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Operating Budget, Comprehensive Analysis

Allison Manufacturing produces a subassembly used in the production of jet aircraft engines. The assembly is sold to engine manufacturers and aircraft maintenance facilities. Projected sales in units for the coming 5 months follow:

January	40,000
February	50,000
March	60,000
April	60,000
May	62,000

The following data pertain to production policies and manufacturing specifications followed by Allison Manufacturing:

1. Finished goods inventory on January 1 is 32,000 units, each costing $166.06. The desired ending inventory for each month is 80% of the next month's sales.
2. The data on materials used are as follows:

   Direct Material	Per-Unit Usage		DM Unit Cost ($)
   Metal	10 lbs.		8
   Components	6		5

   Inventory policy dictates that sufficient materials be on hand at the end of the month to produce 50% of the next month's production needs. This is exactly the amount of material on hand on December 31 of the prior year.
3. The direct labor used per unit of output is 3 hours. The average direct labor cost per hour is $14.25.
4. Overhead each month is estimated using a flexible budget formula. (Note: Activity is measured in direct labor hours.)

   	Fixed-Cost Component ($)		Variable-Cost Component ($)
   Supplies			1.00
   Power			0.50
   Maintenance	30,000		0.40
   Supervision	16,000
   Depreciation	200,000
   Taxes	12,000
   Other	80,000		0.50

5. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Note: Activity is measured in units sold.)

   	Fixed Costs ($)		Variable Costs ($)
   Salaries	50,000
   Commissions			2.00
   Depreciation	40,000
   Shipping			1.00
   Other	20,000		0.60

6. The unit selling price of the subassembly is $205.
7. All sales and purchases are for cash. The cash balance on January 1 equals $400,000. The firm requires a minimum ending balance of $50,000. If the firm develops a cash shortage by the end of the month, sufficient cash is borrowed to cover the shortage. Any cash borrowed is repaid at the end of the quarter, as is the interest due (cash borrowed at the end of the quarter is repaid at the end of the following quarter). The interest rate is 12% per annum. No money is owed at the beginning of January.

Schedule 6: Selling and Administrative Expenses Budget. If required, round amounts to the nearest cent. Do not include a multiplication symbol as part of your answer.

Allison Manufacturing Selling and Administrative Expenses Budget For the Quarter Ended March 31

	January	February	March	Total
Planned sales	fill in the blank 090ff80c7034fd7_1	fill in the blank 090ff80c7034fd7_2	fill in the blank 090ff80c7034fd7_3	fill in the blank 090ff80c7034fd7_4
Variable selling and administrative expenses per unit	$fill in the blank 090ff80c7034fd7_5	$fill in the blank 090ff80c7034fd7_6	$fill in the blank 090ff80c7034fd7_7	$fill in the blank 090ff80c7034fd7_8
Total variable expense	$fill in the blank 090ff80c7034fd7_9	$fill in the blank 090ff80c7034fd7_10	$fill in the blank 090ff80c7034fd7_11	$fill in the blank 090ff80c7034fd7_12
Fixed selling and administrative expenses:
Salaries	$fill in the blank 090ff80c7034fd7_13	$fill in the blank 090ff80c7034fd7_14	$fill in the blank 090ff80c7034fd7_15	$fill in the blank 090ff80c7034fd7_16
Depreciation	fill in the blank 090ff80c7034fd7_17	fill in the blank 090ff80c7034fd7_18	fill in the blank 090ff80c7034fd7_19	fill in the blank 090ff80c7034fd7_20
Other	fill in the blank 090ff80c7034fd7_21	fill in the blank 090ff80c7034fd7_22	fill in the blank 090ff80c7034fd7_23	fill in the blank 090ff80c7034fd7_24
Total fixed expenses	$fill in the blank 090ff80c7034fd7_25	$fill in the blank 090ff80c7034fd7_26	$fill in the blank 090ff80c7034fd7_27	$fill in the blank 090ff80c7034fd7_28
Total selling and administrative expenses	$fill in the blank 090ff80c7034fd7_29	$fill in the blank 090ff80c7034fd7_30	$fill in the blank 090ff80c7034fd7_31	$fill in the blank 090ff80c7034fd7_32

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g. Schedule 7: Ending Finished Goods Inventory Budget. If required, round amounts to the nearest cent.

