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
Desired inventory, January 31Estimated inventory, January 1Expected units to be soldTotal units availableTotal units to be produced		fill in the blank 9		fill in the blank 10
Desired inventory, January 31Estimated inventory, January 1Expected units to be soldTotal units availableTotal units to be produced		fill in the blank 12		fill in the blank 13
Desired inventory, January 31Estimated inventory, January 1Expected units to be soldTotal units availableTotal units to be produced		fill in the blank 15		fill in the blank 16
Desired inventory, January 31Estimated inventory, January 1Expected units to be soldTotal units availableTotal units to be produced		fill in the blank 18		fill in the blank 19
Desired inventory, January 31Estimated inventory, January 1Expected units to be soldTotal units availableTotal units to be produced		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
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