Budgeted Income Statement and Supporting Budgets

The budget director of Birding Homes & Feeders 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 January:

1. Estimated sales for January:

   Bird house	15,000 units at $25 per unit
   Bird feeder	40,000 units at $15 per unit

2. Estimated inventories at January 1:

   Direct materials:
   Wood	600 ft.
   Plastic	1,000 lbs.
   Finished products:
   Bird house	1,000 units at $15 per unit
   Bird feeder	2,500 units at $8 per unit

3. Desired inventories at January 31:

   Direct materials:
   Wood	500 ft.
   Plastic	1,250 lbs.
   Finished products:
   Bird house	1,500 units at $15 per unit
   Bird feeder	3,000 units at $8 per unit

4. Direct materials used in production:

   In manufacture of Bird House:
   Wood	0.80 ft. per unit of product
   Plastic	0.10 lb. per unit of product
   In manufacture of Bird Feeder:
   Wood	0.20 ft. per unit of product
   Plastic	1.00 lb. per unit of product

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

   Wood	$2.50 per ft.
   Plastic	$0.80 per lb.

6. Direct labor requirements:

   Bird House:
   Fabrication Department	0.40 hr. at $18 per hr.
   Assembly Department	0.20 hr. at $12 per hr.
   Bird Feeder:
   Fabrication Department	0.25 hr. at $18 per hr.
   Assembly Department	0.10 hr. at $12 per hr.

7. Estimated factory overhead costs for January:

   Indirect factory wages	$40,000
   Depreciation of plant and equipment	20,000
   Power and light	10,000
   Insurance and property tax	5,000

8. Estimated operating expenses for January:

   Sales salaries expense	$125,000
   Advertising expense	80,000
   Office salaries expense	40,000
   Depreciation expenseoffice equipment	4,000
   Travel expenseselling	25,000
   Office supplies expense	2,500
   Miscellaneous administrative expense	3,500

9. Estimated other revenue and expense for January:

   Interest revenue	$4,540
   Interest expense	3,000

10. Estimated tax rate: 25%

Required:

1. Prepare a sales budget for January.

Birding Homes & Feeders Inc. Sales Budget For the Month Ending January 31
	Unit Sales Volume	Unit Selling Price	Total Sales
Bird house	15,000	$25.00	$375,000
Bird feeder	40,000	15.00	600,000
Total revenue from sales			$975,000

2. Prepare a production budget for January. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Birding Homes & Feeders Inc. Production Budget For the Month Ending January 31
	Units
		Bird House		Bird Feeder
Expected units to be sold		15000		40000
Desired inventory, January 31		1500		3000
Total units available		16500		43000
Estimated inventory, January 1		??		??
Total units to be produced		15500		40500

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

Birding Homes & Feeders Inc. Direct Materials Purchases Budget For the Month Ending January 31
	Wood	Plastic	Total
Required units for production:
Bird house
Bird feeder
Desired units of inventory, January 31
Total units available
Estimated units of inventory, January 1
Total units to be purchased
Unit price	$	$
Total direct materials to be purchased	$	$	$

4. Prepare a direct labor cost budget for January.

Birding Homes & Feeders Inc. Direct Labor Cost Budget For the Month Ending January 31
			Fabrication Department		Assembly Department	Total
Hours required for production:
	Bird house
	Bird feeder
	Total
Hourly rate			$		$
Total direct labor cost			$		$	$