Prepare a manufacturing cost budget, a contribution margin income statement and a cash budget.

Harvey's general manager, Mt. Lipscomb, and president, Mr. owens, want a budget prepared for each quarter of the fiscal year 2018. They have asked various employees to gather information that they believe will be necessary for preparation of a budget. The information is presented below Neither Mr. Lipscomb nor Mr. Owens is skilled in budget preparation. Both executives have used budgets and have participated to some degree in budget preparation in prior years, but neither has prepared a full budget Soles in units and selling price (SP) in dollars per unit Historical sales for 2017 for each of the two products are shown below. (There is a typo in the budget, 2012. Please replace with 2017.) Product Sales for 2012 Screwdriver UnitsSP ary20, 1009813,500118 February 2000198 13,0001120 19 Sco9813,500 122 13,000100 12,000 125 21,500300 3,000 125 22,000202 24.000 130 22,000 105 000130 20000 1024,500130 September 19,50010023,500125 19 000 1003,000125 March April May June July Auguse2 October November 19,000 100 12,900 December 18.000100 22 900125 Harvey's sales typically peak in the summer months, beginning with May. Harvey's general manager, Mr Lipscomb, recommends that the budget be prepared with the units sold in the high sales months of May, June, anduly be used as the bases for determining the annual forecast. Mr. Lipscomb's recommendation is that annual sales be budgeted at 22,000 units per month for screwdrivers and 15,000 units per month for saws Mr. Lipscomb also believes that the budgeted selling price per unit should be equal to t hif highest selling price that could be achieved in 20:7, He would like to budget $102 per unit for screwdrivers ahd $130 per unit for saws. Mr, Lipscomb states that his management team experimented with pricing in the prior year, beginning with the first month of t he yeur You review the unit sales and unit selling price intormation for 2017 and recommend a budget based on 60,000 units of screwdrivers at 5100 each and 4o.poo units of saws at $:25 each. M. Lipscomb challenges your conclusion Likewise Mt. Owens, the company aresident, would like to hear an explanation of the budget numbers and how ar why vou calculated those mumbers 83 Sec 1 Pages: 2 of S 86% Print Layout View Words: 643 of