Borkenstick makes a very popular undyed cloth sandal in one style, but in Regular and Deluxe. The

Question:

Borkenstick makes a very popular undyed cloth sandal in one style, but in Regular and Deluxe. The Regular sandals have cloth soles and the Deluxe sandals have cloth covered wooden soles. Borkenstick is preparing its budget for June 2012, and has estimated sales based on past experience. Other information for the month of June follows:

Borkenstick uses a FIFO cost flow assumption for finished goods inventory. All the sandals are made in batches of 50 pairs of sandals. Borkenstick incurs manufacturing overhead costs, marketing and general administration, and shipping costs. Besides materials and labor, manufacturing costs include setup, processing, and inspection costs. Borkenstick ships 40 pairs of sandals per shipment. Borkenstick uses activity-based costing and has classified all overhead costs for the month of June as shown in the following chart:

Required1. Prepare each of the following for June:a. Revenues budgetb. Production budget in unitsc. Direct material usage budget and direct material purchases budget in both units and dollars; round to dollarsd. Direct manufacturing labor cost budgete. Manufacturing overhead cost budgets for processing and setup activitiesf. Budgeted unit cost of ending finished goods inventory and ending inventories budgetg. Cost of goods sold budgeth. Marketing and general administration costs budget2. Borkenstick's balance sheet for May 31 follows. Use it and the following information to prepare a cash budget for Borkenstick for June. Round to dollars.All sales are on account; 60% are collected in the month of the sale, 38% are collected the following month, and 2% are never collected and written off as bad debts.All purchases of materials are on account. Borkenstick pays for 80% of purchases in the month of purchase and 20% in the following month.All other costs are paid in the month incurred, including the declaration and payment of a $10,000 cash dividend in June.Borkenstick is making monthly interest payments of 0.5% (6% per year) on a $100,000 long term loan.Borkenstick plans to pay the $7,200 of taxes owed as of May 31 in the month of June. Income tax expense for June is zero.30% of processing and setup costs, and 10% of marketing and general administration costs are depreciation.

3. Prepare a budgeted income statement for June and a budgeted balance sheet for Borkenstick as of June30.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Cash Budget
A cash budget is an estimation of the cash flows for a business over a specific period of time. These cash inflows and outflows include revenues collected, expenses paid, and loans receipts and payment. Its primary purpose is to provide the... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...