Budgeted income statement and supporting budgets for three months Newport Inc. gathered the following data for use in developing the budgets for the first quarter (June, July, August) of its fiscal year: a. Estimated sales at $36 per unit: June 300,000 units July 400,000 units August 500,000 units September 500,000 units b. Estimated finished goods inventories: May 31 16,000 units June 30 5% of next month's sales July 31 5% of next month's sales August 31 5% of next month's sales c. Work in process inventories are estimated to be insignificant (zero). d. Estimated direct materials inventories: May 31 June 30 July 31 August 31 35,000 pounds 40,000 pounds 45,000 pounds 50,000 pounds e. Manufacturing costs: Per Unit Direct materials (1.5 lbs. per unit x $4 per Ib.) $ 6.00 Direct labor (0.4 hr. per unit x $25 per hr.) 10.00 1.60 Variable factory overhead ($4 per direct labor hour) Fixed factory overhead ($1,200,000 per month allocated using 500,000 units) 2.40 Total per-unit manufacturing costs $20.00 f. Selling expenses: Variable selling expenses Fixed selling expenses Administrative expenses (all fixed costs) $3 per unit $800,000 $550,000 6. Prepare a cost of goods sold budget for August. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Newport Inc. Cost of Goods Sold Budget For the First Quarter Ending August 31 July $ 320,000 $ 400,000 June $ August 500,000 First Quarter 320,000 $ Beginning finished goods inventory Cost of goods manufactured: Direct materials $1,824,000 $2,430,000 $ 3,000,000 $ 7,254,000 Direct labor 3,040,000 4,050,000 5,000,000 12,090,000 Factory overhead 1,686,400 V 1,848,000 2,000,000 5,534,400 $ 24,878,400 $ 6,550,400 $8,328,000 $10,000,000 Total cost of goods manufactured Cost of finished goods available for sale $ 6,870,400 $8,728,000 $ 10,500,000 500,000 $25,198,400 500,000 Ending finished goods inventory 400,000 X 500,000 X X Cost of goods sold $ 6,470,400 $8,228,000 $10,000,000 $ 24,698,400 8. Prepare a budgeted income statement with budgeted operating income for August. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Newport Inc. Budgeted Income Statement For the First Quarter Ending August 31 June July $10,800,000 $14,400,000 6,470,400 x 8,228,000 x Sales August $18,000,000 10,000,000 $8,000,000 x First Quarter $43,200,000 24,698,400 Cost of goods sold $ 4,329,600 $6,172,000 $18,501,600 Gross profit Selling and administrative expenses: Selling expenses $ 1,700,000 $ X X 2,000,000 550,000 Administrative expenses 550,000 X X X $2,300,000 550,000 $ 2,850,000 $5,150,000 X X X $ 6,000,000 1,650,000 $ 7,650,000 $ 10,851,600 Total selling and administrative expenses Operating income $2,079,600 $3,622,000