Griffin Systems

Projected Sales Budget 2020

Quarter
1 2 3 4 Year
Expected Unit Sales 12,000 12,000 18,000 14,000 56,000
Unit Selling Price $ 85.00 $ 85.00 $ 85.00 $ 90.00
Total Sales $ 1,020,000 $ 1,020,000 $ 1,530,000 $ 1,260,000 $ 4,830,000

Additional information for the Production Budget:

1 Beginning Finished Goods Inventory in units for Q1 2020 is 1,200 units.
2 Each quarter's Finished Goods Inventory should contain 15% of the following quarter's Expected Units Sales.
3 Estimated Q1 2021 Expected Unit Sales are projected to be 6,000.

Additional information for the Direct Materials Budget:

1 There are 4 pounds of direct materials per unit of finished goods.
2 20% of the next quarter's production materials are required to be in ending direct materials inventory.
3 40,000 pounds of material are estimated to be needed for Q1 2021 production.
4 Beginning inventory for Q1 2020 was 4,425 pounds of direct materials.
5 Total cost per pound of direct material is $8.20.

Additional information for the Direct Labor Budget:

1 There are 1.75 hours of direct labor needed to produce one unit of finished goods.
2 Direct labor is $12.00 per hour.

Additional information for the Manufacturing Overhead Budget:

1 Variable Cost
a. Indirect Materials ($.60/hour)
b. Indirect Labor ($1.00/hour)
c. Utilities ($0.20/hour)
d. Maintenance ($0.50/hour)
2 Fixed Cost
a. Supervisory Salaries $25,000 per quarter
b. Depreciation $10,000 per quarter
c. Property taxes and Insurance $8,035 per quarter
d. Maintenance/Utilities $8,950 per quarter
Manufacturing Overhead is applied to production on the basis of direct labor hours.

Griffin Systems
Projected SG&A Expense Budget 2020
Quarter
1 2 3 4 Year
Budgeted Unit Sales 12,000 12,000 18,000 14,000 $ 56,000
Variable Cost
Sales Commissions ($3.00/unit) $ 36,000 $ 36,000 $ 54,000 $ 42,000 $ 168,000
Freight-out ($1.00/unit) $ 12,000 $ 12,000 $ 18,000 $ 14,000 $ 56,000
Total variable cost $ 48,000 $ 48,000 $ 72,000 $ 56,000 $ 224,000
Fixed Cost
Advertising $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 20,000
Sales Salaries $ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 60,000
Office Salaries $ 7,500 $ 7,500 $ 7,500 $ 7,500 $ 30,000
Depreciation $ 1,377 $ 1,377 $ 1,377 $ 1,377 $ 5,508
Property Taxes and Insurance $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 6,000
Total fixed cost $ 30,377 $ 30,377 $ 30,377 $ 30,377 $ 121,508
Total SG&A $ 78,377 $ 78,377 $ 102,377 $ 86,377 $ 345,508

Additional information for the Income Statement:

1 Interest Income of $1,000 is expected to be earned in 2020.
2 Tax rate is 30%
 Griffin Systems
Production Budget
For The Year Ending December 31, 2020
Quarter
1 2 3 4 Year
Expected Unit Sales 12,000 12,000 18,000 14,000 56,000
Add: Desired Ending Finished Goods Units 1,800 2,700 2,100 900
Total Required Units 13,800 14,700 20,100 14,900
Less: Beginning Finished Goods Units 1,200 1,800 2,700 2,100
Required Production Units 12,600 12,900 17,400 12,800 55,700
 Griffin Systems
Direct Materials Budget
For The Year Ending December 31, 2020
Quarter
1 2 3 4
Units to be produced 12,600 12,900 17,400 12,800
Direct materials per unit 4 4 4 4
Total pounds needed for production 50400 51600 69600 51200
Add: Desired ending direct materials (pound 10320 13920 10240 8000
Total materials required 60720 65520 79840 59200
Less: Beginning direct materials (pounds) 4,425 10,320 13,920 10,240
Direct materials purchases 56,295 55,200 65,920 48,960
Cost per pound 8.2 8.2 8.2 8.2
Total cost of direct materials purchases $ 461,619.00 $ 452,640.00 $ 540,544.00 $ 401,472.00
Year

$ 1,856,275.00
 Griffin Systems
Direct Labor Budget
For The Year Ending December 31, 2020
Quarter
1 2 3 4
Units to be produced 12,600 12,900 17,400 12,800
Direct labor time (hours) per unit 1.75 1.75 1.75 1.75
Total required direct labor hours 22050 22575 30450 22400
Direct labor cost per hour 12 12 12 12
Total direct labor cost $ 264,600.00 $ 270,900.00 $ 365,400.00 $ 268,800.00
Year

$ 1,169,700.00
 Griffin Systems
Manufacturing Overhead Budget
For The Year Ending December 31, 2020
Quarter
1 2 3 4
Variable Costs
Indirect Materials ($0.60/hour) $ 13,230.00 $ 13,545.00 $ 18,270.00 $ 13,440.00
Indirect Labor ($1.00/hour) 22,050 22,575 30,450 22,400
Utilities ($0.20/hour) 4410 4515 6090 4480
Maintenance ($0.50/hour) 11025 11287.5 15225 11200
Total variable costs 50,715 51,923 70,035 51,520
Fixed Costs
Supervisory Salaries 25,000 25,000 25,000 25,000
Depreciation 10,000 10,000 10,000 10,000
Property taxes and insurance 8,035 8,035 8,035 8,035
Maintenance 8,950 8,950 8,950 8,950
Total fixed costs 51,985 51,985 51,985 51,985
Total manufacturing overhead $ 102,700.00 $ 103,907.50 $ 122,020.00 $ 103,505.00
Direct labor hours 22,050 22,575 30,450 22,400
Manufacturing overhead rate per direct labor hour (432,133 ÷ 97,475)
Year

$ 58,485.00
97,475
19495
48737.5
224,193

100,000
40,000
32,140
35,800
207,940
$ 432,132.50
97,475
4.43
 Griffin Systems
Budgeted Income Statement
For The Year Ending December 31, 2020
Sales $ 4,830,000.00
Cost of goods sold (56,000*67.8) 3,796,800
Gross profit 1,033,200
Selling and administrative expenses 345,508
Income from operations 687,692
Interest expense 1000
Income before income taxes 686,692
Income tax expense 206007.6
Net income $ 480,684.40
 Budgeted Total Unit Cost
Cost element Quantity Unit Cost Total
Direct materials 4 8.2 32.8
Direct labor 1.75 12 21
Manufacturing overhead 1.75 8 14
Total unit cost 67.8