Berthas Bathworks began manufacturing hair and bath products in 20x1. Its biggest customer is a national retail

Bertha’s Bathworks began manufacturing hair and bath products in 20x1. Its biggest customer is a national retail chain that specializes in such products. Bertha Jackson, the owner of Bertha’s Bathworks, would like to have an estimate of the company’s net income in 20x9.

Required

Calculate Bertha’s Bathworks’ net income in 20x9 by completing the operating budgets and budgeted income statement that follow.

1. Sales budget:

2. Production budget:

*Desired units of ending finished goods inventory = 10% of next quarter’s budgeted sales.
†Desired units of beginning finished goods inventory = 10% of current quarter’s budgeted sales.

3. Direct materials purchases budget:

*Desired ounces of ending direct materials inventory = 20% of next quarter’s budgeted production needs in ounces.
†Desired ounces of beginning direct materials inventory = 20% of current quarter’s budgeted production needs in ounces.

4.Direct labor budget:

5. Overhead budget:

The figures in parentheses are variable costs per unit.

6. Selling and administrative expense budget:

The figures in parentheses are variable costs per unit.

7. Cost of goods manufactured budget:

*It is the company’s policy to have no units in process at the end of the year.

8. Budgeted income statement:

*The figure in parentheses is the company’s income taxrate.

Transcribed Image Text:

Bertha's Bathworks Sales Budget For the Year Ended December 31, 20x9 Quarter Year Sales in units 4,000 3,000 5,000 5,000 17,000 ×selling price per unit × $5 × ? × ? × ? × ? Total sales $20,000 Bertha's Bathworks Production Budget For the Year Ended December 31, 20x9 Quarter 1 2 3 4Year Sales in units 4,000 ??? Plus desired units of ending finished goods inventory" Desired total units Less desired units of beginning finished goods inventoryt Total production units 300 ? 4,300 ?600 600 400 ? 3,900? ?400 Bertha's Bathworks Direct Materials Purchases Budget For the Year Ended December 31, 20x9 Quarter Year Total production units x 3 ounces per unit Total production needs in ounces Plus desired ounces of ending direct materials inventory 3,900 3,200 5,000 5,100 17,200 11,700 1,920 23,600 3,600 Less desired ounces of beginning direct materials inventoryt Total ounces of direct materials to be purchased X Cost per ounce Total cost of direct materials purchases 13,620 2,340 11,280 ?2,340 1,128 Bertha's Bathworks Direct Labor Budget For the Year Ended December 31, 20x9 Quarter 4 Year Total production units ×Direct labor hours per unit Total direct labor hours × Direct labor cost per hour Total direct labor cost 3,900 × .1 390 × $7 2,730 ×? ×? × ×? - o per hour2,30 ×? ×? ×? ×? Bertha's Bathworks Overhead Budget For the Year Ended December 31, 20x9 Quarter 2 3 4 Year Variable overhead costs Factory supplies ($.05) Employee benefits (.25) Inspection ($.10) Maintenance and repair (S.15) Utilities (5.05) S 195 ??? 975 ? ? 390???? 585 ??? 195 ? ?? 2,340 ???? Total variable overhead costs Fixed overhead costs Depreciation, machinery Depreciation, building Supervision Maintenance and repair Other overhead expenses S 500 ???? 700 ???? 1,800??? 400 ? ? ? 600 ?? 54,000 ?? ?? 56,340 ?? ?? Total fixed overhead costs Total overhead costs Bertha's Bathworks Selling and Administrative Expense Budget For the Year Ended December 31, 20x9 Quarter 2 3 4 Year Variable selling and administrative expenses Delivery expenses (S.10) Sales commissions (S.15) Accounting (5.05) Other administrative expenses ($.20) 400 ??? 600 ??? 200 ?? 800 ??? ? $2,000 ?? 5,000 ???? 1,700 ?? ?? 7,600 ??? Total variable selling and administrative expenses Fixed selling and administrative expenses Sales salaries Depreciation, office equipment Taxes and insurance 900??? Total fixed selling and administrative expenses Total selling and administrative expenses 59,600 ?? ?? Bertha's Bathworks Cost of Goods Manufactured Budget For the Year Ended December 31, 20x9 Direct materials used Direct materials inventory, December 31, 20x8 Purchases for 20x9 Cost of direct materials available for use Less direct materials inventory, December 31, 20x9 Cost of direct materials used Direct tabor costs Overhead costs Total manufacturing costs Work in process inventory, December 31, 20x8 Less work in process inventory, December 31, 20x9 Cost of goods manufactured Manufactured Cost per Unit Cost of Goods Manufactured Units Produced Bertha's Bathworks Budgeted Income Statement For the Year Ended December 31, 20x9 Sales Cost of goods sold Finished goods inventory, December 31, 20x8 Cost of goods manufactured Cost finished of goods available for sale Less finished goods inventory, December 31, 20x9 Cost of goods sold Gross margin Selling and administrative expenses Income from operations Income taxes expense (30%)" Net income