Budgeted Income Statement and Supporting Budgets

1. 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%

   Required:

   1. Prepare a sales budget for January.

   Birds of a Feather Inc. Sales Budget For the Month Ending January 31
   	Unit Sales Volume	Unit Selling Price	Total Sales
   Birdhouse
   Bird feeder
   Total revenue from sales			$

   2. Prepare a production budget for January.

   Birds of a Feather Inc. Production Budget For the Month Ending January 31
   	Units
   		Birdhouse		Bird Feeder
   Expected units to be sold
   Plus desired inventory, January 31
   Total
   Less estimated inventory, January 1
   Total units to be produced

   3. Prepare a direct materials purchases budget for January.

   Birds of a Feather Inc. Direct Materials Purchases Budget For the Month Ending January 31
   	Wood	Plastic	Total
   Required units for production:
   Birdhouse
   Bird feeder
   Plus desired units of inventory, January 31
   Total
   Less 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.

   Birds of a Feather Inc. Direct Labor Cost Budget For the Month Ending January 31
   			Fabrication Department		Assembly Department	Total
   Hours required for production:
   	Birdhouse
   	Bird feeder
   	Total
   Hourly rate			$		$
   Total direct labor cost			$		$	$

   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:
   			$