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:

1. Estimated sales for December:

   Bird house	3,200 units at $50 per unit
   Bird feeder	3,000 units at $70 per unit

2. 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

3. 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

4. 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

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

   Wood	$7.00 per ft.
   Plastic	$1.00 per lb.

6. 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.

7. 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

8. 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

9. Estimated other income and expense for December:

   Interest revenue	$200
   Interest expense	122

10. Estimated tax rate: 30%

4. Prepare a direct labor cost budget for December.

Feathered Friends Inc. Direct Labor Cost Budget For the Month Ending December 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 December.

Feathered Friends Inc. Factory Overhead Cost Budget For the Month Ending December 31
Advertising expenseIndirect factory wagesOffice salaries expenseOffice supplies expenseSales salaries expense	$fill in the blank 52
Advertising expenseDepreciation of plant and equipmentOffice salaries expenseOffice supplies expenseSales salaries expense	fill in the blank 54
Advertising expenseOffice salaries expenseOffice supplies expensePower and lightSales salaries expense	fill in the blank 56
Advertising expenseInsurance and property taxOffice salaries expenseOffice supplies expenseSales salaries expense	fill in the blank 58
Total factory overhead cost	$fill in the blank 59