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Budgeted Income Statement and Supporting Budgets

The budget director of Birds and Beyond 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:

Birdhouse	7,500 units at $66 per unit
Bird feeder	5,000 units at $82 per unit

Estimated inventories at January 1:

Direct materials:
Wood	198 ft.
Plastic	420 lb.
Finished products:
Birdhouse	500 units at $28 per unit
Bird feeder	210 units at $40 per unit

Desired inventories at January 31:

Direct materials:
Wood	220 ft.
Plastic	340 lb.
Finished products:
Birdhouse	400 units at $28 per unit
Bird feeder	250 units at $40 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	$9.00 per ft.
Plastic	$1.40 per lb.

Direct labor requirements:

Birdhouse:
Fabrication Department	0.25 hr. at $20 per hr.
Assembly Department	0.30 hr. at $15 per hr.
Bird Feeder:
Fabrication Department	0.40 hr. at $20 per hr.
Assembly Department	0.35 hr. at $15 per hr.

Estimated factory overhead costs for January:

Indirect factory wages	$92,000
Depreciation of plant and equipment	34,000
Power and light	10,100
Insurance and property tax	2,800

Estimated operating expenses for January:

Sales salaries expense	$85,100
Advertising expense	17,600
Office salaries expense	19,200
Depreciation expenseoffice equipment	1,100
Telephone expenseselling	1,000
Telephone expenseadministrative	400
Travel expenseselling	3,800
Office supplies expense	350
Miscellaneous administrative expense	250

Estimated other income and expense for January:

Interest revenue	$450
Interest expense	294

Estimated tax rate: 25%

Required:

1. Prepare a sales budget for January.

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

3. Prepare a direct materials purchases budget for January. Round your unit price answers to two decimal places.

Birds and Beyond 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 units required
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 and Beyond Inc. Direct Labor Cost Budget For the Month Ending January 31
			Fabrication Department		Assembly Department	Total
Hours required for production:
	Birdhouse
	Bird feeder
	Total hours required
Hourly rate
Total direct labor cost

5. Prepare a factory overhead cost budget for January.

6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $33,600, and work in process at the end of January is estimated to be $41,200.

Birds and Beyond Inc. Cost of Goods Sold Budget For the Month Ending January 31
Direct materials inventory, January 1Direct materials inventory, January 31Factory OverheadFinished goods inventory, January 1Finished goods inventory, January 31
Direct materials inventory, January 1Direct materials inventory, January 31Factory OverheadWork in process inventory, January 1Work in process inventory, January 31
Direct materials:
Direct materials inventory, January 1Direct materials inventory, January 31Finished goods inventory, January 1Work in process inventory, January 1Work in process inventory, January 31
Direct laborDirect materials purchasesFactory overheadFinished goods inventory, January 31Work in process inventory, January 1Work in process inventory, January 31
Cost of direct materials available for use
Less: Direct materials inventory, January 1Less: Direct materials inventory, January 31Less: Finished goods inventory, January 1Less: Work in process inventory, January 1Less: Work in process inventory, January 31
Cost of direct materials placed in production
Direct laborDirect materials purchasesFinished goods inventory, January 31Work in process inventory, January 1Work in process inventory, January 31
Direct materials purchasesFactory overheadFinished goods inventory, January 31Work in process inventory, January 1Work in process inventory, January 31
Total manufacturing costs
Total work in process during the period
Less: Direct materials inventory, January 1Less: Finished goods inventory, January 1Less: Finished goods inventory, January 31Less: Work in process inventory, January 1Less: Work in process inventory, January 31
Cost of goods manufactured
Cost of finished goods available for sale
Less: Direct materials inventory, January 1Less: Direct materials inventory, January 31Less: Finished goods inventory, January 1Less: Finished goods inventory, January 31Less: Work in process inventory, January 31
Cost of goods sold