Master budget

Vista Electronics, Inc. manufactures two different types of coils used in electric motors. In the fall of the current year, Erica Becker, the controller, compiled the following data.

Sales forecast for 20x0 (all in units to be shipped in 20x0)

Product Units Price
Light coil.........................60,000...................$65
Heavy coil........................40,000....................95

Raw-material prices and inventory levels:

Expected inventories, Desired inventories, Anticipated
Raw material January 1, 20x0 December 31, 20x0 Purchase price

Sheet metal.................32,000 lb. 36,000 lb. $8
Copper wire................29,000 lb. 32,000 lb. 5
Platforms....................6,000 units 7,000 units 3

Use of raw material:

Amount used per unit
Raw material light coil heavy coil
Sheet metal.........................................4lb. 5 lb.
Copper wire..........................................2 lb. 3 lb.
Platforms.................................... 1 unit

Direct-labor requirements and rates:

Product Hours per unit Rate per hour
Light coil....................................2 $15
Heavy coil..................................3 20

Finished-goods inventories (in units)

Expected Desired
Product January 1, 20x0 December 31, 20x0
Light coil................................20,000 25,000
Heavy coil................................8,000 9,000

Manufacturing overhead:

Overhead cost item Activity-based budget rate
Purchasing and material handling..........$.25 per pound of sheet metal and copper wire purchased

Depreciation, utilities, and inspection......$4.00 per coil produced (either type)

Shipping........................................$1.00 per coil shipped (either type)

General manufacturing overhead............$3.00 per direct-labor hour

Prepare the following budgets for 20x0.

1. Sales budget (in dollars).
2. Raw-material purchases budget (in quantities).
3. Raw-material purchases budget (in dollars).
4. Direct-labor budget (in dollars).