The budget director for Bird House Unlimited, Inc., has gathered the following data for use in developing the budgeted income statement for January 2020.

Questions

6. Prepare a cost of goods sold budget for January.

7. Prepare a selling and administrative budget for January, set up based on the categorization of expenses into selling and administrative costs.

8. Prepare a budgeted income statement for January.

9. What if the company decides to start a new advertising campaign

that will increase the total advertising expense to a total of $180,000 and the estimated sales

of birdhouse would increase to 36,000 units and Bird Feeders would increase to 29,000 units.

What budgets changed? What would be the new budgeted income?

Would you recommend this advertising campaign? Why?

Estimated sales for January Bird House Bird Feeder Amount Units 34,000 units 25,000 units $42 per unit $70 per unit Direct materials Estimated inventories at January 1(beginning) Wood Plastic Estimated inventories at January 31st(ending) Wood Plastic 2600 feet 3200 pounds 3500 feet 2800 pounds Direct materials used in production: In the manufacture of a Bird House: Wood Plastic In the manufacture of a Bird Feeder: Wood Plastic 0.80 feet per unit of product 0.50 pounds per unit of product 1.20 feet per unit of product 0.75 pounds per unit of product Estimated cost of direct materials Wood Plastic $6.50 per feet $0.90 per pound Work in process-given in total of the 2 products Estimated inventories at January 1(beginning) Estimated inventories at January 31 st(ending) $27,000 $32,400 Finished Goods Estimated inventories at January 1(beginning) Bird House Bird Feeder Estimated inventories at January 31st(ending) Bird House Bird Feeder 4900 units 2,500 units $25 per unit $35 per unit 5300 units 2,100 units $24 per unit $36 per unit Direct Labor Requirements: Bird House Fabrication Department Assembly Department 0.25 hour 0.3 hour at $14 per hour $10 per hour Bird Feeder Fabrication Department Assembly Department 0.45 hour 0.35 hour at at $14 per hour $10 per hour Estimated Manufacturing Overhead Costs for January Indirect Factory Wages Depreciation of Plant and Equipment Power and Light Insurance and property tax $550,000 165,000 42,000 15,400 Estimated operating expenses for January Sales salaries expense disin evnense Advertising expense Office salaries expense Depreciation expense-office equipment Telephone expense-selling Telephone expense-administrative Travel expense-selling Office supplies expense Miscellaneous Administrative expense $600,000 148,600 214,800 4,900 5,200 1,700 39,200 3,500 5,000 Estimated other income and expense for January Interest Revenue Interest Expense $14,000 11,000 Estimated tax rate 32% Estimated sales for January Bird House Bird Feeder Amount Units 34,000 units 25,000 units $42 per unit $70 per unit Direct materials Estimated inventories at January 1(beginning) Wood Plastic Estimated inventories at January 31st(ending) Wood Plastic 2600 feet 3200 pounds 3500 feet 2800 pounds Direct materials used in production: In the manufacture of a Bird House: Wood Plastic In the manufacture of a Bird Feeder: Wood Plastic 0.80 feet per unit of product 0.50 pounds per unit of product 1.20 feet per unit of product 0.75 pounds per unit of product Estimated cost of direct materials Wood Plastic $6.50 per feet $0.90 per pound Work in process-given in total of the 2 products Estimated inventories at January 1(beginning) Estimated inventories at January 31 st(ending) $27,000 $32,400 Finished Goods Estimated inventories at January 1(beginning) Bird House Bird Feeder Estimated inventories at January 31st(ending) Bird House Bird Feeder 4900 units 2,500 units $25 per unit $35 per unit 5300 units 2,100 units $24 per unit $36 per unit Direct Labor Requirements: Bird House Fabrication Department Assembly Department 0.25 hour 0.3 hour at $14 per hour $10 per hour Bird Feeder Fabrication Department Assembly Department 0.45 hour 0.35 hour at at $14 per hour $10 per hour Estimated Manufacturing Overhead Costs for January Indirect Factory Wages Depreciation of Plant and Equipment Power and Light Insurance and property tax $550,000 165,000 42,000 15,400 Estimated operating expenses for January Sales salaries expense disin evnense Advertising expense Office salaries expense Depreciation expense-office equipment Telephone expense-selling Telephone expense-administrative Travel expense-selling Office supplies expense Miscellaneous Administrative expense $600,000 148,600 214,800 4,900 5,200 1,700 39,200 3,500 5,000 Estimated other income and expense for January Interest Revenue Interest Expense $14,000 11,000 Estimated tax rate 32%