Haney Batting Company manufactures wood baseball bats. Haney’stwo primary products are a youth bat,
Haney Batting Company manufactures wood baseball bats. Haney’stwo primary products are a youth bat, designed for children andyoung teens, and an adult bat, designed for high school andcollege-aged players. Haney sells the bats to sporting goods storesand all sales are on account. The youth bat sells for $35; theadult bat sells for $55. Haney’s highest sales volume is in thefirst three months of the year as retailers prepare for the springbaseball season.Haney’s balance sheet for December 31, 2016,follows: Haney Batting Company Balance Sheet December 31, 2016 Assets Current Assets: Cash $ 40,000 Accounts Receivable 17,900 Raw Materials Inventory 9,000 Finished Goods Inventory 16,450 Total Current Assets $ 83,350 Property, Plant, and Equipment: Equipment 140,000 Less: Accumulated Depreciation (10,000) 130,000 Total Assets $ 213,350 Liabilities Current Liabilities: Accounts Payable $ 10,500 Stockholders’ Equity Common Stock, no par $ 140,000 Retained Earnings 62,850 Total Stockholders’ Equity 202,850 Total Liabilities and Stockholders’ Equity $ 213,350 Liabilities Current Liabilities: Accounts Payable $ 10,500 Stockholders’ Equity Common Stock, no par $ 140,000 Retained Earnings 62,850 Total Stockholders’ Equity 202,850 Total Liabilities and Stockholders’ Equity $ 213,350 a. Budgeted sales are 1,300 youth bats and 3,100 adult bats. b. Finished Goods Inventory on December 31 consists of 200 youthbats at $11 each and 750 adult bats at $19 each. c. Desired ending Finished Goods Inventory is 250 youth bats and550 adultbats; FIFO inventory costing method is used. d. Direct materials cost is $13 per youth bat and $15 per adultbat. e. Desired ending Raw Materials Inventory is $9,000 (indirectmaterials are insignificant and not considered for budgetingpurposes). f. Each bat requires 0.3 hours of direct labor; direct laborcosts average$32 per hour. g. Variable manufacturing overhead is $0.40 per bat. h. Fixed manufacturing overhead includes $600 per quarter indepreciation and $1,525 per quarter for other costs, such asinsurance and property taxes. i. Fixed selling and administrative expenses include $14,000 perquarter forsalaries; $2,500 per quarter for rent; $1,900 perquarter for insurance; and $100 per quarter for depreciation. j. Variable selling and administrative expenses include suppliesat 1% of sales. 1. Prepare Haney’s sales budget for the first quarter of2017. 2. Prepare Haney’s production budget for the first quarter of2017. 3. Prepare Haney’s direct materials budget, direct labor budget,and manufacturing overhead budget for the first quarter of 2017.Round the predetermined overhead allocation rate to two decimalplaces. The overhead allocation base is direct labor hours. 4. Prepare Haney’s cost of goods sold budget for the firstquarter of 2017. 5. Prepare Haney’s selling and administrative expense budget forthe first quarter of 2017. . . .
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