The budget director of Backyard Habitat Inc., with the assistance of the control

Question

The budget director of Backyard Habitat 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 2008:
a. Estimated sales for December:
Bird House................34,500 units at $40 per unit
Bird Feeder...............25,800 units at $70 per unit
b. Estimated inventories at December 1:
Direct materials: Finished Products:
Wood.............2,600 ft. Bird House............4,900 units at $25per unit
Plastic............3,200 ft. Bird Feeder...........2,500 units at $35per unit
c. Desired inventories at December 31:
Direct materials: Finished Products:
Wood............3,500 ft Bird House.............5,300 units at $24 per unit
Plastic............2,800 ft Bird Feeder............2,100 units at $36 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....... $6.50 per ft. Plastic........$0.90 per lb.
f. Direct labor requirements:
Bird House:
Fabrication Department.......0.25 hour at $14 per hour
Assembly Department..........0.30 hour at $10 per hour
Bird Feeder:
Fabrication Department.......0.45 hour at $14 per hour
Assembly Department..........0.35 hour at $10 per hour
g. Estimated factory overhead costs for December:
Indirect factory wages $650,000 Power and light $42,000
Depreciation of plant and equipment 165,000 Insurance and property tax 15,400
h. Estimated operating expenses for December:
Sales salaries expense $675,000
Advertising expense 148,600
Office salaries expense 214,800
Depreciation expense-office equipment 4,900
Telephone expense-selling 5,200
Telephone expense-administrative 1,700
Travel expense-selling 39,200
Office supplies expense 3,500
Miscellaneous administrative expense 5,000
i. Estimated other income and expense for December:
Interest revenue $16,900
Interest expense 10,600
j. Estimated tax rate: 35%


How to prepare a direct material purchase budget?

Explanation / Answer

BACKYARD HABITAT INC.,

Budgeted Income Statement

For the year ended December 31, 2008

BACKYARD HABITAT INC.,

Budgeted Income Statement

For the year ended December 31, 2008

Bird House Bird Feeder Sales   $1,380,000 $1,806,000 Less: Cost of goods sold 22,985 33,100 Gross profit 1,357,015 1,772,900 Less: Selling and administrative expense 1.097,900 1,097,900 Income from operations 259,115 675,000 Interest expense 10,600 10,600 248,515 664,400 Add: Interest revenue 16,900 16,900 Income b efore income tax 265,415 647,500 Income tax expense 35% 92,895 226,625 Net Income 172,520 420,875 Working notes: Bird House Bird Feeder Opening inventory 122,500 87,500 Add: Purchases wood 5.2      7.8 Plastic0.45    0.68 4,900*5.2=25,480 4,900*0.45=2,205 27,685 21,200 25,480+2,205=27,685 2,500*7.8 = 19,500 2,500*0.68=1,700 19,500+1,700=21,200 150,185 108,700 Less:Closing inventory 127,200 75,600 Cost of Goods Sold 22,985 33,100

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.