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Sales Budget

C&C plans to sell its baseball pants for $12.00, its baseball jerseys for $14.80, and its award jackets for $125.00.
C&C Sports C&C SPORTS
4th Quarter Sales Budget - Baseball Pants Sales Forecast for 2014
Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Annual
October November December 4th Quarter Baseball pants 38,000 20,000 12,000 12,000 12,000 16,000 8,000 6,000 6,000 10,000 20,000 40,000 200,000
Budgeted Units Sold 10,000 20,000 40,000 70,000 Baseball jerseys 12,000 9,000 5,000 4,000 6,000 3,000 2,000 2,000 2,000 4,000 6,000 15,000 70,000
Budgeted Sales Price x $12.00 $12.00 $12.00 $12.00 Award jackets 0 0 0 1,000 5,000 3,000 0 0 0 1,000 5,000 3,000 18,000
Budgeted Sales Revenue = $120,000 $240,000 $480,000 $840,000

Production Budget

The vice president of operations and the inventory manager decide to hold monthly ending inventory equal to 25% of the following month's sales.
C&C is forecasting the same level of sales in January 2015 as in January 2014—38,000 pairs of pants.
C&C Sports
4th Quarter Production Budget - Baseball Pants
October November December 4th Quarter January February
Budgeted Unit Sales 10,000 20,000 40,000 70,000 38,000 22,000
Budgeted Ending Inventory + 5000 10000 9500 9500 5500
Total units Required = 15,000 30,000 49,500 79,500 43,500
Beginning inventory - 2500 5000 10000 2500 9500
Budgeted Production = 12,500 25,000 39,500 77,000 34,000
October's budgeted beginning inventory is equal to 25% of October's budgeted unit sales.
December's budgeted ending inventory is 25% of January 2015's budgeted sales of 38,000 pairs of pants.

Direct Materials Budget

For 2014, C&C decided to keep budgeted ending direct materials inventory balance of 20 percent of the following month's production requirements.
C&C Sports Item Quantity (in yards)
4th Quarter Direct Materials Purchases Budget - Baseball Pants Fabric Required fabric 0.9
October November December 4th Quarter January Waste 0.1
Budgeted Production 12,500 25,000 39,500 77,000 34,000 Spoilage 0.1
Standard Materials per unit (yards) x 1.1 1.1 1.1 1.1 1.1 Standard quantity per pair, in yards 1.1
Production Needs (yards) = 13,750 27,500 43,450 84,700 37,400
Budgeter Ending Inventory (yards) + 5500 8690 7,480 7,480 Item Price
Total Materials Required (yards) = 19,250 36,190 50,930 92,180 List price $ 3.65 
Beginning Inventory (yards) - 2,750 5500 8690 2,750 Quantity discount   (0.25)
Budgeted Materials Purchases (yards) = 16,500 30,690 42,240 89,430 Freight   0.10
Standard Price per yard x $3.50 $3.50 $3.50 $3.50 Standard price per yard 3.50
Budgeted purchases Cost = $ 57,750 $ 107,415 $ 147,840 $ 313,005
October's beginning inventory is 20% of October's producction needs.
December's ending inventory is 20% of January 2015's budgeted production needs of 34,000 pants.
*** You must prepare a separate purchases budget for each type of direct material. Following chart shows the total direct materials purchases C&C is budgeting for the fourth quarter.
C&C Sports
4th Quarter Materials Purchases Budget - Baseball Pants
October November December 4th Quarter
Fabric $ 57,750 $ 107,415 $ 147,840 $ 313,005
Snaps 900 1,674 2,304 4,878
Zipper 4,350 8,091 11,136 23,577
Waistband 1,800 3,348 4,608 9,756
Size label 750 1,395 1,920 4,065
Packaging 1,500 2,790 3,840 8,130
Total Purchases $ 67,050 $ 124,713 $ 171,648 363,411

Direct Labor Budget

C&C Sports Activity Direct Labor Hours
4th Quarter Direct Labor Budget - Baseball Pants Cutting 0.02
October November December 4th Quarter Sewing 0.18
Budgeted Production 12,500 25,000 39,500 77,000 Machine downtime 0.02
Standard Direct Labor Hours per pair x 0.25 0.25 0.25 0.25 Rest period 0.03
Total Direct labor Hours Required = 3,125 6,250 9,875 19,250 Standard direct labor hours 0.25
Standard Average Wage rate x $9.60 $9.60 $9.60 $9.60
Budgeted Direct labor Cost = $ 30,000 $ 60,000 $ 94,800 $ 184,800 Item Rate
Base hourly rate $8.00
Payroll taxes  0.60
Fringe benefits  1.00
Standard direct labor rate $9.60

