Budgeted Income Statement and Supporting Budgets The budget director of Birding Homes at Feeders Inc., with the assistance ofthe controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for January: a. Estimated sales forJanuary: 15,000 units at Bird house . $25 per unit _ 40,000 units at Bird feeder . $15 per unit b. Estimated inventories at January 1: Direct materials: Wood 600 ft. Plastic 1,000 lbs. ) Finished products: _ 1,000 units at Bird house $15 per unit _ 2,500 units at $8 Bird feeder . per unit c. Desired inventories atJanuary 31: Direct materials: Wood 500 ft. Plastic 1.250 lbs. Finished products: 1,500 units at Bird house . $15 per unit 3,000 units at $8 Bird feeder per unit d. Direct materials used in production: In manufacture of Bird House: 0.80 ft. per unit Wood of product 0.10 lb. per unit Plastic of product In manufacture of Bird Feeder: 0.20 ft. per unit Wood of product _ 1.00 lb. per unit Plastic of product e. Anticipated cost of purchases and beginning and ending inventory of direct materials: Wood $2.50 per ft. Plastic $0.80 per lb. f. Direct labor requirements: Bird House: 0.40 hr. at $18 Fabrication Department p er h r. 9 Fabrication Department Assembly Department Bird Feeder: Fabrication Department Assembly Department g. Estimated factory overhead costs for January: Indirect factory wages Depreciation of plant and equipment Power and light Insurance and property tax h. Estimated operating expenses for January: Sales salaries expense Advertising expense Dice salaries expense Depreciation expenseofce equipment Travel expenseselling Ofce supplies expense Miscellaneous administrative expense i. Estimated other revenue and expense for January: Interest revenue Interest expense j. Estimated tax rate: 25% Required: 1. Prepare a sales budget for January. 0.40 nr. at $15 per hr. 0.20 hr. at $12 per hr. 0.25 hr. at $13 per hr. 0.10 hr. at $12 per hr. $40,000 20,000 10,000 5 ,000 $125,000 30,000 40,000 4,000 25,000 2,500 3,500 $4,540 3,000 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 Init Bird House Bird Feeder Expected units to be sold v 15,000 40,000 Desired inventory, January 31 v 1,500 V 3,000 Total units available v 16,500 43,000 V Estimated inventory, January 1 v -1,000 V -2,500 Total units to be produced v 15,500 V 40,500 V 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 12,400 1,550 V Bird feeder 8,100 40,500 V Desired units of inventory, January 31 500 1,250 Total units available 21,000 43,300 Estimated units of inventory, January 1 600 1,000 v Total units to be purchased 20,400 42,300 Unit price $ X$ 2.5 V $ *$ 0.8 V Total direct materials to be purchased $ $ 51,000 $ $ 33,840 V $ $ 84,840 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 6,200 3,100 Bird feeder 10,125 4,0504. Prepare a direct labor cost budget for January. Birding Homes & Feeders Inc. Direct Labor Cost Budget For the Month Ending January 31 Fabrication Assembly Department Total Department Hours required for production: Bird house 6,200 3,100 V Bird feeder 10,125 V 4,050 Total 16,325 7,150 V Hourly rate $ X$ 18 V S * $ 12 V Total direct labor cost $ $ 293,850 V $ 85,800 V $ $ 379,650 V 5. Prepare a factory overhead cost budget for January. Birding Homes & Feeders Inc. Factory Overhead Cost Budget For the Month Ending January 31 Indirect factory wages 40,000 Depreciation of plant and equipment v 20,000 Power and light v 10,000 Insurance and property tax v 5,000 Total factory overhead cost $ 75,000 V6. 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 $ $ $ $ Direct materials: $ $ Cost of direct materials available for use $ $ Cost of direct materials placed in production $ $ Total manufacturing costs Total work in process during period $ $ Cost of goods manufactured Cost of finished goods available for sale $ $ 573,040 V Cost of goods sold $ $ 526,540 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: Sales salaries expense v $ $ 125,000 Advertising expense v 80,000 Travel expense-selling v 25,000 Total selling expenses $ $ 230,000 Administrative expenses: Office salaries expense v Depreciation expense-office equipment v Office supplies expense v 2,500 v7. 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: Sales salaries expense v $ $ 125,000 Advertising expense v 80,000 Travel expense-selling v 25,000 V Total selling expenses $ $ 230,000 Administrative expenses: Office salaries expense v $ $ Depreciation expense-office equipment v Office supplies expense v 2,500 Miscellaneous administrative expense v 3,500 V Total administrative expenses 50,000 V Total operating expenses $ $ 280,000 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 Revenue from sales v $ $ 975,000 Cost of goods sold 526,540 V Gross profit V $$ 448,460 Operating expenses: Selling expenses v $ $ Administrative expenses v Total operating expenses Operating income $ Other revenue and expense: Interest revenue v $ $ Interest expense v Income before income tax $ $ 170,000 Income tax expense v 42,500 Net income $ $ 127,500