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 lb.
   Foam lining	80 lb.
   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 lb.
   Foam lining	65 lb.
   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	1.20 lb. per unit of product
   Foam lining	0.50 lb. per unit of product
   In manufacture of football helmet:
   Plastic	3.50 lb. per unit of product
   Foam lining	1.50 lb. per unit of product

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

   Plastic	$6.00 per lb.
   Foam lining	$4.00 per lb.

6. Direct labor requirements:

   Batting helmet:
   Molding Department	0.20 hr. at $20 per hr.
   Assembly Department	0.50 hr. at $14 per hr.
   Football helmet:
   Molding Department	0.50 hr. at $20 per hr.
   Assembly Department	1.80 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 income and expense for March:

   Interest revenue	$940
   Interest expense	872

10. Estimated tax rate: 30%

Required:

4. Prepare a direct labor cost budget for March.

Gold Medal Athletic Co. Direct Labor Cost Budget For the Month Ending March 31
		Molding Department		Assembly Department		Total
Hours required for production:
Batting helmet	fill in the blank 35		fill in the blank 36
Football helmet	fill in the blank 37		fill in the blank 38
Total hours required	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 March.

Gold Medal Athletic Co. Factory Overhead Cost Budget For the Month Ending March 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 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. Enter all amounts as positive numbers.

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 52
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 54
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 56
Direct laborDirect materials purchasesFactory overheadFinished goods inventory, March 31Work in process inventory, March 1Work in process inventory, March 31	fill in the blank 58
Cost of direct materials available for use	fill in the blank 59
Less: Direct materials inventory, March 1Less: Direct materials inventory, March 31Less: Finished goods inventory, March 1Less: Finished goods inventory, March 31Less: Work in process inventory, March 1Less: Work in process inventory, March 31	fill in the blank 61
Cost of direct materials placed in production	fill in the blank 62
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 64
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 66
Total manufacturing costs		fill in the blank 67
Total work in process during the period		fill in the blank 68
Less: Direct materials inventory, March 1Less: Direct materials inventory, March 31Less: Finished goods inventory, March 1Less: Finished goods inventory, March 31Less: Work in process inventory, March 1Less: Work in process inventory, March 31		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
Less: Direct materials inventory, March 1Less: Direct materials inventory, March 31Less: Finished goods inventory, March 1Less: Finished goods inventory, March 31Less: Work in process inventory, March 1Less: Work in process inventory, March 31			fill in the blank 74
Cost of goods sold			$fill in the blank 75

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:
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 March. Enter all amounts as positive numbers.

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 89
Administrative expensesCost of goods soldIncome tax expenseInterest expenseSelling expenses			fill in the blank 91
Gross profitInterest revenueNet incomeNet lossRevenue from sales			fill in the blank 93
Operating expenses:
Cost of goods soldInterest revenueNet incomeNet lossSelling expenses		fill in the blank 95
Administrative expensesGross profitInterest revenueNet incomeNet loss		fill in the blank 97
Total operating expenses			fill in the blank 98
Income from operations			fill in the blank 99
Other income:
Gross profitInterest expenseInterest revenueNet incomeRevenue from sales		fill in the blank 101
Other expenses:
Cost of goods soldGross profitInterest expenseInterest revenueNet loss		fill in the blank 103	fill in the blank 104
Income before income tax			fill in the blank 105
Cost of goods soldGross profitIncome tax expense (30% rate)Interest revenueNet loss			fill in the blank 107
Net income			$fill in the blank 108