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:

1. Estimated sales for December:

   Bird house	3,200 units at $50 per unit
   Bird feeder	3,000 units at $70 per unit

2. Estimated inventories at December 1:

   Direct materials:
   Wood	200 ft.
   Plastic	240 lbs.
   Finished products:
   Bird house	320 units at $27 per unit
   Bird feeder	270 units at $40 per unit

3. Desired inventories at December 31:

   Direct materials:
   Wood	220 ft.
   Plastic	200 lbs.
   Finished products:
   Bird house	290 units at $27 per unit
   Bird feeder	250 units at $41 per unit

4. Direct materials used in production:

   In manufacture of Bird House:
   Wood	0.80 ft. per unit of product
   Plastic	0.50 lb. per unit of product
   In manufacture of Bird Feeder:
   Wood	1.20 ft. per unit of product
   Plastic	0.75 lb. per unit of product

5. Anticipated cost of purchases and beginning and ending inventory of direct materials:

   Wood	$7.00 per ft.
   Plastic	$1.00 per lb.

6. Direct labor requirements:

   Bird House:
   Fabrication Department	0.20 hr. at $16 per hr.
   Assembly Department	0.30 hr. at $12 per hr.
   Bird Feeder:
   Fabrication Department	0.40 hr. at $16 per hr.
   Assembly Department	0.35 hr. at $12 per hr.

7. Estimated factory overhead costs for December:

   Indirect factory wages	$75,000
   Depreciation of plant and equipment	23,000
   Power and light	6,000
   Insurance and property tax	5,000

8. Estimated operating expenses for December:

   Sales salaries expense	$70,000
   Advertising expense	18,000
   Office salaries expense	21,000
   Depreciation expense—office equipment	600
   Telephone expense—selling	550
   Telephone expense—administrative	250
   Travel expense—selling	4,000
   Office supplies expense	200
   Miscellaneous administrative expense	400

9. Estimated other income and expense for December:

   Interest revenue	$200
   Interest expense	122

10. Estimated tax rate: 30%

Required:

1. Prepare a sales budget for December.

Feathered Friends Inc. Sales Budget For the Month Ending December 31
	Unit Sales Volume	Unit Selling Price	Total Sales
Bird house
Bird feeder
Total revenue from sales

2. Prepare a production budget for December. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Feathered Friends Inc. Production Budget For the Month Ending December 31
	Units
		Bird House		Bird Feeder

3. Prepare a direct materials purchases budget for December. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Feathered Friends Inc. Direct Materials Purchases Budget For the Month Ending December 31
	Wood	Plastic	Total
Required units for production:
Bird house
Bird feeder
Desired units of inventory, December 31
Total units available
Estimated units of inventory, December 1
Total units to be purchased
Unit price
Total direct materials to be purchased

4. Prepare a direct labor cost budget for December.

Feathered Friends Inc. Direct Labor Cost Budget For the Month Ending December 31
			Fabrication Department		Assembly Department	Total
Hours required for production:
	Bird house
	Bird feeder
	Total
Hourly rate
Total direct labor cost

5. Prepare a factory overhead cost budget for December.

Feathered Friends Inc. Factory Overhead Cost Budget For the Month Ending December 31
	$
Total factory overhead cost	$

6. Prepare a cost of goods sold budget for December. Work in process at the beginning of December is estimated to be $29,000, and work in process at the end of December is estimated to be $35,400. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Feathered Friends Inc. Cost of Goods Sold Budget For the Month Ending December 31
Direct materials:
Cost of direct materials available for use
Cost of direct materials placed in production
Total manufacturing costs
Total work in process during 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 December.

Feathered Friends Inc. Selling and Administrative Expenses Budget For the Month Ending December 31
Selling expenses:
		$
Total selling expenses			$
Administrative expenses:
		$
Total administrative expenses
Total operating expenses			$

8. Prepare a budgeted income statement for December. In the Other revenue and expense section, indicate expenses as negative amounts.

Feathered Friends Inc. Budgeted Income Statement For the Month Ending December 31
			$
			$
Operating expenses:
		$
Total operating expenses
Income from operations			$
Other revenue and expense:
		$
Income before income tax			$
Net income			$

Answer 1

salus Budget Total sahs Pri ce Bind Houes 160000 3200 50 210000 Bend feeden F0 3000 370000 6200 oc08 3udgu: उd Fceden Bind HOuk Saus onh 3200 3000 Add: closing skock 2a0 o 250 Opening slocK C270) 320) 2980 3130

ral esa puichai Budgu: Molesa eusud fo: w0od plasic Tolal Bind HOus 2536 1585 (3110 x0-8) (3170x0.5) Bnd Feeden 3576 2235 2980x0- 15) 2980 x 12) Add 6112 3890 closing stock of 200 220 Naieias CCAS OPening slock of Quo) (200) naiesa 3780 bs. 6132 Ft. pasce IP16S $3780 u670 Punchas vals 42924 Osuot tabon cost Budgu ASSenbly Fobrucalion Bnd HOuse as1 634 C3170 x0.3) C3130 x0.2) Tou3 2480 x0.35 BRd Feeden 826 HOu Rah penHou S12 16 $2392 29216 Labowr cost S53 u4 ola Duct aboun cost

Faclon ovenhiad cost Bud $7.5000 Indiucl paclor w0g 23000 Depsuoialion of plant powen and Gqh Insunance & piopen Tax 6000 So000 10900