Budgeted Income Statement and Supporting Budgets The budget director of Feathere

Question

Budgeted Income Statement and Supporting Budgets 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: a. Estimated sales for December: 3,200 units at $50 per unit 3,000 units at $70 per unit Bird house Bird feeder b. Estimated inventories at December 1: Direct materials: Wood 200 ft. Plastic 240 lbs Finished products 320 units at $27 per unit 270 units at $40 per unit Bird house Bird feeder c. Desired inventories at December 31: Direct materials Wood 220 ft. Plastic 200 lbs

Explanation / Answer

1. Sales Budget Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Unit Sales Unit Selling Price Total Sale Bird House 3200 50 160000 Bird Feeder 3000 70 210000 Total Revenue from Sale 370000 2. Production Budget Bird House Bird Feeder Expected units to be sold 3200 3000 Desired Inventory, December 31 290 250 Total units Available 3490 3250 Estimated Inventory , December 1 -320 -270 Total Units to be produced 3170 2980 3. Direct Material Purchases Budget Wood Plastic Total Required units for production: Bird House 2536 1585 4121 Bird Feeder 3576 2235 5811 Desired Inventory, December 31 220 200 420 Total units Available 6332 4020 10352 Estimated Inventory , December 1 -200 -240 -440 Total Units to be purchased 6132 3780 9912 Unit Price 7 1 Total Direct Materials to be purchased 42924 3780 46704 4.Direct Labor Cost Budget Fabrication Assembly Total Hours required for production: -Bird Hour 634 951 1585 -Bird Feeder 1192 1043 2235 -Total 1826 1994 3820 Hourly rate 16 12 Total Direct Labor Cost 29216 23928 53144 5. Factory Overhead Cost Budget Indirect Factory Wages 75000 Depreciation of plant and equipment 23000 Power and light 6000 Insurance and property tax 5000 Total factory overhead cost 109000 6. Cost of Goods Sold Budget Working Finished goods inventory, December 1 19440 (320*27)+(270*40) Work in process inventory, December 1 29000 Direct materials: Direct materials inventory, December 1 1640 (200*7)+(240*1) Direct materials purchases 46704 Cost of direct materials available for use 48344 Direct materials inventory, December 31 -1740 (220*7)+(200*1) Cost of direct materials placed in production 46604 Direct labor 53144 Factory overhead 109000 Total manufacturing costs 208748 Total work in process during period 237748 Work in process inventory, December 31 -35400 Cost of goods manufactured 202348 Cost of finished goods available for sale 221788 Finished goods inventory, December 31 -18080 (290*27)+(250*41) Cost of goods sold 203708 7. Selling and Administrative Budget Selling Expense: Sale Salaries Expense 70000 Advertising Expense 18000 Telephone Expense-Selling 550 Travel Expense Selling 4000 Total Selling Expense 92550 Administration Expense: Office Salaries Expense 21000 Depreciation Expense-Office Equipment 600 Telephone expense—administrative 250 office supplies expense 200 Miscellaneous administrative expense 400 Total administrative expenses 22450 Total operating expenses 115000 8. Budgeted Income Statement Revenue from sales From Sales Budget 370000 Cost of goods sold From COGS Budget -203708 Gross profit 166292 Operating expenses: Selling expenses Selling Budget 92550 Administrative expenses Selling Budget 22450 Total operating expenses Selling+Administrative 115000 Income from operations 166292-115000 51292 Other revenue and expense: Interest revenue 200 Interest expense -122 Income before income tax 51370 Income tax expense 30% -15411 Net Income 35959

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