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:

Estimated sales for January:

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

Estimated inventories at January 1:

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

Desired inventories at January 31:

Direct materials:
Wood	180 ft.
Plastic	210 lbs.
Finished products:
Bird house	340 units at $23 per unit
Bird feeder	200 units at $34 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	$8.00 per ft.
Plastic	$1.20 per lb.

Direct labor requirements:

Bird House:
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.

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

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

Estimated other income and expense for January:

Interest revenue	$300
Interest expense	224

Estimated tax rate: 30%

Birds of a Feather Inc. Cost of Goods Sold Budget For the Month Ending January 31 Finished goods inventory,January 1 V Work in process inventory, January 1 Direct materials: 15,060 V 0 X Direct materials inventory, January 1 Direct materials purchases Cost of direct materials available for use 528,000 X Less: Direct materials inventory, January 31 Cost of direct materials placed in production Direct labor Factory overhead Total manufacturing costs Total work in process during the period Less: Work in process inventory, January 31 Cost of goods manufactured Cost of finished goods available for sale Less: Finished goods inventory, January 31 Cost of goods sold