PR 7-3A Budgeted income statement and supporting budgets Obj. 4 The budget director of Feathered Friends 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 December: A. Estimated sales for December: Bird house Bird feeder. B. Estimated inventories at December 1: Direct materials: Wood... Plastic 3,200 units at $50 per unit 3,000 units at $70 per unit Finished products: + 200 ft. Bird house.. 240 lbs. Bird feeder. 320 units at $27 per unit 270 units at $40 per unit EXCEL TEMPLATE C. Desired inventories at December 31: Direct materials: Wood Plastic 220 ft. 200 lbs. D. Direct materials used in production: Finished products: + Bird house... Bird feeder....... 290 units at $27 per unit 250 units at $41 per unit In manufacture of Bird House: Wood Plastic. .... 0.80 ft. per unit of product 0.50 lb. per unit of product In manufacture of Bird Feeder: Wood Plastic. + 1.20 ft. per unit of product 0.75 lb. per unit of product E. Anticipated cost of purchases and beginning and ending inventory of direct materials: Wood $7.00 per ft. Plastic $1.00 per lb. F. Direct labor requirements: Bird House: Fabrication Department Assembly Department. Bird Feeder: Fabrication Department Assembly Department.. G. Estimated factory overhead costs for December: 0.20 hr. at $16 per hr. 0.30 hr. at $12 per hr. 0.40 hr. at $16 per hr. 0.35 hr. at $12 per hr. Indirect factory wages Depreciation of plant and equipment $75,000 23,000 Power and light $6,000 Insurance and property tax 5,000 H. Estimated operating expenses for December: Sales salaries expense $70,000 Advertising expense 18,000 Office salaries expense 21,000 Depreciation expense-office equipment 600 Telephone expense-selling 550 Telephone expense-administrative 250 Travel expense-selling 4,000 Office supplies expense 200 400 Miscellaneous administrative expense I. Estimated other income and expense for December: Interest revenue Interest expense J. Estimated tax rate: 30% $200 122 Instructions 1. Prepare a sales budget for December. 2. Prepare a production budget for December. 3. Prepare a direct materials purchases budget for December. 4. Prepare a direct labor cost budget for December. Answer 5. Prepare a factory overhead cost budget for December. 6. Prepare a cost of goods sold budget for December. Work in process at the beginning of December is estimated to be $29,000, and work in process at the end of December is estimated to be $35,400. 7. Prepare a selling and administrative expenses budget for December. 8. Prepare a budgeted income statement for December. 1. 2. Product Bird house Bird feeder Total revenue from sales Expected units to be sold Total Total units to be produced Feathered Friends Inc. Sales Budget For the Month Ending December 31 Unit Sales Volume Unit Selling Total Price Sales Feathered Friends Inc. Production Budget For the Month Ending December 31 Units Bird House Bird Feeder 3. 4. Required units for production: Bird house Bird feeder Total Total units to be purchased Unit price Total direct materials to be purchased Hours required for production: Bird house Bird feeder Total Hourly rate Total direct labor cost Feathered Friends Inc. Direct Materials Purchases Budget For the Month Ending December 31 Wood (feet) Plastic Feathered Friends Inc. Direct Labor Cost Budget For the Month Ending December 31 Fabrication Department (lbs.) Total Assembly Department Total 5. Indirect factory wages Feathered Friends Inc. Factory Overhead Cost Budget For the Month Ending December 31 Depreciation of plant and equipment Power and light Insurance and property tax Total 6. Feathered Friends Inc. Cost of Goods Sold Budget For the Month Ending December 31 Direct materials: Direct materials purchases Cost of direct materials available for use Cost of direct materials placed in production Direct labor Factory overhead Total manufacturing costs Total work in process during period Cost of goods manufactured Cost of finished goods available for sale Cost of goods sold Supporting calculations: Units Cost Total Finished goods inventory, Dec. 1: Bird house Bird feeder Total Finished goods inventory, Dec. 31: Bird house Bird feeder Total Direct materials inventory, Dec. 1: Wood Plastic Total Direct materials inventory, Dec. 31 Wood Plastic Total 7. 8. Selling expenses: Feathered Friends Inc. Selling and Administrative Expenses Budget For the Month Ending December 31 Total selling expenses Administrative expenses: Total administrative expenses Total operating expenses Revenue from sales Cost of goods sold Gross profit Operating expenses: Selling expenses Feathered Friends Inc. Budgeted Income Statement For the Month Ending December 31 Administrative expenses Total operating expenses Income from operations Other revenue and expense: Interest revenue Interest expense Income before income tax Income tax expense Net income