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The budget director of Birding Homes & Feeders Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following

The budget director of Birding Homes & Feeders 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:

  1. Estimated sales for January:
    Bird house 15,000 units at $25 per unit
    Bird feeder 40,000 units at $15 per unit
  2. Estimated inventories at January 1:
    Direct materials:
    Wood 600 ft.
    Plastic 1,000 lbs.
    Finished products:
    Bird house 1,000 units at $15 per unit
    Bird feeder 2,500 units at $8 per unit
  3. Desired inventories at January 31:
    Direct materials:
    Wood 500 ft.
    Plastic 1,250 lbs.
    Finished products:
    Bird house 1,500 units at $15 per unit
    Bird feeder 3,000 units at $8 per unit
  4. Direct materials used in production:
    In manufacture of Bird House:
    Wood 0.80 ft. per unit of product
    Plastic 0.10 lb. per unit of product
    In manufacture of Bird Feeder:
    Wood 0.20 ft. per unit of product
    Plastic 1.00 lb. per unit of product
  5. Anticipated cost of purchases and beginning and ending inventory of direct materials:
    Wood $2.50 per ft.
    Plastic $0.80 per lb.
  6. Direct labor requirements:
    Bird House:
    Fabrication Department 0.40 hr. at $18 per hr.
    Assembly Department 0.20 hr. at $12 per hr.
    Bird Feeder:
    Fabrication Department 0.25 hr. at $18 per hr.
    Assembly Department 0.10 hr. at $12 per hr.
  7. Estimated factory overhead costs for January:
    Indirect factory wages $40,000
    Depreciation of plant and equipment 20,000
    Power and light 10,000
    Insurance and property tax 5,000
  8. Estimated operating expenses for January:
    Sales salaries expense $125,000
    Advertising expense 80,000
    Office salaries expense 40,000
    Depreciation expenseoffice equipment 4,000
    Travel expenseselling 25,000
    Office supplies expense 2,500
    Miscellaneous administrative expense 3,500
  9. Estimated other revenue and expense for January:
    Interest revenue $4,540
    Interest expense 3,000
  10. Estimated tax rate: 25%

5. Prepare a factory overhead cost budget for January.

  • Advertising expense
  • Indirect factory wages
  • Office salaries expense
  • Office supplies expense
  • Sales salaries expense

Birding Homes & Feeders Inc. Factory Overhead Cost Budget For the Month Ending January 31
$fill in the blank 52
fill in the blank 54
fill in the blank 56
fill in the blank 58
Total factory overhead cost $fill in the blank 59

6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $9,000, and work in process at the end of January is estimated to be $10,500. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

  • Direct materials inventory, January 1
  • Direct materials inventory, January 31
  • Direct materials purchases
  • Factory overhead
  • Finished goods inventory, January 1
  • Finished goods inventory, January 31
Birding Homes & Feeders Inc. Cost of Goods Sold Budget For the Month Ending January 31
$fill in the blank 61
$fill in the blank 63
Direct materials:
$fill in the blank 65
fill in the blank 67
Cost of direct materials available for use $fill in the blank 68
fill in the blank 70
Cost of direct materials placed in production $fill in the blank 71
fill in the blank 73
fill in the blank 75
Total manufacturing costs fill in the blank 76
Total work in process during period $fill in the blank 77
fill in the blank 79
Cost of goods manufactured fill in the blank 80
Cost of finished goods available for sale $fill in the blank 81
fill in the blank 83
Cost of goods sold $fill in the blank 84

7. Prepare a selling and administrative expenses budget for January.

  • Depreciation expenseoffice equipment
  • Miscellaneous administrative expense
  • Office salaries expense
  • Office supplies expense
  • Sales salaries expense
  • Telephone expenseadministrative

  • Advertising expense
  • Office salaries expense
  • Power and light
  • Sales salaries expense
  • Telephone expenseselling
  • Travel expenseselling
Birding Homes & Feeders Inc. Selling and Administrative Expenses Budget For the Month Ending January 31
Selling expenses:
$fill in the blank 86
fill in the blank 88
fill in the blank 90
Total selling expenses $fill in the blank 91
Administrative expenses:
$fill in the blank 93
fill in the blank 95
fill in the blank 97
fill in the blank 99
Total administrative expenses fill in the blank 100
Total operating expenses $fill in the blank 101

8. Prepare a budgeted income statement for January. In the Other revenue and expense section, indicate expenses as negative amounts.

  • Gross profit
  • Income before income tax
  • Interest expense
  • Interest revenue
  • Revenue from sales
  • Cost of goods sold
  • Interest revenue
  • Net income
  • Net loss
  • Selling expenses
  • Gross profit
  • Interest expense
  • Interest revenue
  • Net income
  • Revenue from sales
Birding Homes & Feeders Inc. Budgeted Income Statement For the Month Ending January 31
$fill in the blank 103
fill in the blank 105
$fill in the blank 107
Operating expenses:
$fill in the blank 109
fill in the blank 111
Total operating expenses fill in the blank 112
Operating income $fill in the blank 113
Other revenue and expense:
$fill in the blank 115
fill in the blank 117 fill in the blank 118
Income before income tax $fill in the blank 119
fill in the blank 121
Net income $fill in the blank 122

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