Budgeted Income Statement and Supporting Budgets The budget director of Birds of a Feather 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 January:

Estimated sales for January:

Bird house	6,000 units at $55 per unit
Bird feeder	4,500 units at $75 per unit

Estimated inventories at January 1:

Direct materials:
Wood	220 ft.
Plastic	250 lbs.
Finished products:
Bird house	300 units at $23 per unit
Bird feeder	240 units at $34 per unit

Desired inventories at January 31:

Direct materials:
Wood	180 ft.
Plastic	210 lbs.
Finished products:
Bird house	340 units at $23 per unit
Bird feeder	200 units at $34 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	$8.00 per ft.
Plastic	$1.20 per lb.

Direct labor requirements:

Bird House:
Fabrication Department	0.20 hr. at $15 per hr.
Assembly Department	0.30 hr. at $12 per hr.
Bird Feeder:
Fabrication Department	0.40 hr. at $15 per hr.
Assembly Department	0.35 hr. at $12 per hr.

Estimated factory overhead costs for January:

Indirect factory wages	$80,000
Depreciation of plant and equipment	25,000
Power and light	$8,000
Insurance and property tax	2,000

Estimated operating expenses for January:

Sales salaries expense	$90,000
Advertising expense	20,000
Office salaries expense	18,000
Depreciation expenseoffice equipment	800
Telephone expenseselling	500
Telephone expenseadministrative	200
Travel expenseselling	5,000
Office supplies expense	250
Miscellaneous administrative expense	450

Estimated other income and expense for January:

Interest revenue	$300
Interest expense	224

Estimated tax rate: 30%

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2- The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:

	May		June		July
Sales	$86,000		$90,000		$95,000
Manufacturing costs	34,000		39,000		44,000
Selling and administrative expenses	15,000		16,000		22,000
Capital expenditures	_		_		80,000

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $3,500 of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of May 1 include cash of $33,000, marketable securities of $40,000, and accounts receivable of $90,000 ($72,000 from April sales and $18,000 from March sales). Sales on account for March and April were $60,000 and $72,000, respectively. Current liabilities as of May 1 include $6,000 of accounts payable incurred in April for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $14,000 will be made in June. Sonomas regular quarterly dividend of $5,000 is expected to be declared in June and paid in July. Management wants to maintain a minimum cash balance of $30,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for May, June, and July 2016. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign.

Cost of Goods Sold Budget For the Month Ending January 31 Finished goods inventory,January 1 V Work in process inventory, January 1 Direct materials: 88,742X 2,060X Direct materials inventory, January 1 Direct materials purchases Cost of direct materials available for use 90,802X 1,692 X 89,110 X 85,356X Less: Direct materials inventory, January 31 Cost of direct materials placed in production Direct labor Factory overhead Total manufacturing costs Total work in process during the period Less: Work in process inventory, January 31 Cost of goods manufactured Cost of finished goods available for sale Less: Finished goods inventory, January 31 Cost of goods sold 115,000 X 289,466 X 29,000X 318,466 X 45,400X 283,066 X 15,060X 298,126V 14,620 283,506