Budgeted Income Statement and Supporting An accounting device used to plan and control resources of operational departments and divisions.Budgets

The budget director of Gold Medal Athletic Co., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for March:

Estimated sales for March:

Batting helmet 1,200 units at $40 per unit Football helmet 6,500 units at $160 per unit

Estimated inventories at March 1:

Direct materials: Plastic 90 lbs. Foam lining 80 lbs. Finished products: Batting helmet 40 units at $25 per unit Football helmet 240 units at $77 per unit

Desired inventories at March 31:

Direct materials: Plastic 50 lbs. Foam lining 65 lbs. Finished products: Batting helmet 50 units at $25 per unit Football helmet 220 units at $78 per unit

Direct materials used in production:

In manufacture of batting helmet: Plastic 1.2 lbs. per unit of product Foam lining 0.5 lb. per unit of product In manufacture of football helmet: Plastic 3.5 lbs. per unit of product Foam lining 1.5 lbs. per unit of product

Anticipated cost of purchases and beginning and ending inventory of direct materials:

Plastic $6 per lb. Foam lining $4 per lb.

Direct labor requirements:

Batting helmet: Molding Department 0.2 hr. at $20 per hr. Assembly Department 0.5 hr. at $14 per hr. Football helmet: Molding Department 0.5 hr. at $20 per hr. Assembly Department 1.8 hrs. at $14 per hr.

Estimated factory overhead costs for March:

Indirect factory wages $86,000 Depreciation of plant and equipment 12,000 Power and light 4,000 Insurance and property tax 2,300

Estimated operating expenses for March:

Sales salaries expense $184,300 Advertising expense 87,200 Office salaries expense 32,400 Depreciation expenseoffice equipment 3,800 Telephone expenseselling 5,800 Telephone expenseadministrative 1,200 Travel expenseselling 9,000 Office supplies expense 1,100 Miscellaneous administrative expense 1,000

Estimated other income and expense for March:

Interest revenue $940 Interest expense 872

Estimated tax rate: 30%

Required:

1. Prepare a One of the major elements of the income statement budget that indicates the quantity of estimated sales and the expected unit selling price.sales budget for March. Enter all amounts as positive numbers.

Gold Medal Athletic Co. Sales Budget For the Month Ending March 31 Unit Sales Volume Unit Selling Price Total Sales Batting helmet $ $ Football helmet Total revenue from sales $

2. Prepare a A budget of estimated unit production.production budget for March. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Gold Medal Athletic Co. Production Budget For the Month Ending March 31 Units Batting helmet Football helmet

Desired inventory, March 31 Estimated inventory, March 1 Expected units to be sold Total units available Total units to be produced

Desired inventory, March 31 Estimated inventory, March 1 Expected units to be sold Total units available Total units to be produced

Desired inventory, March 31 Estimated inventory, March 1 Expected units to be sold Total units available Total units to be produced

Desired inventory, March 31 Estimated inventory, March 1 Expected units to be sold Total units available Total units to be produced

Desired inventory, March 31 Estimated inventory, March 1 Expected units to be sold Total units available Total units to be produced

3. Prepare a A budget that uses the production budget as a starting point to budget materials purchases.direct materials purchases budget for March. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Gold Medal Athletic Co. Direct Materials Purchases Budget For the Month Ending March 31 Plastic Foam Lining Total Units required for production: Batting helmet Football helmet Desired units of inventory, March 31 Total units available Estimated units of inventory, March 1 Total units to be purchased Unit price $ $ Total direct materials to be purchased $ $ $

4. Prepare a Budget that estimates direct labor hours and related costs needed to support budgeted production.direct labor cost budget for March. Enter all amounts as positive numbers.

Gold Medal Athletic Co. Direct Labor Cost Budget For the Month Ending March 31 Molding Department Assembly Department Total Hours required for production: Batting helmet Football helmet Total Hourly rate $ $ Total direct labor cost $ $ $

5. Prepare a Budget that estimates the cost for each item of factory overhead needed to support budgeted production.factory overhead cost budget for March.

Gold Medal Athletic Co. Factory Overhead Cost Budget For the Month Ending March 31 Indirect factory wages

Advertising expense Indirect factory wages Office salaries expense Office supplies expense Sales salaries expense

$ Depreciation of plant and equipment

Advertising expense Depreciation of plant and equipment Office salaries expense Office supplies expense Sales salaries expense

Power and light

Advertising expense Office salaries expense Office supplies expense Power and light Sales salaries expense

Insurance and property tax

Advertising expense Insurance and property tax Office salaries expense Office supplies expense Sales salaries expense

Total $

6. Prepare a A budget of the estimated direct materials, direct labor, and factory overhead consumed by sold products.cost of goods sold budget for March. Work in process at the beginning of March is estimated to be $15,300, and work in process at the end of March is desired to be $14,800. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Gold Medal Athletic Co. Cost of Goods Sold Budget For the Month Ending March 31 Finished goods inventory, March 1

