Budgeted Income Statement and Supporting Budgets

The budget director of Jupiter Helmets 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 May:

a$.$ Estimated sales for May:

Product Type Data

Bicycle helmet $9,250$ units at $$24$ per unit

Motorcycle helmet $6,250$ units at $$175$ per unit

b$.$ Estimated inventories at May $1$:

Direct materials:

Materials Units

Plastic $1,480$ lbs$.$

Foam lining $520$ lbs$.$

Finished products:

Product Type Data

Bicycle helmet $200$ units at $$15$ per unit

Motorcycle helmet $100$ units at $$90$ per unit

c$.$ Desired inventories at May $31$:

Direct materials:

Materials Units

Plastic $2,000$ lbs$.$

Foam lining $800$ lbs$.$

Finished products:

Product Type Data

Bicycle helmet $400$ units at $$15$ per unit

Motorcycle helmet $300$ units at $$100$ per unit

d$.$ Direct materials used in production:

In manufacture of bicycle helmet:

Materials Data

Plastic $0\mathrm{.}90$ lb$.$ per unit of product

Foam lining $0\mathrm{.}20$ lb$.$ per unit of product

In manufacture of motorcycle helmet:

Materials Data

Plastic $3\mathrm{.}50$ lbs$.$ per unit of product

Foam lining $1\mathrm{.}40$ lbs$.$ per unit of product

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

Materials Cost per Unit

Plastic $$4\mathrm{.}40$ per lb$.$

Foam lining $$0\mathrm{.}90$ per lb$.$

f$.$ Direct labor requirements:

Bicycle helmet:

Department Data

Molding Department $0\mathrm{.}30$ hr$.$ at $$15$ per hr$.$

Assembly Department $0\mathrm{.}10$ hr$.$ at $$14$ per hr$.$

Motorcycle helmet:

Department Data

Molding Department $0\mathrm{.}50$ hr$.$ at $$15$ per hr$.$

Assembly Department $0\mathrm{.}40$ hr$.$ at $$14$ per hr$.$

g$.$ Estimated factory overhead costs for May:

Line Item Description Amount

Indirect factory wages $$125,000$

Depreciation of plant and equipment $45,000$

Power and light $23,000$

Insurance and property tax $11,000$

h$.$ Estimated operating expenses for May:

Line Item Description Amount

Sales salaries expense $$175,000$

Advertising expense $120,000$

Office salaries expense $92,000$

Depreciation expense$$office equipment $6,000$

Miscellaneous expense$$selling $5,000$

Utilities expense$$administrative $3,000$

Travel expense$$selling $50,000$

Office supplies expense $2,500$

Miscellaneous administrative expense $1,500$

i$.$ Estimated other income and expense for May:

Line Item Description Amount

Interest revenue $$14,560$

Interest expense $3,000$

j$.$ Estimated tax rate: $25\%$

Required:

Question Content Area

$1.$ Prepare a sales budget for May.

Jupiter Helmets Inc.

Sales Budget

For the Month Ending May $31$

Line Item Description Unit Sales Volume Unit Selling Price Total Sales

Bicycle helmet Bicycle helmet $Bicycle helmet $Bicycle helmet

Motorcycle helmet Motorcycle helmet Motorcycle helmet Motorcycle helmet

Total revenue from sales $Total revenue from sales

Feedback Area

Feedback

For each product, multiply the unit sales volume by the unit selling price.

Question Content Area

$2.$ Prepare a production budget for May.

Jupiter Helmets Inc.

Production Budget

For the Month Ending May $31$

Line Item Description Bicycle Helmet Units Motorcycle Helmet Units

Expected units to be sold Expected units to be sold Expected units to be sold

Plus desired inventory, May $31$ Plus desired inventory, May $31$

Total Total Total

Less estimated inventory, May $1$ Less estimated inventory, May $1$

Total units to be produced Total units to be produced Total units to be produced

Feedback Area

Feedback

Expected units to be sold plus the desired ending inventory minus the estimated beginning inventory equals units produced.

Question Content Area

$3.$ Prepare a direct materials purchases budget for May.

Jupiter Helmets Inc.

Direct Materials Purchases Budget

For the Month Ending May $31$

Line Item Description Direct Materials Plastic Direct Materials Foam Lining Direct Materials Total

Units $($lbs$.)$ required for production:

Bicycle helmet Bicycle helmet Bicycle helmet

Motorcycle helmet Motorcycle helmet Motorcycle helmet

Plus desired units of inventory, May $1$ Plus desired units of inventory, May $1$

Total Total Total

Less estimated units of inventory, May $1$ Less estimated units of inventory, May $1$

Total units $($lbs$.)$ to be purchased Total units $($lbs$.)$ to be purchased Total units $($lbs$.)$ to be purchased

Unit price $($per lb$.)$ $Unit price $($per lb$.)$ $Unit price $($per lb$.)$

Total direct materials to be purchased $Total direct materials to be purchased $Total direct materials to be purchased $Total direct materials to be purchased

Feedback Area

Feedback

Production quantity $($for both products$)$ of plastic and foam lining, plus the desired ending inventory minus the estimated beginning inventory equals the amount to be purchased. Multiply this amount by the respective unit price.

Question Content Area

$4.$ Prepare a direct labor cost budget for May.

Jupiter Helmets Inc.

Direct Labor Cost Budget

For the Month Ending May $31$

Line Item Description Molding Department Assembly Department Total

Hours required for production:

Bicycle helmet Bicycle helmet Bicycle helmet

Motorcycle