Budgeted Income Statement and Supporting Budgets

The budget director of Birds of a Feather 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:

   Birdhouse	6,000 units at $55 per unit
   Bird feeder	4,500 units at $75 per unit

2. Estimated inventories at January 1:

   Direct materials:
   Wood	220 ft.
   Plastic	250 lb.
   Finished products:
   Birdhouse	300 units at $23 per unit
   Bird feeder	240 units at $34 per unit

3. Desired inventories at January 31:

   Direct materials:
   Wood	180 ft.
   Plastic	210 lb.
   Finished products:
   Birdhouse	340 units at $23 per unit
   Bird feeder	200 units at $34 per unit

4. Direct materials used in production:

   In manufacture of BirdHouse:
   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	$8.00 per ft.
   Plastic	$1.20 per lb.

6. Direct labor requirements:

   Birdhouse:
   Fabrication Department	0.20 hr. at $15 per hr.
   Assembly Department	0.30 hr. at $12 per hr.
   Bird Feeder:
   Fabrication Department	0.40 hr. at $15 per hr.
   Assembly Department	0.35 hr. at $12 per hr.

7. Estimated factory overhead costs for January:

   Indirect factory wages	$80,000
   Depreciation of plant and equipment	25,000
   Power and light	8,000
   Insurance and property tax	2,000

8. Estimated operating expenses for January:

   Sales salaries expense	$90,000
   Advertising expense	20,000
   Office salaries expense	18,000
   Depreciation expenseoffice equipment	800
   Telephone expenseselling	500
   Telephone expenseadministrative	200
   Travel expenseselling	5,000
   Office supplies expense	250
   Miscellaneous administrative expense	450

9. Estimated other income and expense for January:

   Interest revenue	$300
   Interest expense	224

10. Estimated tax rate: 30%

    5. Prepare a factory overhead cost budget for January.

    Birds of a Feather Inc. Factory Overhead Cost Budget For the Month Ending January 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 January. Work in process at the beginning of January is estimated to be $29,000, and work in process at the end of January is estimated to be $35,400.

    Birds of a Feather Inc. Cost of Goods Sold Budget For the Month Ending January 31
    Direct materials:
    Cost of direct materials available for use
    Cost of direct materials placed in production
    Total manufacturing costs
    Total work in process during the period
    Cost of goods manufactured
    Cost of finished goods available for sale
    Cost of goods sold			$

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

    Birds of a Feather Inc. Selling and Administrative Expenses Budget For the Month Ending January 31
    Selling expenses:
    	Sales salaries expense
    	Advertising expense
    	Telephone expenseselling
    	Travel expenseselling
    	Total selling expenses
    Administrative expenses:
    	Office salaries expense
    	Depreciation expenseoffice equipment
    	Telephone expenseadministrative
    	Office supplies expense
    	Miscellaneous administrative expense
    	Total administrative expenses
    Total operating expenses			$

    8. Prepare a budgeted income statement for January.

    Birds of a Feather Inc. Budgeted Income Statement For the Month Ending January 31
    Selling and administrative expenses:
    	Total selling and administrative expenses
    Other revenue:
    Other expenses:
    			$