Allison Manufacturing Ending Finished Goods Inventory Budget For the Quarter Ended March 31

Unit cost computation:
Direct materials:
Metal	$fill in the blank 30b752fb4010fb4_1
Components	fill in the blank 30b752fb4010fb4_2	$fill in the blank 30b752fb4010fb4_3
Direct labor		fill in the blank 30b752fb4010fb4_4
Overhead:
Variable		fill in the blank 30b752fb4010fb4_5
Fixed		fill in the blank 30b752fb4010fb4_6
Total unit cost		$fill in the blank 30b752fb4010fb4_7
Finished goods inventory		$fill in the blank 30b752fb4010fb4_8

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h. Schedule 8: Cost of Goods Sold Budget.

Allison Manufacturing Cost of Goods Sold Budget For the Quarter Ended March 31

Direct materials
Metal	$fill in the blank c9f547085fd0fdf_1
Components	fill in the blank c9f547085fd0fdf_2	$fill in the blank c9f547085fd0fdf_3
Direct labor used		fill in the blank c9f547085fd0fdf_4
Overhead		fill in the blank c9f547085fd0fdf_5
Budgeted manufacturing costs		$fill in the blank c9f547085fd0fdf_6
Add: Beginning finished goods		fill in the blank c9f547085fd0fdf_7
Cost of goods available for sale		$fill in the blank c9f547085fd0fdf_8
Less: Ending finished goods		fill in the blank c9f547085fd0fdf_9
Budgeted cost of goods sold		$fill in the blank c9f547085fd0fdf_10

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i. Schedule 9: Budgeted Income Statement. Use a minus sign to indicate a negative amount.

Allison Manufacturing Budgeted Income Statement For the Quarter Ended March 31

Sales	$fill in the blank f8253cf25027fae_1
Less: Cost of goods sold	fill in the blank f8253cf25027fae_2
Gross margin	$fill in the blank f8253cf25027fae_3
Less: Selling and administrative expenses	fill in the blank f8253cf25027fae_4
Income before taxes	$fill in the blank f8253cf25027fae_5

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j. Schedule 10: Cash Budget. If an amount is zero, enter "0". Use a minus sign to enter a negative amount.

Allison Manufacturing Cash Budget For the Quarter Ended March 31

	January	February	March	Total
Beginning balance	$fill in the blank eeb740f9e07000d_1	$fill in the blank eeb740f9e07000d_2	$fill in the blank eeb740f9e07000d_3	$fill in the blank eeb740f9e07000d_4
Cash receipts	fill in the blank eeb740f9e07000d_5	fill in the blank eeb740f9e07000d_6	fill in the blank eeb740f9e07000d_7	fill in the blank eeb740f9e07000d_8
Cash available	$fill in the blank eeb740f9e07000d_9	$fill in the blank eeb740f9e07000d_10	$fill in the blank eeb740f9e07000d_11	$fill in the blank eeb740f9e07000d_12
Less Disbursements:
Purchases	$fill in the blank eeb740f9e07000d_13	$fill in the blank eeb740f9e07000d_14	$fill in the blank eeb740f9e07000d_15	$fill in the blank eeb740f9e07000d_16
Direct labor	fill in the blank eeb740f9e07000d_17	fill in the blank eeb740f9e07000d_18	fill in the blank eeb740f9e07000d_19	fill in the blank eeb740f9e07000d_20
Overhead	fill in the blank eeb740f9e07000d_21	fill in the blank eeb740f9e07000d_22	fill in the blank eeb740f9e07000d_23	fill in the blank eeb740f9e07000d_24
Selling & admin.	fill in the blank eeb740f9e07000d_25	fill in the blank eeb740f9e07000d_26	fill in the blank eeb740f9e07000d_27	fill in the blank eeb740f9e07000d_28
Total	$fill in the blank eeb740f9e07000d_29	$fill in the blank eeb740f9e07000d_30	$fill in the blank eeb740f9e07000d_31	$fill in the blank eeb740f9e07000d_32
Tentative ending balance	$fill in the blank eeb740f9e07000d_33	$fill in the blank eeb740f9e07000d_34	$fill in the blank eeb740f9e07000d_35	$fill in the blank eeb740f9e07000d_36
Borrowed/repaid	fill in the blank eeb740f9e07000d_37	fill in the blank eeb740f9e07000d_38	fill in the blank eeb740f9e07000d_39	fill in the blank eeb740f9e07000d_40
Interest paid		fill in the blank eeb740f9e07000d_41		fill in the blank eeb740f9e07000d_42
Ending balance	$fill in the blank eeb740f9e07000d_43	$fill in the blank eeb740f9e07000d_44	$fill in the blank eeb740f9e07000d_45	$fill in the blank eeb740f9e07000d_46