Question
Budgeted Income Statement and Supporting Budgets The budget director of Feathered Friends Inc., with the assistance of the controller, treasurer, production manager, and sales manager,
Budgeted Income Statement and Supporting Budgets
The budget director of Feathered Friends Inc., 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 December 2016:
Estimated sales for December:
Bird house | 3,200 units at $50 per unit |
Bird feeder | 3,000 units at $70 per unit |
Estimated inventories at December 1:
Direct materials: | |
Wood | 200 ft. |
Plastic | 240 lbs. |
Finished products: | |
Bird house | 320 units at $27 per unit |
Bird feeder | 270 units at $40 per unit |
Desired inventories at December 31:
Direct materials: | |
Wood | 220 ft. |
Plastic | 200 lbs. |
Finished products: | |
Bird house | 290 units at $27 per unit |
Bird feeder | 250 units at $41 per unit |
Direct materials used in production:
In manufacture of Bird House: | |
Wood | 0.80 ft. per unit of product |
Plastic | 0.50 lb. per unit of product |
In manufacture of Bird Feeder: | |
Wood | 1.20 ft. per unit of product |
Plastic | 0.75 lb. per unit of product |
Anticipated cost of purchases and beginning and ending inventory of direct materials:
Wood | $7.00 per ft. |
Plastic | $1.00 per lb. |
Direct labor requirements:
Bird House: | |
Fabrication Department | 0.20 hr. at $16 per hr. |
Assembly Department | 0.30 hr. at $12 per hr. |
Bird Feeder: | |
Fabrication Department | 0.40 hr. at $16 per hr. |
Assembly Department | 0.35 hr. at $12 per hr. |
Estimated factory overhead costs for December:
Indirect factory wages | $75,000 |
Depreciation of plant and equipment | 23,000 |
Power and light | $6,000 |
Insurance and property tax | 5,000 |
Estimated operating expenses for December:
Sales salaries expense | $70,000 |
Advertising expense | 18,000 |
Office salaries expense | 21,000 |
Depreciation expenseoffice equipment | 600 |
Telephone expenseselling | 550 |
Telephone expenseadministrative | 250 |
Travel expenseselling | 4,000 |
Office supplies expense | 200 |
Miscellaneous administrative expense | 400 |
Estimated other income and expense for December:
Interest revenue | $200 |
Interest expense | 122 |
Estimated tax rate: 30%
Required:
1. Prepare a sales budget for December.
Feathered Friends Inc. Sales Budget For the Month Ending December 31, 2016 | |||
---|---|---|---|
Unit Sales Volume | Unit Selling Price | Total Sales | |
Bird house | |||
Bird feeder | |||
Total revenue from sales |
2. Prepare a production budget for December.
Feathered Friends Inc. Production Budget For the Month Ending December 31, 2016 | ||||
---|---|---|---|---|
Units | ||||
Bird House | Bird Feeder | |||
Expected units to be sold | ||||
Plus desired inventory, December 31, 2016 | ||||
Total | ||||
Less estimated inventory, December 1, 2016 | ||||
Total units to be produced |
3. Prepare a direct materials purchases budget for December.
Feathered Friends Inc. Direct Materials Purchases Budget For the Month Ending December 31, 2016 | |||
---|---|---|---|
Wood | Plastic | Total | |
Required units for production: | |||
Bird house | |||
Bird feeder | |||
Plus desired units of inventory, December 31, 2016 | |||
Total | |||
Less estimated units of inventory, December 1, 2016 | |||
Total units to be purchased | |||
Unit price | |||
Total direct materials to be purchased |
4. Prepare a direct labor cost budget for December.
Feathered Friends Inc. Direct Labor Cost Budget For the Month Ending December 31, 2016 | ||||||
---|---|---|---|---|---|---|
Fabrication Department | Assembly Department | Total | ||||
Hours required for production: | ||||||
Bird house | ||||||
Bird feeder | ||||||
Total | ||||||
Hourly rate | ||||||
Total direct labor cost |
5. Prepare a factory overhead cost budget for December.
Feathered Friends Inc. Factory Overhead Cost Budget For the Month Ending December 31, 2016 | ||
---|---|---|
Indirect factory wages | ||
Depreciation of plant and equipment | ||
Power and light | ||
Insurance and property tax | ||
Total |
6. Prepare a cost of goods sold budget for December. Work in process at the beginning of December is estimated to be $29,000, and work in process at the end of December is estimated to be $35,400.
Feathered Friends Inc. Cost of Goods Sold Budget For the Month Ending December 31, 2016 | |||
---|---|---|---|
Direct materials: | |||
Cost of direct materials available for use | |||
Cost of direct materials placed in production | |||
Total manufacturing costs | |||
Total work in process during the period | |||
Cost of goods manufactured | |||
Cost of finished goods available for sale | |||
Cost of goods sold |
7. Prepare a selling and administrative expenses budget for December.
Feathered Friends Inc. Selling and Administrative Expenses Budget For the Month Ending December 31, 2016 | |||
---|---|---|---|
Selling expenses: | |||
Sales salaries expense | |||
Advertising expense | |||
Telephone expenseselling | |||
Travel expenseselling | |||
Total selling expenses | |||
Administrative expenses: | |||
Office salaries expense | |||
Depreciation expenseoffice equipment | |||
Telephone expenseadministrative | |||
Office supplies expense | |||
Miscellaneous administrative expense | |||
Total administrative expenses | |||
Total operating expenses |
8. Prepare a budgeted income statement for December.
Feathered Friends Inc. Budgeted Income Statement For the Month Ending December 31, 2016 | |||
---|---|---|---|
Operating expenses: | |||
Total operating expenses | |||
Other income: | |||
Other expenses: | |||
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