The budget director for Bird House Unlimited, Inc., has gathered the following data for use in developing the budgeted income statement for November 20XX. Estimated sales for November Bird House 28,600 units at $33 per unit Bird Feeder 24,000 units at $37 per unit Direct materials Estimated inventories at November 1(beginning) Wood 2600 feet Plastic 3200 pounds Estimated inventories at November 30th(ending) Wood 3500 feet Plastic 2800 pounds Direct materials used in production: In the manufacture of a Bird House: Wood 0.80 feet per unit of product Plastic 0.50 pounds per unit of product In the manufacture of a Bird Feeder: Wood 1.20 feet per unit of product Plastic 0.75 pounds per unit of product Estimated cost of direct materials Wood $6.00 per feet Plastic $0.90 per pound Work in process-given in total of the 2 products Estimated inventories at November 1(beginning) $2,000 Estimated inventories at November 30th(ending) $3,000 Finished Goods Estimated inventories at November 1(beginning) Bird House 4,000 units at $13 per unit Bird Feeder 2,500 units at $14 per unit Estimated inventories at November 30th(ending) Bird House 5,000 units at $13 per unit Bird Feeder 2,000 units at $14 per unit Direct Labor Requirements: Bird House Fabrication Department 0.25 hour at $15 per hour Assembly Department 0.3 hour at $12 per hour Bird Feeder Fabrication Department 0.45 hour at $15 per hour Assembly Department 0.35 hour at $12 per hour Estimated Manufacturing Overhead Costs for November Indirect Factory Wages $2,000 Depreciation of Plant and Equipment 1,000 Power and Light 4,000 Insurance and property tax 3,000 Estimated operating expenses for November Sales salaries expense $2,000 Advertising expense 10,000 Office salaries expense 5,000 Depreciation expense-office equipment 4,000 Telephone expense-selling 5,000 Telephone expense-administrative 2,000 Travel expense-selling 2,000 Office supplies expense 3,000 Miscellaneous Administrative expense 6,000 Estimated other income and expense for November Interest Revenue $14,000 Interest Expense 10,000 Estimated tax rate 30% Solutions

1. Prepare a sales budget for November. 2. Prepare a production budget for November. 3. Prepare a supporting schedule to determine required material for production and a direct materials purchase budget for November. 4. Prepare a direct labor cost budget for November. 5. Prepare a factory overhead cost budget for November. 6. Prepare a cost of goods sold budget for November. 7. Prepare a selling and administrative budget for November, set up based on categorization of expenses into selling and administrative costs. 8. Prepare a budgeted income statement for November. 9. What if the company decides to start a new advertising campaign that will increase the total advertising expense to a total of $12,000 and the estimated sales of bird house would increase to 30,000 units and Bird Feeders would increase to 26,000 units. Make these changes on the data sheet and if you have linked your data correctly to these budgets the budgets should update immediately. What budgets changed? What would be the new budgeted income? Would you recommend this advertising campaign? Why? 10. Read the following article: Armato, Neil (October 2013). Forward Roll: How Companies Can Move Beyond Traditional Budgeting. http://www.journalofaccountancy.com/Issues/2013/Oct/20137811.htm Answer the following questions: a. How has a rolling forecast helped the company referenced in the article? b. What are the 3 stages a company needs to convert to a rolling forecast? c. What are the 4 ways to embrace rolling forecasts? d. How many days can a company save in their budgeting process based on research by the American Productivity & Quality Center? Enter the appropriate cell references or formulas in the shaded cells below. 1. Bird House Unlimited, Inc. Sales Budget For the Month Ending November 30, 20XX Unit Sales Unit Selling Volume Price Total Sales Bird House 28,600 $33.00 $943,800 Bird Feeder 24,000 37.00 888,000 Total revenue from sales $1,831,800 2. Bird House Unlimited, Inc. Production Budget For the Month Ending November 30, 20XX Units Bird Bird House Feeder Expected units to be sold Plus desired inventory, November 30, 20XX Total Less estimated inventory, November 1, 20XX Total units to be produced 3.

Bird House Unlimited, Inc. Schedule to determine the required material for production For the Month Ending November 30, 20XX Bird House Bird Feeder Required units for production: Wood required per unit(feet) Wood required for production(feet) Required units for production: Plastic required per unit(Pounds) Plastic required for production(pounds) Bird House Unlimited, Inc. Direct Materials Purchases Budget For the Month Ending November 30, 20XX Wood Plastic Total Required units for production: Bird House Bird Feeder Plus desired ending inventory, November 30, 20XX Total Less estimated beginning inventory, November 1, 20XX Total units to be purchased Cost per material Total direct materials to be purchased

4.

Bird House Unlimited, Inc. Direct Labor Cost Budget For the Month Ending November 30, 20XX Fabrication Assembly Department Department Total Hours required for production: Bird House Bird Feeder Total Hourly rate Total direct labor cost 5. Bird House Unlimited, Inc. Manufacturing Overhead Cost Budget For the Month Ending November 30, 20XX Indirect factory wages Depreciation of plant and equipment Power and light Insurance and property tax Total 6. Hint: Do not forget you have 2 products and 2 direct materials, so you will need to combine this information below. Bird House Unlimited, Inc. Cost of Goods Sold Budget For the Month Ending November 30, 20XX Direct materials: Direct materials inventory, November 1, 20XX Direct materials purchases Cost of direct materials available for use Less: Direct materials inventory, November 30, 20XX Cost of direct materials placed in production Direct labor Manufacturing overhead Total manufacturing costs Work in process inventory, November 1, 20XX Subtotal Less work in process inventory, November 30, 20XX Cost of goods manufactured Finished goods inventory, November 1, 20XX Cost of finished goods available for sale Less finished goods inventory, November 30, 20XX Cost of goods sold 7. Bird House Unlimited, Inc. Selling and Administrative Expenses Budget For the Month Ending November 30, 20XX Selling expenses: Sales salaries expense Advertising expense Telephone expense - selling Travel expense - selling Total selling expenses Administrative expenses: Office salaries expense Depreciation expense - office equipment Telephone expense - administrative Office supplies expense Miscellaneous administrative expense Total administrative expenses Total operating expenses 8. Bird House Unlimited, Inc. Budgeted Income Statement For the Month Ending November 30, 20XX Sales Revenue Less: Cost of goods sold Gross Margin Operating expenses: Selling expenses Administrative expenses Total operating expenses Income from operations Other income: Interest revenue Other expenses: Interest expense Income before income tax Income tax expense Net income 9. What if the company decides to start a new advertising campaign that will increase the total advertising expense to a total of $15,000 and the estimated sales of bird house would increase to 30,000 units and Bird Feeders would increase to 26,000 units. Make these changes on the data sheet and if you have linked your data correctly to these budgets the budgets should update immediately. What budgets changed? What would be the new budgeted income? Would you recommend this advertising campaign? Why? Please make sure you change your data back to the original information before you submit.