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Budgeted Income Statement and Supporting Budgets The budget director of Feathered Friends Inc., with the assistance of the controller, treasurer, production manager, and sales manager,

Budgeted Income Statement and Supporting Budgets

The budget director of Feathered Friends 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 December 2016:

Estimated sales for December:

Bird house 3,200 units at $50 per unit
Bird feeder 3,000 units at $70 per unit

Estimated inventories at December 1:

Direct materials:
Wood 200 ft.
Plastic 240 lbs.
Finished products:
Bird house 320 units at $27 per unit
Bird feeder 270 units at $40 per unit

Desired inventories at December 31:

Direct materials:
Wood 220 ft.
Plastic 200 lbs.
Finished products:
Bird house 290 units at $27 per unit
Bird feeder 250 units at $41 per unit

Direct materials used in production:

In manufacture of Bird House:
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

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

Wood $7.00 per ft.
Plastic $1.00 per lb.

Direct labor requirements:

Bird House:
Fabrication Department 0.20 hr. at $16 per hr.
Assembly Department 0.30 hr. at $12 per hr.
Bird Feeder:
Fabrication Department 0.40 hr. at $16 per hr.
Assembly Department 0.35 hr. at $12 per hr.

Estimated factory overhead costs for December:

Indirect factory wages $75,000
Depreciation of plant and equipment 23,000
Power and light $6,000
Insurance and property tax 5,000

Estimated operating expenses for December:

Sales salaries expense $70,000
Advertising expense 18,000
Office salaries expense 21,000
Depreciation expenseoffice equipment 600
Telephone expenseselling 550
Telephone expenseadministrative 250
Travel expenseselling 4,000
Office supplies expense 200
Miscellaneous administrative expense 400

Estimated other income and expense for December:

Interest revenue $200
Interest expense 122

Estimated tax rate: 30%

Required:

1. Prepare a sales budget for December.

Feathered Friends Inc. Sales Budget For the Month Ending December 31, 2016
Unit Sales Volume Unit Selling Price Total Sales
Bird house
Bird feeder
Total revenue from sales

2. Prepare a production budget for December.

Feathered Friends Inc. Production Budget For the Month Ending December 31, 2016
Units
Bird House Bird Feeder
Expected units to be sold
Plus desired inventory, December 31, 2016
Total
Less estimated inventory, December 1, 2016
Total units to be produced

3. Prepare a direct materials purchases budget for December.

Feathered Friends Inc. Direct Materials Purchases Budget For the Month Ending December 31, 2016
Wood Plastic Total
Required units for production:
Bird house
Bird feeder
Plus desired units of inventory, December 31, 2016
Total
Less estimated units of inventory, December 1, 2016
Total units to be purchased
Unit price
Total direct materials to be purchased

4. Prepare a direct labor cost budget for December.

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