Budgeted Income Statement and Supporting Budgets The budget director of Gold Med
ID: 2475485 • Letter: B
Question
Budgeted Income Statement and Supporting Budgets
The budget director of Gold Medal Athletic Co., 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 March 2016:
Estimated sales for March:
Estimated inventories at March 1:
Desired inventories at March 31:
Direct materials used in production:
Anticipated cost of purchases and beginning and ending inventory of direct materials:
Direct labor requirements:
Estimated factory overhead costs for March:
Estimated operating expenses for March:
Estimated other income and expense for March:
Estimated tax rate: 30%
6. Prepare a cost of goods sold budget for March. Work in process at the beginning of March is estimated to be $15,300, and work in process at the end of March is desired to be $14,800. Enter all amounts as positive numbers.
Gold Medal Athletic Co.
Cost of Goods Sold Budget
For the Month Ending March 31, 2016
Direct materials inventory, March 1, 2016
Work in process inventory, March 31, 2016
Direct materials:
Cost of direct materials available for use
Cost of direct materials placed in production
Total manufacturing costs
Total work in process during the period
Cost of goods manufactured
Cost of finished goods available for sale
Cost of goods sold
7. Prepare a selling and administrative expenses budget for March. Enter all amounts as positive numbers.
Gold Medal Athletic Co.
Selling and Administrative Expenses Budget
For the Month Ending March 31, 2016
Selling expenses:
Sales salaries expense
Advertising expense
Telephone expense—selling
Travel expense—selling
Total selling expenses
Administrative expenses:
Office salaries expense
Depreciation expense—office equipment
Telephone expense—administrative
Office supplies expense
Miscellaneous administrative expense
Total administrative expenses
Total operating expenses
8. Prepare a budgeted income statement for March. Enter all amounts as positive numbers.
Gold Medal Athletic Co.
Budgeted Income Statement
For the Month Ending March 31, 2016
Revenue from sales
Cost of goods sold
Net income
Operating expenses:
Total operating expenses
Income from operations
Other income:
Other expenses:
Income before income tax
Net income
Explanation / Answer
Sales budget Batting Helmet Foot ball Helmet Total Revenues Sales in units 1,200 6,500 S.P per unit $40 $ 160 Sales budget $ 48,000 $ 1,040,000 $ 1,088,000 finished goods produced calculation: Batting Helmet (in uts) Foot ball Helmet (in uts) Ending Inventory 50 220 Sales 1,200 6,500 Total units 1,250 6,720 Less: Beginning Inventory 40 240 Goods manufactured during the year 1,210 6,480 Calculation of material used in production: Batting Helmet Foot ball Helmet Total Plastic in lbs per unit 1.20 3.50 Foam 0.50 1.50 Plastic (lbs) Foam (lbs) Batting Helmet 1.20 0.50 For manufactuirng 1210 units 1,452 605 Football Helmet 3.50 1.50 For manufactuirng 6,480 units 22,680 9,720 Total 24,132 10,325 34,457 Cost per lbs $ 6.00 $4.00 Direct material cost used for production $ 144,792 $ 41,300 $ 186,092 Calculation of direct material purchased: Plastic (lbs) Foam (lbs) Ending Inventory 50 65 Material used in production 24,132 10,325 Less: Beginning Inventory (90) (80) Purchases 24,092 10,310 Cost of material per lbs $ 6.00 $ 4.00 Cost of purchases $ 144,552 $ 41,240 Direct labor cost: Batting Helmet Football Helmet Total hours Cost per hr. Labor cost Moulding Deptt 0.20 0.50 Assembly Deptt. 0.50 1.80 No. of units produced 1,210 6,480 Moulding deptt 242 3,240 3,482 $20 $69,640 Assembly Deptt. 605 11,664 12,269 $14 $171,766 Total labor cost $241,406 Total factory overhead cost for the month of March: Indirect factory wages $ 86,000 Depreciation of P&E $ 12,000 Power & Light $ 4,000 Insurance &Property tax $ 2,300 Total factory overhead cost: $ 104,300 Finished goods at the beginning cost: Batting Football Total Finshed goods at beginning (units) 40 240 Cost per unit $ 25 $ 77 Cost of beginning finished goods $ 1,000 $ 18,480 $ 19,480 Cost of ending finished goods: Finshed goods at Ending (units) 50 220 Cost per unit $ 25 $ 78 Cost of beginning finished goods $ 1,250 $ 17,160 $ 18,410 Calculation of cost of goods sold budget for the month of March is as under: Amount Amount Direct material used for production $ 186,092 Direct labor cost $ 241,406 Factory overhead cost $ 104,300 Total manufacturing cost $ 345,706 WIP Inventory beginning $ 15,300 Less: WIP Inventory Ending $ 14,800 Cost of goods manufactured $ 346,206 Finished goods inventory (Beginning) $ 19,480 Cost of goods available for sale $ 365,686 Less: Finished goods inventory (Ending) $ 18,410 Cost of goods sold $ 347,276 7 Selling and administrative expenses budget for the month of March is as under: Amount Selling expenses: Sales salaries expenses $ 184,300 Advertisement expenses $ 87,200 Telephone expenses $ 5,800 Travel expenses $ 9,000 Total selling expenses: $ 286,300 Administrative expense: Office salaries expenses $ 32,400 Depreciation exp-office equipment $ 3,800 Telephone exp.-administrative $ 1,200 Office supplies expenses $ 1,100 Misc. administrative exp $ 1,000 Total administrative exp. $ 39,500 Total operating expenses $ 325,800 8 Gold Medal Athletic Co. Budgeted Income Statement For the month ended 31st March 2016 Revenues from sales $ 1,088,000 Less: Cost of goods sold $ 347,276 Net Income $ 740,724 Less: Operating expenses: Selling expenses $ 286,300 Administrative expenses $ 39,500 Total operating expenses $ 325,800 Income from operations $ 414,924 Other Income: Interest Revenue $ 940 Less: Other Expenses: Interest Expenses $ 872 Income before Income Tax $ 414,992 Less: Income tax (@30%) $ 124,498 Net Income $ 290,494
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