Question
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
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:
following data for use in developing the budgeted income statement for January:
- Estimated sales for January:
Birdhouse 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 lb. Finished products: Birdhouse 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 lb. Finished products: Birdhouse 340 units at $23 per unit Bird feeder 200 units at $34 per unit - 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 - 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:
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. - 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%
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 | |||
---|---|---|---|
Finished goods inventory, January 1 | |||
Work in process inventory, January 1 | |||
Direct materials: | |||
Direct materials inventory, January 1 | |||
Direct materials purchases | |||
Cost of direct materials available for use | |||
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 | $ |
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 | |||
---|---|---|---|
Revenue from sales | |||
Cost of goods sold | |||
Gross profit | |||
Selling and administrative expenses: | |||
Selling expenses | |||
Administrative expenses | |||
Total selling and administrative expenses | |||
Income from operations | |||
Other revenue: | |||
Interest revenue | |||
Other expenses: | |||
Interest expense | |||
Income before income tax | |||
Income tax (30% rate) | |||
Net income |
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