Question

Budgeted Income Statement and Supporting Budgets The budget director of Jupiter Helmets 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 May a. Estimated sales for May: Bicycle helmet 7,500 units at $24 per unit Motorcycle helmet 7,000 units at $185 per unit b. Estimated Inventories at May 1: Direct materials: Plastic Foam lining 1,480 lbs. 520 lbs. Finished products: Bicycle helmet 200 units at $15 per unit Motorcycle helmet 100 units at $90 per unit c. Desired Inventories at May 31: Direct materials: Plastic Foam lining 2,000 lbs. 800 s. Finished products: Bicycle helmet 400 units at $15 per unit Motorcycle helmet 300 units at $100 per unit d. Direct materials used in production: In manufacture of bicycle helmet: Plastic 0.90 ib. per unit of product Foam lining 0.20 ib. per unit of product In manufacture of motorcycle helmet: Plastic 3.50 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 $4,40 per lb. Foam lining $0.90 per lb. Direct labor requirements: Bicycle helmet: Molding Department 0.30 h. at $15 per hr. Assembly Department 0.10 hr at $14 per hr. Motorcycle helmet: Molding Department 0.50 h at $15 per hr. Assembly Department 0.40 hr at $14 per hr. Q. Estimated factory overhead costs for May: Indirect factory wages Depreciation of plant and equipment $125,000 45,000 Power and light Insurance and property tax $23,000 11,000 h. Estimated operating expenses for May: Sales salaries expense Advertising expense Orice salaries expense Depreciation expense-office equipment Miscellaneous expense-selling Utilities expense-administrative Travel expense-selling Office supplies expense Miscellaneous administrative expense $175,000 120,000 92,000 0,000 5,000 3,000 50,000 2,500 1,500 1. Estimated other income and expense for May: Interest revenue $14,500 Interest expense 3,000 1. Estimated tax rate: 25% Required: 1. Prepare a sales budget for May. Jupiter Helmets Inc. Sales Budget For the Month Ending May 31 Unt Selling Price Total Sales Unit Sales Volume 7 Bicycle helmet C ,500 24 180,000

Answer 1

Part 1: Total Sales Budget For the Month Ending May 31 Unit Sales Unit Selling Volume Price 7,500 7,000 Product Bicycle helmet Motorcycle helmet Total revenue from sales 24 185 Sales 180,000 1,295,000 1,475,000 Part 2: Production Budget For the Month Ending May 31 Units Bicycle helmet Motorcycle helmet Expected units to be sold 7,500 7,000 Plus desired inventory, May 31 400 300 Total 7,900 7,300 Less estimated inventory, May 1 200 100 Total units to be produced 7,700 7,200 Foam lining (lbs.) 1 Total Part 3: Direct Materials Purchases Budget For the Month Ending May 31 Plastic (lbs.) Required units for production: Bicycle helmet 6,930 Motorcycle helmet 25, 200 Plus desired inventory, May 31 2,000 Total 34, 130 Less estimated inventory, May 1 1,480 Total units to be purchased 32,650 Unit price 4.40 Total direct materials to be purchased 143,660 1,540 10,080 800 12,420 520 11,900 0.90 10,710 154,370 Part 4: Jupiter Helmets Inc. Direct Labor Cost Budget For the Month Ending May 31 Molding Department Assembly Department | Total 2,310 3,600 Hours required for production: Bicycle helmet Motorcycle helmet Total Hourly rate Total direct labor cost 5,910 770 2,880 3,650 14 51, 100 15 88,650 139,750 Part 5: Factory Overhead Cost Budget For the Month Ending May 31 Indirect factory wages Depreciation of plant and equipment Power and light Insurance and property tax Total 125,000 45,000 23,000 11,000 204,000

12,000 4,200 Part 6: Jupiter Helmets Inc. Cost of Goods Sold Budget For the Month Ending May 31 Finished goodsinventory, May 1 Work in process inventory, May 1 Direct materials: Direct materials inventory, May 1 Direct materials purchases Cost of direct materials available for use Less: Direct materials inventory, May 31 Cost of direct materials placed in production Direct labor Factory overhead Total manufacturing costs Total work in process during period Less: Work in process inventory, May 31 Cost of goods manufactured Cost of finished goods available for sale Less: Finished goods inventory, May 31 Cost of goods sold 6,980 154,370 161, 350 9,520 151,830 139,750 204,000 495,580 499,780 3,800 495,980 507,980 36,000 471,980 Units Cost Total L 200 100 153,000 90 9,000 12,000 400 300 15 100 Supporting calculations: Finished goodsinventory, May 1: Bicycle helmet Motorcycle helmet Total Finished goods inventory, May 31. : Bicycle helmet Motorcycle helmet Total Direct materials inventory, May 1, Plastic Foam lining Total Direct materials inventory, May 31 Plastic Foam lining Total 6,000 30,000 36,000 1,480 4.40 0.90 6,512 468 520 6,980 2,000 800 4.40 0.90 8,800 720 9,520

Part 7: Selling and Administrative Expenses Budget For the Month Ending May 31. Selling expenses: Sales salaries expense 175,000 Advertising expense 120,000 Travel expense - selling 50,000 Miscellaneous expense-selling 5,000 Total selling expenses Administrative expenses: Office salaries expense 92,000 Depreciation expense-office equipment 6,000 Utilities expense-administrative 3,000 Office supplies expense 2,500 Miscellaneous administrative expense 1,500 Total administrative expenses Total operating expenses 350,000 105,000 455,000 1,475,000 471,980 1,003,020 Part 8: Jupiter Helmets Inc. Budgeted Income Statement For the Month Ending May 31 Revenue from sales Cost of goods sold Gross profit Operating expenses: Selling expenses Administrative expenses Total operating expenses Income from operations Other income: Interest revenue Other expenses: Interest expense Income before income tax Income tax expense Net income 350,000 105,000 455,000 548,020 14,560 3,000 11,560 559,580 139,895 419,685