PA$8-4($Algo$)$ Preparing Operating Budget Components $[$LO $8-3$a$,$ b$,$ c$,$ d$]$

Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Each handisaw sells for $$58.$ Wesley expects the following unit sales:

January $5,000$

February $5,200$

March $5,700$

April $5,500$

May $4,900$

Wesley$$s ending finished goods inventory policy is $25$ percent of the next month$$s sales.

Suppose each handisaw takes approximately $0\mathrm{.}60$ hours to manufacture, and Wesley pays an average labor wage of $$20$ per hour.

Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $$8\mathrm{.}00$ each. The company has an ending direct materials inventory policy of $20$ percent of the following month$$s production requirements. Materials other than the housing unit total $$4\mathrm{.}50$ per handisaw.

Manufacturing overhead for this product includes $$72,000$ annual fixed overhead $($based on production of $27,000$ units$)$ and $$1\mathrm{.}20$ per unit variable manufacturing overhead. Wesley$$s selling expenses are $7$ percent of sales dollars, and administrative expenses are fixed at $$18,000$ per month.

Required:

Compute the following for the first quarter: $($Round your intermediate calculations to nearest whole dollar.$)$