Question
Budgeted Income Statement and Supporting Budgets The budget director of Birding Homes & Feeders Inc., with the assistance of the controller, treasurer, production manager, and
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:
- Estimated sales for January:
Bird house 15,000 units at $25 per unit Bird feeder 40,000 units at $15 per unit - 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 - 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 - 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 - Anticipated cost of purchases and beginning and ending inventory of direct materials:
Wood $2.50 per ft. Plastic $0.80 per lb. - 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. - 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 - 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 - Estimated other revenue and expense for January:
Interest revenue $4,540 Interest expense 3,000 - 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 | |||
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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 | |||
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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 | |||
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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 |
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