Question 1

Bacon Inc. is preparing its annual budgets for the year ending December 31, 2017. Accounting assistants furnish the following data.

	Product A	Product B
Sales Budget:
Anticipated volume in units	410 000	250 000
Unit selling price	$25	$35
Production budget:
Desired ending finished goods units	20 000	25 000
Beginning finished goods units	30 000	15 000
Direct material budget:
Direct material per unit (pounds)	2	3
Desired ending direct material pounds	50 000	10 000
Beginning direct materials pounds	40 000	20 000
Cost per pound	$2	$3
Direct labor budget:
Direct labor time per unit	0.5	0.75
Direct labor rate per hour	$12	$12
Budgeted income statement:
Total unit cost	$12	$22

An accounting assistant has prepared the detailed manufacturing overhead budget and selling and administrative expense budget. The latter shows selling expenses of $750 000 for Product A and $580 000 for Product B, and administrative expenses of $420 000 for Product A and $380 000 for Product B. Income taxes are expected to be 20%.

Required:

Prepare the following budgets for the year. Show data for each product. Quarterly budgets need not be prepared.

a) Sales

b) Production

c) Direct materials

d) Direct labor

e) Income statement