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 2016:

Estimated sales for December:

Estimated inventories at December 1:

Desired inventories at December 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 December:

Estimated operating expenses for December:

Estimated other income and expense for December:

Estimated tax rate: 30%

Required:

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.

Explanation / Answer

1 Sales Budget Feathered Friends Inc. Sales Budget For the Month Ending December 31, 2016 Unit Sales Unit Selling Total Sales Volume Price Bird house 3200 $50 $160,000 Bird feeder 3000 $70 $210,000 Total revenue from sales $370,000 2 Production Budget Feathered Friends Inc. Production Budget For the Month Ending December 31, 2016 Units Bird House Bird Feeder Expected units to be sold 3200 3000 Plus desired inventory, December 31, 2016 290 250 Total 3490 3250 Less estimated inventory, December 1, 2016 320 270 Total units to be produced 3170 2980 3 Direct Materials Purchase Budget Feathered Friends Inc. Direct Materials Purchases Budget For the Month Ending December 31, 2016 Wood Plastic Total Quantity Required per unit: ft pound A Bird House 0.80 0.50 B Bird Feeder 1.20 0.75 Required units for production: C=A*3170 Bird house 2536 1585 D=B*2980 Bird feeder 3576 2235 E Plus desired units of inventory, December 31, 2016 220 200 F=C+D+E Total 6332 4020 G Less estimated units of inventory, December 1, 2016 200 240 H=F-G Total units to be purchased 6132 3780 I Unit price $7.00 $1.00 J=H*I Total direct materials to be purchased $42,924 $3,780 $46,704 4 Direct Labor Cost Budget Feathered Friends Inc. Direct Labor Cost Budget For the Month Ending December 31, 2016 Bird House Bird Feeder Total A Hours in Fabrication Department 0.20 0.40 B Hours in Assembly Department 0.30 0.35 C Rate of Fabrication ($/hour) $          16.00 $16.00 D Rate of Assembly ($/hour) $12 $12 E=A*C Direct labor cost in Fabrication $            3.20 $            6.40 F=B*D Direct labor cost in Assembly $3.60 $4.20 G=E+F Total Direct Labor cost per unit $            6.80 $           10.60 H Production during the month(units) 3170 2980 I=G*H Total direct labor cost of the month $        21,556 $         31,588 $ 53,144

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