Refer to the information in PB9-1.

Required:

Prepare Flying High’s budgeted income statement for quarter 2.

Data from PB9-1

Flying High Company manufactures kites that sell for \($15.00\) each. Each kite requires 2 yards of lightweight canvas, which costs \($0.50\) per yard. Each kite takes approximately 45 minutes to build, and the labor rate averages \($8.00\) per hour.

Flying High has the following inventory policies:

Ending finished goods inventory should be 30 percent of next month’s sales.

Ending raw materials inventory should be 20 percent of next month’s production.

Expected kite sales for the upcoming months are:

Variable manufacturing overhead is incurred at a rate of \($0.30\) per unit produced. Annual fixed manufacturing overhead is estimated to be \($9,000\) (\($750\) per month) for an expected production of 9,000 units for the year. Selling and administrative expenses are estimated at \($820\) per month plus \($0.75\) per unit sold.

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