Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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:

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

EAuditing Fundamentals Virtual Communication And Remote Auditing

Authors: J.P. Russell, Shauna Wilson

1st Edition

0873898486, 978-0873898485

More Books

Students also viewed these Accounting questions