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Spring Manufacturing Company makes two components identified as C12 and D57. Selected budgetary data for 2019 follow:

Finished ComponentsC12D57Requirements for each finished component:RM 110pounds8poundsRM 204poundsRM 32pounds1poundDirect labor2hours3hoursProduct information:Sales price$180$190Sales (units)12,00012,000Estimated beginning inventory (units)370140Desired ending inventory (units)300200

Direct Materials InformationRM1RM2RM3Cost per pound$6$3.50$0.50Estimated beginning inventory in pounds3,0001,3001,000Desired ending inventory in pounds3,6009001,800

The firm expects the average wage rate to be $25 per hour in 2019. Spring Manufacturing uses direct labor hours to apply overhead. Each year the firm determines the overhead application rate for the year based on budgeted direct labor hours for the year. The firm maintains negligible Work-in-Process Inventory and expects the cost per unit for both beginning and ending inventories of finished products to be identical.

Factory

Overhead

InformationIndirect materialsvariable$7,000Miscellaneous supplies and toolsvariable5,100Indirect laborvariable43,000Supervisionfixed80,000Payroll taxes and fringe benefitsvariable200,000Maintenance costsfixed23,000Maintenance costsvariable10,070Depreciationfixed71,350Heat, light, and powerfixed43,410Heat, light, and powervariable16,000Total$498,930

Selling and

Administrative

Expense InformationAdvertising$62,000Sales salaries150,000Travel and entertainment63,000Depreciationwarehouse4,600Office salaries55,000Executive salaries250,000Supplies4,500Depreciationoffice6,000Total$595,100

The effective income tax rate for the company is 30%.

Required:

1.Prepare the Sales budgetfor 2019.

2. Prepare the Production budgetfor 2019.

3. Prepare the Direct materials purchases budget (units and dollars)for 2019.

4. Prepare the Direct labor budgetfor 2019.

5. Prepare the Factory overhead budgetfor 2019.

6. Prepare the Cost of goods sold and ending finished goods inventory budgets for 2019.

7. Prepare the Selling and administrative expense budget, broken down into two components: Selling Expenses, and Administrative Expenses for 2019.

8. Prepare the Budgeted income statement, the last item of which is labeled After-tax Operating Income for 2019.