Refer to the information presented in PB9-4 regarding Black & Decker’s glue gun product.

Required:

Prepare the following for the first quarter:

1. Cost of goods sold budget.

2. Selling and administrative expense budget.

3. Budgeted income statement for the glue gun product.

Data from PB9-4

Black & Decker (B&D) manufactures a wide variety of tools and accessories. One of its more popular craft-related items is the cord free glue gun. Use the following fictitious information about this product to complete the problem requirements. Each glue gun sells for \($25\). B&D expects the following unit sales.

B&D’s ending finished goods inventory policy is 30 percent of the following months budgeted sales.
Suppose each glue gun takes approximately 0.5 hours to manufacture, and B&D pays an average labor wage of \($16.50\) per hour.
Each glue gun requires a heating element that B&D purchases from a supplier at a cost of \($1.25\) each. The company has an ending raw materials inventory policy of 40 percent of the following month’s production requirements. Materials other than the heating elements total \($3.25\) per glue gun.
Manufacturing overhead for this product includes \($96,900\) annual fixed overhead (based on production of 102,000 units) and variable manufacturing overhead of \($0.80\) per unit. B&D’s selling expenses are 5 percent of sales dollars, and administrative expenses for this product are fixed at \($17,500\) per month.

January 8,000 February 7,400 March 8,700 April 9,500 May 9,150