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Sales Budget

Canilao Company Sales Budget For the Year Ending December 31, 2003. Quarter. Expected unit sales Unit selling price Total sales. 1 3,000 x $60 $180,000. 2 3,500 x $60 $210,000. 3 4,000 x $60 $240,000.

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Sales Budget

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  1. Canilao CompanySales BudgetFor the Year Ending December 31, 2003 Quarter Expected unit salesUnit selling price Total sales 1 3,000 x $60 $180,000 2 3,500 x $60 $210,000 3 4,000 x $60 $240,000 4 4,500 x $60 $270,000 Year 15,000 x $60 $900,000 Sales Budget An estimate of expected sales for the budget period.

  2. Canilao CompanyProduction BudgetFor the Year Ending December 31, 2003 Year 15,400 2 3,500 8004,300 700 3,600 4 4,500 1,000b5,500 900 4,600 1 3,000 700 3,700 600c 3,100 3 4,000 9004,900 800 4,100 Quarter Expected unit sales (sales budget)Add: Desired ending FG unitsaTotal required unitsLess: Beginning FG units Required production units a20% of next quarter’s salesbExpected 2003 first-quarter sales, 5000 units x 20%c20% of estimated first-quarter 2002 sales units Production Budget A projection of the units that must be produced to meet anticipated sales…including a realistic estimate of ending inventory.

  3. Direct Materials Budget An estimate of the quantity and cost of direct materials to be purchased, including a realistic estimate of ending inventory. Canilao CompanyDirect Materials BudgetFor the Year Ending December 31, 2003 Quarter Year $124,800 1 3,100 x 2 6,200 720 6,920 620 6,300 x $4 $25,200 3 4,100 x 2 8,200 920 9,120 820 8,300 x $4 $33,200 4 4,600 x 2 9,200 1,020 10,220 920 9,300 x $4 $37,200 2 3,600 x 2 7,200 820 8,020 720 7,300 x $4 $29,200 Units to be produced (Illustration 6-5)Direct materials per unitTotal pounds needed for productionAdd: Desired ending Direct MaterialsTotal materials requiredLess:Beginning Direct Materials Direct materials purchasesCost per pound Total cost of DM purchases

  4. Year $308,000 1 3,100 x 26,200 x $10 $62,000 Direct Labor Budget A projection of the quantity and cost of direct labor to be incurred to meet production requirements. Canilao CompanyDirect Labor BudgetFor the Year Ending December 31, 2003 Quarter 2 3,600 x 27,200 x $10 $72,000 3 4,100 x 28,200 x $10 $82,000 4 4,600 x 29,200 x $10 $92,000 Units to be produced (from production budget Ill 6-5)Direct labor time (hours) per unitTotal required direct labor hoursDirect labor cost per hour Total direct labor cost

  5. $ 8.00 Manufacturing overhead rate per direct labor hour ($246,400  30,800) Manufacturing Overhead Budget Canilao CompanyManufacturing BudgetFor the Year Ending December 31, 2003 Quarter 1 $ 6,2008,6802,480 1,240 18,60020,0003,8009,000 5,700 38,500 $57,100 2 $ 7,20010,0802,880 1,440 21,60020,0003,8009,000 5,700 38,500 $60,100 3 $ 8,20011,4803,280 1,640 24,60020,0003,8009,000 5,700 38,500 $63,100 4 $ 9,20012,8803,680 1,840 27,60020,0003,8009,000 5,700 38,500 $66,100 Year $ 30,80043,12012,320 6,160 92,40080,00015,20036,000 22,800 154,000 $246,400 Variable Costs Indirect materials ($1.00 per DLH) Indirect labor ($1.40 per DLH) Utilities ($ .40 per DLH) Maintenance ($.20 per DLH) Total variableFixed costs Supervisory salaries Depreciation Property tax and insurance Maintenance Total fixed Total manufacturing overhead 7,200 Direct Labor hours 6,200 8,200 9,200 30,800

  6. Year $ 45,000 15,000 60,00020,00060,00030,0004,000 6,000 120,000 $180,000 1 $ 9,000 3,000 12,0005,00015,0007,5001,000 1,500 30,000 $42,000 2 $ 10,500 3,500 14,0005,00015,0007,5001,000 1,500 30,000 $44,000 3 $ 12,000 4,000 16,0005,00015,0007,5001,000 1,500 30,000 $46,000 4 $ 13,500 4,500 18,0005,00015,0007,5001,000 1,500 30,000 $48,000 Selling and Administrative Expense Budget Canilao CompanySelling & Administrative BudgetFor the Year Ending December 31, 2003 Quarter Variable Costs Sales commissions ($3 per unit) Freight-out ($1 per unit) Total variableFixed costs Advertising Sales salaries Office Salaries Depreciation Property taxes and insurance Total selling and administrative expenses Total fixed

  7. Canilao CompanyBudgeted Income StatementFor the Year Ending December 31, 2003 Sales (Illustration 6-3)Cost of goods sold (15,000 x $44)Gross profitSelling & administrative expensesIncome from operationsInterest expenseIncome before income taxesIncome tax expense Net income $900,000 660,000240,000 180,00060,000 10059,900 12,000 $ 47,900 Budgeted Income Statement An estimate of the expected profitability of operations for the budget period.

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