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%

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
Direct materials inventory, January 1Direct materials inventory, January 31Direct materials purchasesFactory overheadFinished goods inventory, January 1Finished goods inventory, January 31			$fill in the blank 61
Direct materials inventory, January 1Direct materials inventory, January 31Direct materials purchasesFactory overheadWork in process inventory, January 1Work in process inventory, January 31		$fill in the blank 63
Direct materials:
Direct materials inventory, January 1Direct materials inventory, January 31Finished goods inventory, January 1Finished goods inventory, January 31Work in process inventory, January 1Work in process inventory, January 31	$fill in the blank 65
Direct laborDirect materials purchasesFactory overheadFinished goods inventory, January 31Work in process inventory, January 1Work in process inventory, January 31	fill in the blank 67
Cost of direct materials available for use	$fill in the blank 68
Direct materials inventory, January 1Direct materials inventory, January 31Finished goods inventory, January 1Finished goods inventory, January 31Work in process inventory, January 1Work in process inventory, January 31	fill in the blank 70
Cost of direct materials placed in production	$fill in the blank 71
Direct laborDirect materials purchasesFinished goods inventory, January 1Finished goods inventory, January 31Work in process inventory, January 1Work in process inventory, January 31	fill in the blank 73
Direct materials purchasesFactory overheadFinished goods inventory, January 1Finished goods inventory, January 31Work in process inventory, January 1Work in process inventory, January 31	fill in the blank 75
Total manufacturing costs		fill in the blank 76
Total work in process during period		$fill in the blank 77
Direct materials inventory, January 1Direct materials inventory, January 31Finished goods inventory, January 1Finished goods inventory, January 31Work in process inventory, January 1Work in process inventory, January 31		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
Direct materials inventory, January 1Direct materials inventory, January 31Finished goods inventory, January 1Finished goods inventory, January 31Work in process inventory, January 1Work in process inventory, January 31			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:
Depreciation expenseoffice equipmentMiscellaneous administrative expenseOffice salaries expenseOffice supplies expenseSales salaries expenseTelephone expenseadministrative		$fill in the blank 86
Advertising expenseDepreciation expenseoffice equipmentMiscellaneous administrative expenseOffice salaries expenseOffice supplies expenseTelephone expenseadministrative		fill in the blank 88
Depreciation expenseoffice equipmentMiscellaneous administrative expenseOffice salaries expenseOffice supplies expenseTelephone expenseadministrativeTravel expenseselling		fill in the blank 90
Total selling expenses			$fill in the blank 91
Administrative expenses:
Advertising expenseOffice salaries expensePower and lightSales salaries expenseTelephone expensesellingTravel expenseselling		$fill in the blank 93
Advertising expenseDepreciation expenseoffice equipmentPower and lightSales salaries expenseTelephone expensesellingTravel expenseselling		fill in the blank 95
Advertising expenseOffice supplies expensePower and lightSales salaries expenseTelephone expensesellingTravel expenseselling		fill in the blank 97
Advertising expenseMiscellaneous administrative expensePower and lightSales salaries expenseTelephone expensesellingTravel expenseselling		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
Gross profitIncome before income taxInterest expenseInterest revenueRevenue from sales			$fill in the blank 103
Administrative expensesCost of goods soldIncome tax expenseInterest expenseSelling expenses			fill in the blank 105
Gross profitInterest revenueNet incomeNet lossRevenue from sales			$fill in the blank 107
Operating expenses:
Cost of goods soldInterest revenueNet incomeNet lossSelling expenses		$fill in the blank 109
Administrative expensesGross profitInterest revenueNet incomeNet loss		fill in the blank 111
Total operating expenses			fill in the blank 112
Operating income			$fill in the blank 113
Other revenue and expense:
Gross profitInterest expenseInterest revenueNet incomeRevenue from sales		$fill in the blank 115
Cost of goods soldGross profitInterest expenseInterest revenueNet loss		fill in the blank 117	fill in the blank 118
Income before income tax			$fill in the blank 119
Cost of goods soldGross profitIncome tax expenseInterest revenueNet loss			fill in the blank 121
Net income			$fill in the blank 122