Comprehensive Profit Plan Spring Manufacturing Company makes

Comprehensive Profit Plan Spring Manufacturing Company makes two components identified as C12 and D57. Selected budgetary data for 2016 follow Finished Components C12 D57 Requirements for each finished component RM 1 RM 2 RM 3 Direct labor 8 pounds 4 pounds 1 pound 3 hours 10 pounds 2 pounds 2 hours Product information: Sales price Sales (units) Estimated beginning inventory (units) Desired ending inventory (units) $150 12,000 400 300 S220 9,000 150 200 Direct Materials Information RM1 S 2.00 3,000 4,000 RM2 $2.50 1,500 1,000 RM3 Cost per pound Estimated beginning inventory in pounds Desired ending inventory in pounds 0.50 1,000 1,500

Solution

Sales budget C12 D57 Year End Sales in units 12000 9000 21000 Selling Price per unit 150 220 Gross Sales 1800000 1980000 3780000 Production Budget C12 D57 Year End Budgeted Sales (Units) 12000 9000 21000 Add: Desired ending inventory of finished units 300 200 200 Total units needed 12300 9200 21200 Less: Beginning inventory of finished units 400 150 400 Budgeted production units 11900 9050 20800 Direct material purchase budget (Units and Dollars) Production requirement C12 D57 Year End Budgeted Production 11900 9050 20950 Pounds of RM per Unit RM1 10 8 18 RM2 0 4 4 RM3 2 1 3 RM1 119000 72400 191400 RM2 0 36200 36200 RM3 23800 9050 32850 Total pounds of RM needed 142800 117650 260450 RM 1 C12 D57 Total Budgeted Production 11900 9050 20950 Pounds per unit 10 8 119000 72400 191400 Add:Desired ending inventory 4000 Total RM 1 needed 195400 Less:Beginning Inventory 3000 Required Purhases or RM 1 192400 Cost per pound 2 Budgeted purchases RM1 384800 RM 2 C12 D57 Total Budgeted Production 11900 9050 20950 Pounds per unit 0 4 Total RM 2 needed 0 36200 36200 Add:Desired ending inventory 1000 Total RM 2 needed 37200 Less:Beginning Inventory 1500 Required Purhases or RM 2 35700 Cost per pound 2.5 Budgeted purchases RM2 89250 RM3 C12 D57 Total Budgeted Production 11900 9050 20950 Pounds per unit 2 1 Total RM 3 needed 23800 9050 32850 Add:Desired ending inventory 1500 Total RM 3 needed 34350 Less:Beginning Inventory 1000 Required Purhases or RM 3 33350 Cost per pound 0.5 Budgeted purchases RM2 16675 Direct labor budget Bariable Over head Indirect Materials 10000 Misc Supplies and tools 5000 Indirect Labor 40000 payrol taxes fringe benefits 250000 maintenance costs 10080 Heat light and power 11000 326080 Fixed over head Supervision 120000 maintenance costs 20000 Heat llight and power 43420 Total Cash Fixed Factory 183420 Depriciation 71330 254750 Total Budget Factory Over head 580830 Cost of goods sold and ending inventory budget C12 D57 Total Sales Volume 12000 9000 21000 Cost per unit 94 136 Cost of Goods sold 1125600 1221300 2346900 Finished goods ending inventory 300 200 Cost per unit 94 136 Budgeted ending Inventories 28140 27140 55280 Cost per unit C12 Costs Unit input cost Quantity Cost per unit RM1 2 10 20 RM2 2.5 0 0 RM3 0.5 2 1 Direct Labor 25 2 50 Factory OH 6.4 2 12.8 Fixed OH 5 2 10 Manufacturing Cost per unit 93.8 Cost per unit D57 Costs Unit input cost Quantity Cost per unit RM1 2 8 16 RM2 2.5 4 10 RM3 0.5 1 0.5 Direct Labor 25 3 75 Factory OH 6.4 3 19.2 Fixed OH 5 3 15 Manufacturing Cost per unit 135.7 Selling and administrative expense budget Selling expense Advertising 60000 Sales salaries 200000 travel and equipment 60000 depriciation 5000 325000 Administrative expenses Office salaries 60000 execuitve salaries 250000 supplies 4000 depriciation 6000 320000 total selling/ admin expense 645000 Budgeted Income statement Sales 3780000 COGS 2346900 Gross profit 1433100 Selling and administrative expense 645000 Pre-tax operaing Income 788100 Income Taxes @ 40% 315240 Net Income 472860