Overhead Budget

C&C Sports C&C SPORTS
4th Quarter Overhead Budget - Baseball Pants Budgeted Annual Manufacturing Overhead Costs
October November December 4th Quaarter Fixed Costs Variable Costs
Direct labor Cost $ 30,000 $ 60,000 $ 94,800 $ 184,800 Indirect labor $211,000
Variable Overhead Rate per DLH dollar x $0.55 $0.55 $0.55 $0.55 Depreciation 46184
Variable Overhead Cost (DL cost x $0.55) = $ 16,500 $ 33,000 $ 52,140 $ 101,640 Indirect materials   98,000 $0.50 per direct labor dollar
Fixed Overhead Cost + 48,218 48,218 48,218 144,655 Rent  110,000
Total Budgeted Manufacturing Overhead = $ 64,718 $ 81,218 $ 100,358 $ 246,295 Utilities   17,000 $0.05 per direct labor dollar
Less: Noncash Items Insurance   55,000
Depreciation - 3,849 3,849 3,849 11,546 Other   41,436
Total Cash Costs = $ 60,870 $ 77,370 $ 96,510 $ 234,749 Total $578,620 $0.55 per direct labor dollar
Monthly fixed overhead cost equals annual fixed overhead cost divided by 12.
Monthly depreciation equals annual depriciation divided by 12.

Selling & Admin Expense Budget

Three of C&C's selling expenses are variable.
First, salespeople earn a 5% commission on all sales.
Second, bad debt expense is estimated to be 5% of sales, but it applies only to baseball pants and jerseys.
Finally, shipping expenses are estimated to be $0.40 per unit.
The remaining selling and administrative expenses are fixed annual amounts:
Office equipment depreciation: $15,612
Advertising: $160,000
Administrative salaries: $385,000
Utilities: $7,000
Since these expenses are incurred evenly throughout the year, we can calculate the monthly budgeted amounts by dividing the fixed annual amount by 12.
C&C Sports
4th Quarter Selling & Administrative Budget - Baseball Pants
October November December 4th Quarter
Budgeted Sales Revenue $120,000 $240,000 $480,000 $840,000
Comission Percentage x 0.05 0.05 0.05 0.05
Sales Commissions = $6,000 $12,000 $24,000 $42,000
Bad Debt Expense (Bdg. Sales x 5%) 6,000 12,000 24,000 42,000
Budgeted Sales (units) 10,000 20,000 40,000 70,000
Shipping Cost per unit x $0.40 $0.40 $0.40 $0.40
Shipping = $4,000 $8,000 $16,000 $28,000
Office Equipment Depreciation 1,301 1,301 1,301 3,903
Advertising 13,333 13,333 13,333 40,000
Administrative salaries 32,083 32,083 32,083 96,250
Utilities 583 583 583 1,750
Total Budgeted Expenses $63,301 $79,301 $111,301 $253,903
Less: Noncash Items
Bad Debt Expense - 6,000 12,000 24,000 42,000
Office Equipment Depreciation - 1,301 1,301 1,301 3,903
Total Cash Cost = $56,000 $66,000 $86,000 $208,000

Cost of Goods Sold Budget

The beginning raw materials balance is assumed to be $89,281.
The beginning finished goods balance is assumed to be $267,205.
C&C Sports Product Material Description Standard Quantity Standard Price Standard Product Cost
4th Quarter Ending Inventory and Cost of Goods Sold Budget - Baseball Pants Pants Fabric 1.1 yards $3.50 $3.85
Snaps 2  0.03  0.06
Raw Materials Inventory: Zipper 1  0.29  0.29
Beginning Inventory $89,281 Waistband 1  0.12  0.12
Purchases of direct materials + 363,411 Size label 1  0.05  0.05
Direct Materials used (pants) Packaging 1  0.10  0.10
Budgeted Production 77,000 $4.47
Standard materials cost per pant x $4.47
= - $344,190
Ending Raw Materials Inventory $108,502 Variable overhead = 55% x $2.40 direct labor cost = $1.32
Fixed overhead = 70% x $2.40 direct labor cost = 1.68
Finished Goods Inventory: Total standard overhead cost = $3.00
Unit Costs
Direct Materials $4.47
Direct Labor + $2.40
Overhead + $3.00
Total Standard Unit Cost = $9.87
Ending Inventory units x 9,500
Ending Finished Goods Inventory = $ 93,765
Cost of Goods Sold:
Beginning Work in Process inventory $0
Direct Materials Used $344,190
Direct Labor + 184,800
Manufacturing Overhead + 246,295
Total Manufacturing Cost $775,285
Less: Ending Work in Process Inventory 0
Cost of Goods Manufactured $775,285
Add: Beginning Finished Goods + 267,205
Less: Ending Finished Goods - $ 93,765
Cost of Goods Sold $948,725