Country Cookin' Inc. Budgeted Income Statement For the month ended January 31 Sales Revenue $3,640,000 Less: Cost of goods sold (28000*97.85) $2,739,800 Gross profit $900,200 Less: Operating expenses Operating income Less: Interest expense 0 Less: Income tax expense (35%) $315,070.00 Net income $585,130.00