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 35,000 pounds June 30 40,000 pounds July 31 45,000 pounds August 31 50,000 pounds e. Manufacturing costs: Per Unit Direct materials (1.5 Ibs. per unit x $4 per Ib.) Direct labor (0.4 hr. per unit x $25 per hr.) $ 6.00 10.00 Variable factory overhead ($4 per direct labor hour) 1.60 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 $3 per unit Fixed selling expenses $800,000 Administrative expenses (all fixed costs) $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 June 320,000 July First Quarter 400,000 August 500,000 320,000 Beginning finished goods inventory Cost of goods manufactured: Direct materials v Direct labor 1,824,000 2,430,000 3,000,000 7,254,000 v 3,040,000 4,050,000 5,000,000 12,090,000 Factory overhead v 1,686,400 1,848,000 2,000,000 5,534,400 Total cost of goods manufactured 6,550,400 $ 8,328,000 10,000,000 24,878,400 Cost of finished goods available for sale v Ending finished goods inventory v Cost of goods sold v 6,870,400 $ 8,728,000 $ 10,500,000 $ 25,198,400 400,000 500,000 500,000 500,000 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 July August 18,000,000 First Quarter June Sales v $ 10,800,000 $ 14,400,000 43,200,000 Cost of goods sold v 8,228,000 10,000,000 24,698,400 6,470,400 Gross profit 4,329,600 6,172,000 8,000,000 8,000,000 18,501,600 Selling and administrative expenses: Selling expenses v Administrative expenses V $ 1,700,000 $ 2,000,000 2,300,000 6,000,000 550,000 550,000 550,000 1,650,000 Total selling and administrative expenses 2,250,000 2,550,000 2,850,000 7,650,000 Operating income v 2,079,600 3,622,000 5,150,000 10,851,600