Budgeted Income Statement and Supporting Budgets

The budget director of Birds of a Feather 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:

   Birdhouse	6,000 units at $55 per unit
   Bird feeder	4,500 units at $75 per unit

2. Estimated inventories at January 1:

   Direct materials:
   Wood	220 ft.
   Plastic	250 lb.
   Finished products:
   Birdhouse	300 units at $23 per unit
   Bird feeder	240 units at $34 per unit

3. Desired inventories at January 31:

   Direct materials:
   Wood	180 ft.
   Plastic	210 lb.
   Finished products:
   Birdhouse	340 units at $23 per unit
   Bird feeder	200 units at $34 per unit

4. Direct materials used in production:

   In manufacture of BirdHouse:
   Wood	0.80 ft. per unit of product
   Plastic	0.50 lb. per unit of product
   In manufacture of Bird Feeder:
   Wood	1.20 ft. per unit of product
   Plastic	0.75 lb. per unit of product

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

   Wood	$8.00 per ft.
   Plastic	$1.20 per lb.

6. Direct labor requirements:

   Birdhouse:
   Fabrication Department	0.20 hr. at $15 per hr.
   Assembly Department	0.30 hr. at $12 per hr.
   Bird Feeder:
   Fabrication Department	0.40 hr. at $15 per hr.
   Assembly Department	0.35 hr. at $12 per hr.

7. Estimated factory overhead costs for January:

   Indirect factory wages	$80,000
   Depreciation of plant and equipment	25,000
   Power and light	8,000
   Insurance and property tax	2,000

8. Estimated operating expenses for January:

   Sales salaries expense	$90,000
   Advertising expense	20,000
   Office salaries expense	18,000
   Depreciation expenseoffice equipment	800
   Telephone expenseselling	500
   Telephone expenseadministrative	200
   Travel expenseselling	5,000
   Office supplies expense	250
   Miscellaneous administrative expense	450

9. Estimated other income and expense for January:

   Interest revenue	$300
   Interest expense	224

10. Estimated tax rate: 30%

Required:

1. Prepare a sales budget for January.

Birds of a Feather Inc. Sales Budget For the Month Ending January 31
	Unit Sales Volume	Unit Selling Price	Total Sales
Birdhouse	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.

Birds of a Feather Inc. Production Budget For the Month Ending January 31
	Units
		Birdhouse		Bird Feeder
Expected units to be sold		fill in the blank 8		fill in the blank 9
Plus desired inventory, January 31		fill in the blank 10		fill in the blank 11
Total		fill in the blank 12		fill in the blank 13
Less estimated inventory, January 1		fill in the blank 14		fill in the blank 15
Total units to be produced		fill in the blank 16		fill in the blank 17

3. Prepare a direct materials purchases budget for January.

Birds of a Feather Inc. Direct Materials Purchases Budget For the Month Ending January 31
	Wood	Plastic	Total
Required units for production:
Birdhouse	fill in the blank 18	fill in the blank 19
Bird feeder	fill in the blank 20	fill in the blank 21
Plus desired units of inventory, January 31	fill in the blank 22	fill in the blank 23
Total	fill in the blank 24	fill in the blank 25
Less estimated units of inventory, January 1	fill in the blank 26	fill in the blank 27
Total units to be purchased	fill in the blank 28	fill in the blank 29
Unit price	$fill in the blank 30	$fill in the blank 31
Total direct materials to be purchased	$fill in the blank 32	$fill in the blank 33	$fill in the blank 34

4. Prepare a direct labor cost budget for January.

Birds of a Feather Inc. Direct Labor Cost Budget For the Month Ending January 31
			Fabrication Department		Assembly Department	Total
Hours required for production:
	Birdhouse		fill in the blank 35		fill in the blank 36
	Bird feeder		fill in the blank 37		fill in the blank 38
	Total		fill in the blank 39		fill in the blank 40
Hourly rate			$fill in the blank 41		$fill in the blank 42
Total direct labor cost			$fill in the blank 43		$fill in the blank 44	$fill in the blank 45

5. Prepare a factory overhead cost budget for January.

Birds of a Feather Inc. Factory Overhead Cost Budget For the Month Ending January 31
	Indirect factory wages	fill in the blank 46
	Depreciation of plant and equipment	fill in the blank 47
	Power and light	fill in the blank 48
	Insurance and property tax	fill in the blank 49
	Total	$fill in the blank 50

6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $29,000, and work in process at the end of January is estimated to be $35,400.

Birds of a Feather Inc. Cost of Goods Sold Budget For the Month Ending January 31
			fill in the blank 52
		fill in the blank 54
Direct materials:
	fill in the blank 56
	fill in the blank 58
Cost of direct materials available for use	fill in the blank 59
	fill in the blank 61
Cost of direct materials placed in production	fill in the blank 62
	fill in the blank 64
	fill in the blank 66
Total manufacturing costs		fill in the blank 67
Total work in process during the period		fill in the blank 68
		fill in the blank 70
Cost of goods manufactured			fill in the blank 71
Cost of finished goods available for sale			fill in the blank 72
			fill in the blank 74
Cost of goods sold			$fill in the blank 75

7. Prepare a selling and administrative expenses budget for January.

Birds of a Feather Inc. Selling and Administrative Expenses Budget For the Month Ending January 31
Selling expenses:
	Sales salaries expense	fill in the blank 76
	Advertising expense	fill in the blank 77
	Telephone expenseselling	fill in the blank 78
	Travel expenseselling	fill in the blank 79
	Total selling expenses		fill in the blank 80
Administrative expenses:
	Office salaries expense	fill in the blank 81
	Depreciation expenseoffice equipment	fill in the blank 82
	Telephone expenseadministrative	fill in the blank 83
	Office supplies expense	fill in the blank 84
	Miscellaneous administrative expense	fill in the blank 85
	Total administrative expenses		fill in the blank 86
Total operating expenses			$fill in the blank 87

8. Prepare a budgeted income statement for January.

Birds of a Feather Inc. Budgeted Income Statement For the Month Ending January 31
			fill in the blank 89
			fill in the blank 91
			fill in the blank 93
Selling and administrative expenses:
		fill in the blank 95
		fill in the blank 97
	Total selling and administrative expenses		fill in the blank 98
			fill in the blank 100
Other revenue:
		fill in the blank 102
Other expenses:
		fill in the blank 104	fill in the blank 105
			fill in the blank 107
			fill in the blank 109
			$fill in the blank 111