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 July 300,000 units 400,000 units 500,000 units 500,000 units August September b. Estimated finished goods inventories: May 31 June 30 July 31 August 31 16,000 units 5% of next month's sales 5% of next month's sales 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 $ 6.00 10.00 Direct materials (1.5 lbs. per unit x $4 per lb.) Direct labor (0.4 hr. per unit x $25 per hr.) Variable factory overhead ($4 per direct labor hour) Fixed factory overhead ($1,200,000 per month allocated using 500,000 units) 1.60 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 2. Prepare a production budget for August. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Newport Inc. Production Budget For the First Quarter Ending August 31 June July 20,000 25,000 300,000 400,000 Estimated units sold August 25,000 500,000 First Quarter 70,000 Selling price per unit x x 1,200,000 425,000 Total units available for sale Less estimated ending inventory x 320,000 - 15,000 525,000 -25,000 X 20,000 1,270,000 -60,000 1,210,000 X X Total units to be produced 305,000 X 405,000 500,000 3. Prepare a direct materials purchases budget for August. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Newport Inc. Direct Materials Purchases Budget For the First Quarter Ending August 31 June July August First Quarter Units to be produced 305,000 X 405,000 500,000 1,210,000 X Materials required per unit 2 lbs. X x 2 lbs. X x 2 lbs. X x 2 lbs. X Materials required for production 457,500 lbs. X 607,500 lbs. 750,000 lbs. 1,815,000 lbs. X Estimated ending inventory X 40,000 lbs. 45,000 lbs. 50,000 lbs. 135,000 lbs. X Total materials available for use Less estimated beginning inventory 802,502 lbs. X - 35,000 lbs. 462,500 lbs. X 1,057,502 lbs. X 40,000 lbs. / 612,500 lbs. 1,300,002 lbs. X -45,000 lbs. 755,000 lbs. 3,160,002 lbs. X - 120,000 lbs. X 1,830,000 lbs. X Total materials to be purchased Cost per pound Cost of direct materials to be purchased $ 1,850,000 X $ 2,450,000 $3,020,000 $7,320,000 x 4. Prepare a direct labor cost budget for August. Newport Inc. Direct Labor Cost Budget For the First Quarter Ending August 31 June July 305,000 X 405,000 0.4 hr. 0.4 hr. Units to be produced August 500,000 0.4 hr. First Quarter 1,210,000 0.4 hr. X Direct labor required per unit x X Direct labor hours required for production Direct labor hourly rate 122,000 hrs. X x 25 $ 3,050,000 X 162,000 hrs. x 25 $4,050,000 200,000 hrs. x 25 $5,000,000 484,000 hrs. X x 25 $12,100,000 X Direct labor cost 5. Prepare a factory overhead cost budget for August. Newport Inc. Factory Overhead Cost Budget For the First Quarter Ending August 31 July June August First Quarter Variable factory overhead: Budgeted direct labor hours 122,000 hrs. X 162,000 hrs. 200,000 hrs. 484,000 hrs. X Variable factory overhead rate x$ Budgeted variable factory overhead $ 488,000 X $ 648,000 $ 800,000 $1,936,000 X Fixed factory overhead: Budgeted fixed factory overhead 1,200,000 1,200,000 1,200,000 3,600,000 Total factory overhead cost $1,688,000 X 1,848,000 $2,000,000 $5,536,000 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 July August First Quarter Beginning finished goods inventory Cost of goods manufactured: Direct materials $ 1,850,000 X $ X $ Direct labor 3,050,000 X X X $2,450,000 4,050,000 1,848,000 3,020,000 5,000,000 2,000,000 7,320,000 12,100,000 5,536,000 Factory overhead 1,688,000 Total cost of goods manufactured $ 6,588,000 X $ 8,348,000 X $ 10,020,000 X $ 24,956,000 Estimated units sold x 300,000 X 400,000 X 500,000 1,200,000 Cost of goods sold $ 22 X $ 21 X $ 20 X $ 21 X 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 -6,588,000 X 8,348,000 X Sales First Quarter $ 43,200,000 Cost of goods sold August $ 18,000,000 -10,020,000 $ 7,980,000 x -24,956,000 $4,212,000 X $6,052,000 X x $ 1,824,400 Gross profit Selling and administrative expenses: Selling expenses $ 900,000 -800,000 X X $ -1,200,000 800,000 X X $ -1,500,000 800,000 X X $ -3,600,000 / -2,400,000 Fixed selling expenses X x X Total selling and administrative evnenses $ 550,000 X 5 -550,000 X $ 550,000 X $ -1,650,000 Operating income $1,962,000 X $3,502,000 X $ 5,130,000 X $ 10,594,000 Feedback