Budgeted Income Statement and Supporting Budgets

The budget director of Birding Homes & Feeders 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:

1. Estimated sales for January:

   Bird house	15,000 units at $25 per unit
   Bird feeder	40,000 units at $15 per unit

2. Estimated inventories at January 1:

   Direct materials:
   Wood	600 ft.
   Plastic	1,000 lbs.
   Finished products:
   Bird house	1,000 units at $15 per unit
   Bird feeder	2,500 units at $8 per unit

3. Desired inventories at January 31:

   Direct materials:
   Wood	500 ft.
   Plastic	1,250 lbs.
   Finished products:
   Bird house	1,500 units at $15 per unit
   Bird feeder	3,000 units at $8 per unit

4. Direct materials used in production:

   In manufacture of Bird House:
   Wood	0.80 ft. per unit of product
   Plastic	0.10 lb. per unit of product
   In manufacture of Bird Feeder:
   Wood	0.20 ft. per unit of product
   Plastic	1.00 lb. per unit of product

5. Anticipated cost of purchases and beginning and ending inventory of direct materials:

   Wood	$2.50 per ft.
   Plastic	$0.80 per lb.

6. Direct labor requirements:

   Bird House:
   Fabrication Department	0.40 hr. at $18 per hr.
   Assembly Department	0.20 hr. at $12 per hr.
   Bird Feeder:
   Fabrication Department	0.25 hr. at $18 per hr.
   Assembly Department	0.10 hr. at $12 per hr.

7. Estimated factory overhead costs for January:

   Indirect factory wages	$40,000
   Depreciation of plant and equipment	20,000
   Power and light	10,000
   Insurance and property tax	5,000

8. Estimated operating expenses for January:

   Sales salaries expense	$125,000
   Advertising expense	80,000
   Office salaries expense	40,000
   Depreciation expenseoffice equipment	4,000
   Travel expenseselling	25,000
   Office supplies expense	2,500
   Miscellaneous administrative expense	3,500

9. Estimated other revenue and expense for January:

   Interest revenue	$4,540
   Interest expense	3,000

10. Estimated tax rate: 25%

Required:

1. Prepare a sales budget for January.

Birding Homes & Feeders Inc. Sales Budget For the Month Ending January 31
	Unit Sales Volume	Unit Selling Price	Total Sales
Bird house	fill in the blank 1	$fill in the blank 2	$fill in the blank 3
Bird feeder	fill in the blank 4	fill in the blank 5	fill in the blank 6
Total revenue from sales			$fill in the blank 7

2. Prepare a production budget for January. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Birding Homes & Feeders Inc. Production Budget For the Month Ending January 31
	Units
		Bird House		Bird Feeder
		fill in the blank 9		fill in the blank 10
		fill in the blank 12		fill in the blank 13
		fill in the blank 15		fill in the blank 16
		fill in the blank 18		fill in the blank 19
		fill in the blank 21		fill in the blank 22

3. Prepare a direct materials purchases budget for January. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Birding Homes & Feeders Inc. Direct Materials Purchases Budget For the Month Ending January 31
	Wood	Plastic	Total
Required units for production:
Bird house	fill in the blank 23	fill in the blank 24
Bird feeder	fill in the blank 25	fill in the blank 26
Desired units of inventory, January 31	fill in the blank 27	fill in the blank 28
Total units available	fill in the blank 29	fill in the blank 30
Estimated units of inventory, January 1	fill in the blank 31	fill in the blank 32
Total units to be purchased	fill in the blank 33	fill in the blank 34
Unit price	$fill in the blank 35	$fill in the blank 36
Total direct materials to be purchased	$fill in the blank 37	$fill in the blank 38	$fill in the blank 39

4. Prepare a direct labor cost budget for January.

Birding Homes & Feeders Inc. Direct Labor Cost Budget For the Month Ending January 31
			Fabrication Department		Assembly Department	Total
Hours required for production:
	Bird house		fill in the blank 40		fill in the blank 41
	Bird feeder		fill in the blank 42		fill in the blank 43
	Total		fill in the blank 44		fill in the blank 45
Hourly rate			$fill in the blank 46		$fill in the blank 47
Total direct labor cost			$fill in the blank 48		$fill in the blank 49	$fill in the blank 50

5. Prepare a factory overhead cost budget for January.

Birding Homes & Feeders Inc. Factory Overhead Cost Budget For the Month Ending January 31
	$fill in the blank 52
	fill in the blank 54
	fill in the blank 56
	fill in the blank 58
Total factory overhead cost	$fill in the blank 59

6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $9,000, and work in process at the end of January is estimated to be $10,500. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Birding Homes & Feeders Inc. Cost of Goods Sold Budget For the Month Ending January 31
			$fill in the blank 61
		$fill in the blank 63
Direct materials:
	$fill in the blank 65
	fill in the blank 67
Cost of direct materials available for use	$fill in the blank 68
	fill in the blank 70
Cost of direct materials placed in production	$fill in the blank 71
	fill in the blank 73
	fill in the blank 75
Total manufacturing costs		fill in the blank 76
Total work in process during period		$fill in the blank 77
		fill in the blank 79
Cost of goods manufactured			fill in the blank 80
Cost of finished goods available for sale			$fill in the blank 81
			fill in the blank 83
Cost of goods sold			$fill in the blank 84

7. Prepare a selling and administrative expenses budget for January.

Birding Homes & Feeders Inc. Selling and Administrative Expenses Budget For the Month Ending January 31
Selling expenses:
		$fill in the blank 86
		fill in the blank 88
		fill in the blank 90
Total selling expenses			$fill in the blank 91
Administrative expenses:
		$fill in the blank 93
		fill in the blank 95
		fill in the blank 97
		fill in the blank 99
Total administrative expenses			fill in the blank 100
Total operating expenses			$fill in the blank 101

8. Prepare a budgeted income statement for January. In the Other revenue and expense section, indicate expenses as negative amounts.

Birding Homes & Feeders Inc. Budgeted Income Statement For the Month Ending January 31
			$fill in the blank 103
			fill in the blank 105
			$fill in the blank 107
Operating expenses:
		$fill in the blank 109
		fill in the blank 111
Total operating expenses			fill in the blank 112
Operating income			$fill in the blank 113
Other revenue and expense:
		$fill in the blank 115
		fill in the blank 117	fill in the blank 118
Income before income tax			$fill in the blank 119
			fill in the blank 121
Net income			$fill in the blank 122