King Tire Co.€™s budgeted unit sales for the year 2016 were:
Passenger-car tires .............................................. 120,000
Truck tires ....................................................... 25,000
The budgeted selling price for truck tires was $200 per tire, and for passenger car tires it was $65 per tire. The beginning finished goods inventories were expected to be 2,000 truck tires and 5,000 passenger tires, for a total cost of $326,478, with desired ending inventories at 2,500 and 6,000, respectively, with a total cost of $400,510. There was no anticipated beginning or ending work-in-process inventory for either type of tire. The standard materials quantities for each type of tire were as follows:

The purchase prices of rubber and steel were $2 and $3 per pound, respectively. The desired ending inventories for rubber and steel were 60,000 and 6,000 lb, respectively. The estimated beginning inventories for rubber and steel were 75,000 and 7,000 lb, respectively. The direct labor hours required for each type of tire were as follows:

The direct labor rate for each department is as follows:
Molding Department ................................................. $15 per hour
Finishing Department ................................................ $13 per hour
Budgeted factory overhead costs for 2016 were as follows:
Indirect materials.........................................................$198,500
Indirect labor............................................................... 213,200
Depreciation of building and equipment..................... 157,500
Power and light........................................................... 122,900
Total........................................................................... $692,100
Required:
Prepare each of the following budgets for King for the year ended December 31, 2016:
1. Sales budget.
2. Production budget.
3. Direct material budget.
4. Direct labor budget.
5. Factory overhead budget.
6. Cost of goods sold budget.

Transcribed Image Text:

Truck 30 lb 4 lb Passengeir Car 10 lb Rubber 1.5 lb Steel belts. .. Molding Finishing Department Department 0.25 0.15 Truck tire 0.10 0.05 Passenger car tire