7-4 The company Linares, SA , produces several product lines, among which is the filled chocolates.

Because the company accountant is on vacation and the only person who knows how to develop budgets, the assessor is asked to draw on management accounting : a) the sales budget and b) the production budget. The data below are relevant : FILLED CHOCOLATES Materials ( raw material) : Chocolate Filling Direct Labor 5 grams 10 grams 5 minutes

Indirect manufacturing costs are applied based on hours of direct labor . The sales department estimates , based on market analysis and reviews of sellers, sales of Filled Chocolates for next year will be 1'000 000 chocolates. Also, do know that the price is expected to sell the box is $ 50 and each box contains 25 chocolates. The balance of the company at December 31, 2001 , shows an inventory of 250 000 300 000 chocolates and chocolates are desired inventory at the end of 2002.

EXERCISE. 7.4 PREPARE THE BUDGET SALES AND PRODUCTION

SALES BUDGET
PROJECTED SALES (*) PRODUCT PRICE (=) BUDGET OF SALES 1000000 Chocolates $ 2.00 2000000 Chocolates

BUDGET PRODUCTION
BUDGET SALES (+) WANTED ENDING INVENTORY (-) BEGINNING INVENTORY (=) TOTAL PRODUCTION REQUIRED 1000000 Chocolates 300000 Chocolates 250000 Chocolates 1050000 Chocolates

KIMBERLY GAYBOR UCE