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 2010:

a. Estimated sales for December:

Bird House . . . . . . . . . . . . . . . . . . . . 32,500 units at $50 per unit

Bird Feeder. . . . . . . . . . . . . . . . . . . . 21,300 units at $85 per unit

b. Estimated inventories at December 1:

Direct materials: Finished products:

Wood. . . . . . . . . 2,400 ft. Bird House . . . . . . . . . 3,100 units at $26 per unit

Plastic. . . . . . . . . 3,600 lbs. Bird Feeder . . . . . . . . . 1,900 units at $40 per unit

c. Desired inventories at December 31:

Direct materials: Finished products:

Wood. . . . . . . . . 2,900 ft. Bird House . . . . . . . . . 3,600 units at $27 per unit

Plastic . . . . . . . . 3,400 lbs. Bird Feeder. . . . . . . . . 1,800 units at $41 per unit

d. Direct materials used in production:

In manufacture of Bird House: In manufacture of Bird Feeder:

Wood . . . . . 0.80 ft. per unit of product Wood . . . . . 1.20 ft. per unit of product

Plastic . . . . 0.50 lb. per unit of product Plastic . . . . 0.75 lb. per unit of product

e. Anticipated cost of purchases and beginning and ending inventory of direct materials:

Wood . . . . . . . $6.00 per ft. Plastic . . . . . . $0.80 per lb.

f. Direct labor requirements:

Bird House:

Fabrication Department . . . . . . . . . 0.20 hr. at $15 per hr.

Assembly Department . . . . . . . . . . 0.30 hr. at $11 per hr.

Bird Feeder:

Fabrication Department . . . . . . . . . 0.40 hr. at $15 per hr.

Assembly Department . . . . . . . . . . 0.35 hr. at $11 per hr.

g. Estimated factory overhead costs for December:

Indirect factory wages $750,000 Power and light $47,000

Depreciation of plant and equipment 185,000 Insurance and property tax 15,400

h. Estimated operating expenses for December:

Sales salaries expense $645,000

Advertising expense 149,700

Office salaries expense 211,100

Depreciation expense—office equipment 5,200

Telephone expense—selling 4,800

Telephone expense—administrative 1,500

Travel expense—selling 41,200

Office supplies expense 3,500

Miscellaneous administrative expense 5,000

i. Estimated other income and expense for December:

Interest revenue $16,900

Interest expense 11,600

j. Estimated tax rate: 35%

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.

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 $27,000, and work in process at the end of December is estimated to be $32,400.

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

8. Prepare a budgeted income statement for December.