Budgeting (Group Project) Must complete an Annual Sales Budget for Project

Arrowdale ManufacturingBudget InformationArrowdale Manufacturing is a family owned business that has been in operation for over 50 years.  Although the actual manufacturing process has greatly changed due to huge advances in technology, the chief product produced by Arrowdale remains the same ─ a high-quality stainless steel thermos bottle that is popular with construction workers and others needing a product with a high level of durability. The company is considering opening a second shift and hiring a number of new employees. Before this decision is finalized, the board of directors would like to have a sense of what they can expect in terms of sales for the upcoming year. In preparation for the next board meeting, you, as the group of managers over sales, have been asked to prepare an annual sales budget, a production budget, a direct materials budget, a direct labor budget, and a budgeted income statement for next year. Your group must be able to answer questions that board members might have concerning your calculations and how they impact the decision making. Your assistants have provided the following data:Sales budgetAnticipated volume in units600,000Unit selling price$22.50Production budgetDesired ending inventory40,000Beginning inventory35,000Direct materials budgetDirect materials per unit (pounds)2.5Desired ending direct materials in pounds45,000Beginning direct materials in pounds50,000Cost per pound (unit price)$3.50Direct labor budgetDirect labor hours per unit0.5Direct labor cost per hour$12.00Budgeted income statementTotal Cost of Goods Manufactured per unit$18.00Selling expenses660,000Administrative expenses540,000Interest expense5,000Income tax rate30%Balance sheet – current yearFinished goods inventory25,000Budgeted balance sheet – next yearFinished goods inventory20,000

 

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