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:

1. Estimated sales for December:

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

2. 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

3. 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

4. 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

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

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

6. 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.

7. 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

8. 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

9. Estimated other income and expense for December:

   Interest revenue	$200
   Interest expense	122

10. Estimated tax rate: 30%

Required:

1. Prepare a sales budget for December.

Feathered Friends Inc. Sales Budget For the Month Ending December 31
	Unit Sales Volume	Unit Selling Price	Total Sales
Bird house	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 December. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Feathered Friends Inc. Production Budget For the Month Ending December 31
	Units
		Bird House		Bird Feeder
Expected units to be sold		fill in the blank 9		fill in the blank 10
Desired inventory, December 31		fill in the blank 12		fill in the blank 13
Total units available		fill in the blank 15		fill in the blank 16
Estimated inventory, December 1		fill in the blank 18		fill in the blank 19
Total units to be produced		fill in the blank 21		fill in the blank 22

3. Prepare a direct materials purchases budget for December. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Feathered Friends Inc. Direct Materials Purchases Budget For the Month Ending December 31
	Wood	Plastic	Total
Required units for production:
Bird house	fill in the blank 23	fill in the blank 24
Bird feeder	fill in the blank 25	fill in the blank 26
Desired units of inventory, December 31	fill in the blank 27	fill in the blank 28
Total units available	fill in the blank 29	fill in the blank 30
Estimated units of inventory, December 1	fill in the blank 31	fill in the blank 32
Total units to be purchased	fill in the blank 33	fill in the blank 34
Unit price	fill in the blank 35	fill in the blank 36
Total direct materials to be purchased	fill in the blank 37	fill in the blank 38	fill in the blank 39

4. Prepare a direct labor cost budget for December.

Feathered Friends Inc. Direct Labor Cost Budget For the Month Ending December 31
			Fabrication Department		Assembly Department	Total
Hours required for production:
	Bird house		fill in the blank 40		fill in the blank 41
	Bird feeder		fill in the blank 42		fill in the blank 43
	Total		fill in the blank 44		fill in the blank 45
Hourly rate			fill in the blank 46		fill in the blank 47
Total direct labor cost			fill in the blank 48		fill in the blank 49	fill in the blank 50

5. Prepare a factory overhead cost budget for December.

Feathered Friends Inc. Factory Overhead Cost Budget For the Month Ending December 31
Indirect factory wages	$fill in the blank 52
Depreciation of plant and equipment	fill in the blank 54
Power and light	fill in the blank 56
Insurance and property tax	fill in the blank 58
Total factory overhead cost	$fill in the blank 59

6. Prepare a cost of goods sold budget for December. Work in process at the beginning of December is estimated to be $29,000, and work in process at the end of December is estimated to be $35,400. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Feathered Friends Inc. Cost of Goods Sold Budget For the Month Ending December 31
Finished goods inventory, December 1			fill in the blank 61
Work in process inventory, December 1		fill in the blank 63
Direct materials:
Direct materials inventory, December 1	fill in the blank 65
Direct materials purchases	fill in the blank 67
Cost of direct materials available for use	fill in the blank 68
Direct materials inventory, December 31	fill in the blank 70
Cost of direct materials placed in production	fill in the blank 71
Direct labor	fill in the blank 73
Factory overhead	fill in the blank 75
Total manufacturing costs		fill in the blank 76
Total work in process during period		fill in the blank 77
Work in process inventory, December 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
Finished goods inventory, December 31			fill in the blank 83
Cost of goods sold			fill in the blank 84

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

Feathered Friends Inc. Selling and Administrative Expenses Budget For the Month Ending December 31
Selling expenses:
Sales salaries expense		$fill in the blank 86
Advertising expense		fill in the blank 88
Telephone expenseselling		fill in the blank 90
Travel expenseselling		fill in the blank 92
Total selling expenses			$fill in the blank 93
Administrative expenses:
Office salaries expense		$fill in the blank 95
Depreciation expenseoffice equipment		fill in the blank 97
Telephone expenseadministrative		fill in the blank 99
Office supplies expense		fill in the blank 101
Miscellaneous administrative expense		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 December. In the Other revenue and expense section, indicate expenses as negative amounts.