The budget director of Safety Athletic 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 2008:
a. Estimated sales for January:
Batting helmet . . . . . . . . . . . . . 3,500 units at $65 per unit
Football helmet . . . . . . . . . . . . 6,800 units at $130 per unit
b. Estimated inventories at January 1:

c. Desired inventories at January 31:

d. Direct materials used in production:
In manufacture of batting helmet:
Plastic . . . . . . . . . . . . . . . . . . . . . . . . 1.20 lbs. per unit of product
Foam lining . . . . . . . . . . . . . . . . . . . . 0.50 lb. per unit of product

In manufacture of football helmet:
Plastic . . . . . . . . . . . . . . . . . . . . . . . . 2.80 lbs. per unit of product
Foam lining . . . . . . . . . . . . . . . . . . . 1.40 lbs. per unit of product
e. Anticipated cost of purchases and beginning and ending inventory of direct materials:
Plastic . . . . . . . . . . . . . $7.00 per lb.
Foam lining . . . . . . . . $4.00 per lb.
f. Direct labor requirements:
Batting helmet:
Molding Department . . . . . . . . . . . 0.20 hour at $14 per hour
Assembly Department . . . . . . . . . . . 0.50 hour at $12 per hour


Football helmet:
Molding Department . . . . . . . . . . . 0.30 hour at $14 per hour
Assembly Department . . . . . . . . . . . 0.65 hour at $12 per hour
g. Estimated factory overhead costs for January:
Indirect factory wages ....... $105,000
Power and light .......... $16,000
Depreciation of plant and equipment.... 30,000
Insurance and property tax ....... 8,700
h. Estimated operating expenses for January:
Sales salaries expense ....... $265,800
Advertising expense ........ 135,600
Office salaries expense ........ 84,300
Depreciation expense€”office equipment . 5,200
Telephone expense€”selling ...... 3,500
Telephone expense€”administrative ..... 700
Travel expense€”selling ....... 43,100
Office supplies expense ......... 4,900
Miscellaneous administrative expense .. 5,200
i. Estimated other income and expense for January:
Interest revenue $14,500
Interest expense 18,700
j. Estimated tax rate: 30%

Instructions
1. Prepare a sales budget for January.
2. Prepare a production budget for January.
3. Prepare a direct materials purchases budget for January.
4. Prepare a direct labor cost budget for January.
5. Prepare a factory overhead cost budget for January.
6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $12,500, and work in process at the end of January is desired to be $13,500.
7. Prepare a selling and administrative expenses budget for January.
8. Prepare a budgeted income statement forJanuary.

Transcribed Image Text:

Direct materials: Finished products: Plastic...a.. Foam lining 900 lbs 490 lbs. Batting helmet.270 units at $32 per unit Football helmet.. 400 units at $52 per unit Direct materials: Finished products: Plastic_.... ,240 lbs. Foam lining470 lbs. Batting helmet 240 nits at $34 per unit Football helmet . . .。.. 360 units at $55 per unit