Direct materials inventory, March 1 Direct materials inventory, March 31 Direct materials purchases Factory overhead Finished goods inventory, March 1 Finished goods inventory, March 31

$ Work in process inventory, March 1

Direct materials inventory, March 1 Direct materials inventory, March 31 Direct materials purchases Factory overhead Work in process inventory, March 1 Work in process inventory, March 31

$ Direct materials: Direct materials inventory, March 1

Direct materials inventory, March 1 Direct materials inventory, March 31 Finished goods inventory, March 1 Finished goods inventory, March 31 Work in process inventory, March 1 Work in process inventory, March 31

$ Direct materials purchases

Direct labor Direct materials purchases Factory overhead Finished goods inventory, March 31 Work in process inventory, March 1 Work in process inventory, March 31

Cost of direct materials available for use $ Direct materials inventory, March 31

Direct materials inventory, March 1 Direct materials inventory, March 31 Finished goods inventory, March 1 Finished goods inventory, March 31 Work in process inventory, March 1 Work in process inventory, March 31

Cost of direct materials placed in production $ Direct labor

Direct labor Direct materials purchases Finished goods inventory, March 1 Finished goods inventory, March 31 Work in process inventory, March 1 Work in process inventory, March 31

Factory overhead

Direct materials purchases Factory overhead Finished goods inventory, March 1 Finished goods inventory, March 31 Work in process inventory, March 1 Work in process inventory, March 31

Total manufacturing costs Total work in process during period $ Work in process inventory, March 31

Direct materials inventory, March 1 Direct materials inventory, March 31 Finished goods inventory, March 1 Finished goods inventory, March 31 Work in process inventory, March 1 Work in process inventory, March 31

Cost of goods manufactured Cost of finished goods available for sale $ Finished goods inventory, March 31

Direct materials inventory, March 1 Direct materials inventory, March 31 Finished goods inventory, March 1 Finished goods inventory, March 31 Work in process inventory, March 1 Work in process inventory, March 31

Cost of goods sold $

7. Prepare a selling and administrative expenses budget for March.

Gold Medal Athletic Co. Selling and Administrative Expenses Budget For the Month Ending March 31 Selling expenses: Sales salaries expense

Depreciation expenseoffice equipment Miscellaneous administrative expense Office salaries expense Office supplies expense Sales salaries expense Telephone expenseadministrative

$ Advertising expense

Advertising expense Depreciation expenseoffice equipment Miscellaneous administrative expense Office salaries expense Office supplies expense Telephone expenseadministrative

Telephone expenseselling

Depreciation expenseoffice equipment Miscellaneous administrative expense Office salaries expense Office supplies expense Telephone expenseadministrative Telephone expenseselling

Travel expenseselling

Depreciation expenseoffice equipment Miscellaneous administrative expense Office salaries expense Office supplies expense Telephone expenseadministrative Travel expenseselling

Total selling expenses $ Administrative expenses: Office salaries expense

Advertising expense Office salaries expense Power and light Sales salaries expense Telephone expenseselling Travel expenseselling

$ Depreciation expenseoffice equipment

Advertising expense Depreciation expenseoffice equipment Power and light Sales salaries expense Telephone expenseselling Travel expenseselling

Telephone expenseadministrative

Advertising expense Power and light Sales salaries expense Telephone expenseadministrative Telephone expenseselling Travel expenseselling

Office supplies expense

Advertising expense Office supplies expense Power and light Sales salaries expense Telephone expenseselling Travel expenseselling

Miscellaneous administrative expense

Advertising expense Miscellaneous administrative expense Power and light Sales salaries expense Telephone expenseselling Travel expenseselling

Total administrative expenses Total operating expenses $

8. Prepare a budgeted income statement for March.

Gold Medal Athletic Co. Budgeted Income Statement For the Month Ending March 31 Revenue from sales

Gross profit Income before income tax Interest expense Interest revenue Revenue from sales

$ Cost of goods sold

Administrative expenses Cost of goods sold Income tax expense Interest expense Selling expenses

Gross profit

Gross profit Interest revenue Net income Net loss Revenue from sales

$ Operating expenses: Selling expenses

Cost of goods sold Interest revenue Net income Net loss Selling expenses

$ Administrative expenses

Administrative expenses Gross profit Interest revenue Net income Net loss

Total operating expenses Income from operations $ Other revenue and expense: Interest revenue

Gross profit Interest expense Interest revenue Net income Revenue from sales

$ Interest expense

Cost of goods sold Gross profit Interest expense Interest revenue Net loss

Income before income tax $ Income tax expense

Cost of goods sold Gross profit Income tax expense Interest revenue Net loss

Net income $