Budgeted Income Statement and Supporting Budgets

The budget director of Jupiter Helmets 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 May:

a. Estimated sales for May:

Bicycle helmet	8,000 units at $24 per unit
Motorcycle helmet	7,250 units at $190 per unit

b. Estimated inventories at May 1:

Direct materials:					Finished products:
Plastic		1,480	lbs.		Bicycle helmet		200 units at $15 per unit
Foam lining		520	lbs.		Motorcycle helmet		100 units at $90 per unit

c. Desired inventories at May 31:

Direct materials:					Finished products:
Plastic		2,000	lbs.		Bicycle helmet		400 units at $15 per unit
Foam lining		800	lbs.		Motorcycle helmet		300 units at $100 per unit

d. Direct materials used in production:

In manufacture of bicycle helmet:
Plastic		0.90 lb. per unit of product
Foam lining		0.20 lb. per unit of product
In manufacture of motorcycle helmet:
Plastic		3.50 lbs. per unit of product
Foam lining		1.40 lbs. per unit of product

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

Plastic		$4.40 per lb.
Foam lining		$0.90 per lb.

f. Direct labor requirements:

Bicycle helmet:
Molding Department		0.30 hr. at $15 per hr.
Assembly Department		0.10 hr. at $14 per hr.
Motorcycle helmet:
Molding Department		0.50 hr. at $15 per hr.
Assembly Department		0.40 hr. at $14 per hr.

g. Estimated factory overhead costs for May:

Indirect factory wages		$125,000			Power and light		$23,000
Depreciation of plant and equipment		45,000			Insurance and property tax		11,000

h. Estimated operating expenses for May:

Sales salaries expense		$175,000
Advertising expense		120,000
Office salaries expense		92,000
Depreciation expenseoffice equipment		6,000
Miscellaneous expenseselling		5,000
Utilities expenseadministrative		3,000
Travel expenseselling		50,000
Office supplies expense		2,500
Miscellaneous administrative expense		1,500

i. Estimated other income and expense for May:

Interest revenue		$14,560
Interest expense		3,000

j. Estimated tax rate: 25%

Required:

4. Prepare a direct labor cost budget for May.

Jupiter Helmets Inc.
Direct Labor Cost Budget
For the Month Ending May 31
	Molding Department	Assembly Department	Total
Hours required for production:
Bicycle helmet
Motorcycle helmet
Total
Hourly rate	$	$
Total direct labor cost	$	$	$

5. Prepare a factory overhead cost budget for May.

Jupiter Helmets Inc.
Factory Overhead Cost Budget
For the Month Ending May 31
Indirect factory wages	$
Depreciation of plant and equipment
Power and light
Insurance and property tax
Total	$

6. Prepare a cost of goods sold budget for May. Work in process at the beginning of May is estimated to be $4,200, and work in process at the end of May is desired to be $3,800.

Jupiter Helmets Inc.
Cost of Goods Sold Budget
For the Month Ending May 31
Finished goods inventory, May 1			$
Work in process inventory, May 1		$
Direct materials:
Direct materials inventory, May 1	$
Direct materials purchases
Cost of direct materials available for use	$
Less: Direct materials inventory, May 31
Cost of direct materials placed in production	$
Direct labor
Factory overhead
Total manufacturing costs
Total work in process during period		$
Less: Work in process inventory, May 31
Cost of goods manufactured
Cost of finished goods available for sale			$
Less: Finished goods inventory, May 31
Cost of goods sold			$

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

Jupiter Helmets Inc.
Selling and Administrative Expenses Budget
For the Month Ending May 31
Selling expenses:
Sales salaries expense	$
Advertising expense
Travel expense-selling
Miscellaneous-selling
Total selling expenses		$
Administrative expenses:
Office salaries expense	$
Depreciation expense-office equipment
Utilities expense-administrative
Office supplies expense
Miscellaneous administrative expense
Total administrative expenses
Total operating expenses		$

8. Prepare a budgeted income statement for May. If required, round your interim calculations to nearest whole value.

Jupiter Helmets Inc.
Budgeted Income Statement
For the Month Ending May 31
Revenue from sales		$
Cost of goods sold
Gross profit		$
Operating expenses:
Selling expenses	$
Administrative expenses
Total operating expenses
Income from operations		$
Other income:
Interest revenue	$
Other expenses:
Interest expense
Income before income tax		$
Income tax expense
Net income		$