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The budget director of Birds of a Feather Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following

The budget director of Birds of a Feather 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:
    Birdhouse 6,000 units at $55 per unit
    Bird feeder 4,500 units at $75 per unit
  2. Estimated inventories at January 1:
    Direct materials:
    Wood 220 ft.
    Plastic 250 lb.
    Finished products:
    Birdhouse 300 units at $23 per unit
    Bird feeder 240 units at $34 per unit
  3. Desired inventories at January 31:
    Direct materials:
    Wood 180 ft.
    Plastic 210 lb.
    Finished products:
    Birdhouse 340 units at $23 per unit
    Bird feeder 200 units at $34 per unit
  4. 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
  5. Anticipated cost of purchases and beginning and ending inventory of direct materials:
    Wood $8.00 per ft.
    Plastic $1.20 per lb.
  6. Direct labor requirements:
    Birdhouse:
    Fabrication Department 0.20 hr. at $15 per hr.
    Assembly Department 0.30 hr. at $12 per hr.
    Bird Feeder:
    Fabrication Department 0.40 hr. at $15 per hr.
    Assembly Department 0.35 hr. at $12 per hr.
  7. Estimated factory overhead costs for January:
    Indirect factory wages $80,000
    Depreciation of plant and equipment 25,000
    Power and light 8,000
    Insurance and property tax 2,000
  8. Estimated operating expenses for January:
    Sales salaries expense $90,000
    Advertising expense 20,000
    Office salaries expense 18,000
    Depreciation expenseoffice equipment 800
    Telephone expenseselling 500
    Telephone expenseadministrative 200
    Travel expenseselling 5,000
    Office supplies expense 250
    Miscellaneous administrative expense 450
  9. Estimated other income and expense for January:
    Interest revenue $300
    Interest expense 224
  10. Estimated tax rate: 30%

5. Prepare a Budget that estimates the cost for each item of factory overhead needed to support budgeted production.factory overhead cost budget for January.

Birds of a Feather Inc. Factory Overhead Cost Budget For the Month Ending January 31
Indirect factory wages
Depreciation of plant and equipment
Power and light
Insurance and property tax
Total $

6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $29,000, and work in process at the end of January is estimated to be $35,400.

Birds of a Feather Inc. Cost of Goods Sold Budget For the Month Ending January 31
  • 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
  • Direct materials inventory, January 1
  • Direct materials inventory, January 31
  • Direct materials purchases
  • Factory Overhead
  • Work in process inventory, January 1
  • Work in process inventory, January 31
Direct materials:
  • Direct materials inventory, January 1
  • Direct materials inventory, January 31
  • Finished goods inventory, January 1
  • Finished goods inventory, January 31
  • Work in process inventory, January 1
  • Work in process inventory, January 31
  • Direct labor
  • Direct materials purchases
  • Factory overhead
  • Finished goods inventory, January 31
  • Work in process inventory, January 1
  • Work in process inventory, January 31
Cost of direct materials available for use
  • Less: Direct materials inventory, January 1
  • Less: Direct materials inventory, January 31
  • Less: Finished goods inventory, January 1
  • Less: Finished goods inventory, January 31
  • Less: Work in process inventory, January 1
  • Less: Work in process inventory, January 31
Cost of direct materials placed in production
  • Direct labor
  • Direct materials purchases
  • Finished goods inventory, January 1
  • Finished goods inventory, January 31
  • Work in process inventory, January 1
  • Work in process inventory, January 31
  • Direct materials purchases
  • Factory overhead
  • Finished goods inventory, January 1
  • Finished goods inventory, January 31
  • Work in process inventory, January 1
  • Work in process inventory, January 31
Total manufacturing costs
Total work in process during the period
  • Less: Direct materials inventory, January 1
  • Less: Direct materials inventory, January 31
  • Less: Finished goods inventory, January 1
  • Less: Finished goods inventory, January 31
  • Less: Work in process inventory, January 1
  • Less: Work in process inventory, January 31
Cost of goods manufactured
Cost of finished goods available for sale
  • Less: Direct materials inventory, January 1
  • Less: Direct materials inventory, January 31
  • Less: Finished goods inventory, January 1
  • Less: Finished goods inventory, January 31
  • Less: Work in process inventory, January 1
  • Less: Work in process inventory, January 31
Cost of goods sold $

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

Birds of a Feather Inc. Selling and Administrative Expenses Budget For the Month Ending January 31
Selling expenses:
Sales salaries expense
Advertising expense
Telephone expenseselling
Travel expenseselling
Total selling expenses
Administrative expenses:
Office salaries expense
Depreciation expenseoffice equipment
Telephone expenseadministrative
Office supplies expense
Miscellaneous administrative expense
Total administrative expenses
Total operating expenses $

8. Prepare a budgeted income statement for January.

Birds of a Feather Inc. Budgeted Income Statement For the Month Ending January 31
  • Gross profit
  • Income before income tax
  • Interest expense
  • Interest revenue
  • Revenue from sales
  • Administrative expenses
  • Cost of goods sold
  • Income tax expense
  • Interest expense
  • Selling expenses
  • Gross profit
  • Interest revenue
  • Net income
  • Net loss
  • Revenue from sales
Selling and administrative expenses:
  • Cost of goods sold
  • Income tax expense
  • Interest expense
  • Net loss
  • Selling expenses
  • Administrative expenses
  • Gross profit
  • Income tax expense
  • Interest expense
  • Interest revenue
Total selling and administrative expenses
  • Income from operations
  • Loss from operations
Other revenue:
  • Gross profit
  • Interest revenue
  • Interest expense
  • Net income
  • Revenue from sales
Other expenses:
  • Cost of goods sold
  • Income tax expense
  • Interest expense
  • Net loss
  • Selling expenses
  • Income before income tax
  • Loss before income tax
  • Cost of goods sold
  • Income tax (30% rate)
  • Interest expense
  • Gross profit
  • Net loss
  • Net income
$

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