2 13-19: Estimate Sales Revenues Market size and our share of marketOur forecast = share x (total forecasted market)Market size last year?30%(total market) = 45,000 units;total market = 150,000 unitsMarket size next year = 110% x 150,000 units = 165,000 unitsCompany share = 25% x 165,000 units = 41,250 unitsSales revenue = 41,250 units x $11 per unit = $453,750
3 13-19: Estimate Sales Revenues Stated otherwise:(25/30) x 110% x 45,000 = 41, 250 unitsI.e., we receive 25/30 of what we would have received when the market increased 10%
4 13-24: Estimate Production and Materials Requirements Expected sales ,000 Add: Desired EI of FG ,000Total needs ,000Less: BI of FG… ,000=Units to produce ,000Our material needs will follow from this.
11 Pr. 13-44: Production Budget CHANDER, INC.Bag production cost data:Direct materials per bag:Chander, Inc.Yards of cotton1.000Production BudgetCost of cotton per yard$Coming YearYards of canvas finish0.200Expected sales270,000unitsCost of canvas per yard$Add: Desired ending inventory of finished goods105,000Direct labor per bag:Total needs375,000Number of hours0.500Less: beginning inventory of finished goods60,000Cost per hour$Units to be produced315,000Overhead per bag:Indirect labor$Estimate of costs:Indirect materials$Direct materials:Power$Cotton$1,134,000Equipment costs$Canvas630,000Building occupancy$Total direct materials1,764,000Total overhead per bagDirect labor$2,520,000Overhead:Additional Information:$ 157,500Normal annual production in units300,000$ ,250Annual plant capacity in units$ ,500Percentage increase in cost of cotton20%$ 375,000Expected sales in coming budget period$ 240,000Current finished goods inventory in unitsTotal overhead$ 914,250Targeted finished goods inventory in unitsTotal budgeted production costs$5,198,250