Budgeted Income Statement and Supporting Budgets

The budget director of Gold Medal Athletic Co., 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 March:

1. Estimated sales for March:

   Batting helmet	1,200 units at $40 per unit
   Football helmet	6,500 units at $160 per unit

2. Estimated inventories at March 1:

   Direct materials:
   Plastic	90 lbs.
   Foam lining	80 lbs.
   Finished products:
   Batting helmet	40 units at $25 per unit
   Football helmet	240 units at $77 per unit

3. Desired inventories at March 31:

   Direct materials:
   Plastic	50 lbs.
   Foam lining	65 lbs.
   Finished products:
   Batting helmet	50 units at $25 per unit
   Football helmet	220 units at $78 per unit

4. Direct materials used in production:

   In manufacture of batting helmet:
   Plastic	1.2 lbs. per unit of product
   Foam lining	0.5 lb. per unit of product
   In manufacture of football helmet:
   Plastic	3.5 lbs. per unit of product
   Foam lining	1.5 lbs. per unit of product

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

   Plastic	$6 per lb.
   Foam lining	$4 per lb.

6. Direct labor requirements:

   Batting helmet:
   Molding Department	0.2 hr. at $20 per hr.
   Assembly Department	0.5 hr. at $14 per hr.
   Football helmet:
   Molding Department	0.5 hr. at $20 per hr.
   Assembly Department	1.8 hrs. at $14 per hr.

7. Estimated factory overhead costs for March:

   Indirect factory wages	$86,000
   Depreciation of plant and equipment	12,000
   Power and light	4,000
   Insurance and property tax	2,300

8. Estimated operating expenses for March:

   Sales salaries expense	$184,300
   Advertising expense	87,200
   Office salaries expense	32,400
   Depreciation expenseoffice equipment	3,800
   Telephone expenseselling	5,800
   Telephone expenseadministrative	1,200
   Travel expenseselling	9,000
   Office supplies expense	1,100
   Miscellaneous administrative expense	1,000

9. Estimated other revenue and expense for March:

   Interest revenue	$940
   Interest expense	872

10. Estimated tax rate: 30%

c

Prepare a cost of goods sold budget for March. Work in process at the beginning of March is estimated to be $15,300, and work in process at the end of March is desired to be $14,800. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Gold Medal Athletic Co. Cost of Goods Sold Budget For the Month Ending March 31
Direct materials inventory, March 1Direct materials inventory, March 31Direct materials purchasesFactory overheadFinished goods inventory, March 1Finished goods inventory, March 31			$fill in the blank 61
Direct materials inventory, March 1Direct materials inventory, March 31Direct materials purchasesFactory overheadWork in process inventory, March 1Work in process inventory, March 31		$fill in the blank 63
Direct materials:
Direct materials inventory, March 1Direct materials inventory, March 31Finished goods inventory, March 1Finished goods inventory, March 31Work in process inventory, March 1Work in process inventory, March 31	$fill in the blank 65
Direct laborDirect materials purchasesFactory overheadFinished goods inventory, March 31Work in process inventory, March 1Work in process inventory, March 31	fill in the blank 67
Cost of direct materials available for use	$fill in the blank 68
Direct materials inventory, March 1Direct materials inventory, March 31Finished goods inventory, March 1Finished goods inventory, March 31Work in process inventory, March 1Work in process inventory, March 31	fill in the blank 70
Cost of direct materials placed in production	$fill in the blank 71
Direct laborDirect materials purchasesFinished goods inventory, March 1Finished goods inventory, March 31Work in process inventory, March 1Work in process inventory, March 31	fill in the blank 73
Direct materials purchasesFactory overheadFinished goods inventory, March 1Finished goods inventory, March 31Work in process inventory, March 1Work in process inventory, March 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, March 1Direct materials inventory, March 31Finished goods inventory, March 1Finished goods inventory, March 31Work in process inventory, March 1Work in process inventory, March 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, March 1Direct materials inventory, March 31Finished goods inventory, March 1Finished goods inventory, March 31Work in process inventory, March 1Work in process inventory, March 31			fill in the blank 83
Cost of goods sold			$fill in the blank 84

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

Gold Medal Athletic Co. Selling and Administrative Expenses Budget For the Month Ending March 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 expenseadministrativeTelephone expenseselling		fill in the blank 90
Depreciation expenseoffice equipmentMiscellaneous administrative expenseOffice salaries expenseOffice supplies expenseTelephone expenseadministrativeTravel expenseselling		fill in the blank 92
Total selling expenses			$fill in the blank 93
Administrative expenses:
Advertising expenseOffice salaries expensePower and lightSales salaries expenseTelephone expensesellingTravel expenseselling		$fill in the blank 95
Advertising expenseDepreciation expenseoffice equipmentPower and lightSales salaries expenseTelephone expensesellingTravel expenseselling		fill in the blank 97
Advertising expensePower and lightSales salaries expenseTelephone expenseadministrativeTelephone expensesellingTravel expenseselling		fill in the blank 99
Advertising expenseOffice supplies expensePower and lightSales salaries expenseTelephone expensesellingTravel expenseselling		fill in the blank 101
Advertising expenseMiscellaneous administrative expensePower and lightSales salaries expenseTelephone expensesellingTravel expenseselling		fill in the blank 103
Total administrative expenses			fill in the blank 104
Total operating expenses			$fill in the blank 105

8. Prepare a budgeted income statement for March.

Gold Medal Athletic Co. Budgeted Income Statement For the Month Ending March 31
Gross profitIncome before income taxInterest expenseInterest revenueRevenue from sales			$fill in the blank 107
Administrative expensesCost of goods soldIncome tax expenseInterest expenseSelling expenses			fill in the blank 109
Gross profitInterest revenueNet incomeNet lossRevenue from sales			$fill in the blank 111
Operating expenses:
Cost of goods soldInterest revenueNet incomeNet lossSelling expenses		$fill in the blank 113
Administrative expensesGross profitInterest revenueNet incomeNet loss		fill in the blank 115
Total operating expenses			fill in the blank 116
Operating income			$fill in the blank 117
Other revenue and expense:
Gross profitInterest expenseInterest revenueNet incomeRevenue from sales		$fill in the blank 119
Cost of goods soldGross profitInterest expenseInterest revenueNet loss		fill in the blank 121	fill in the blank 122
Income before income tax			$fill in the blank 123
Cost of goods soldGross profitIncome tax expenseInterest revenueNet loss			fill in the blank 125
Net income			$fill in the blank 126