Question

Budgeted Income Statement and Supporting Budgets The budget director of Birds of a Feather 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 January: a. Estimated sales for January: Birdhouse 6,000 units at $55 per unit Bird feeder 4,500 units at $75 per unit b. Estimated inventories at January 1: Direct materials: Wood 220 ft. Plastic 250 lb. Finished products: Birdhouse 300 units at $23 per unit Bird feeder 240 units at $34 per unit c. Desired inventories at January 31 Direct materials: Wood 180 Plastic 210 lb. Finished products: Am

Answer 1

1			Sales budget
						Unit sales volume	Unit selling price	Total sales
	Birdhouse					6000	55	330000
	Bird feeder					4500	75	337500
	Total revenue from sales							667500
2			Production budget
						Units
						Birdhouse	Bird feeder
	Expected units to be sold					6000	4500
	Plus desired inventory,January 31					340	200
	Total					6340	4700
	Less estimated inventory,January 1					300	240
	Total units to be produced					6040	4460
3			Direct materials purchases budget
						Wood	Plastic	Total
	Required units for production
	Birdhouse					4832	3020
						(6040*0.80)	(6040*0.50)
	Bird feeder					5352	3345
						(4460*1.20)	(4460*0.75)
	Plus desired units of inventory,January 31					180	210
	Total					10364	6575
	Less estimated units of inventory,January 1					220	250
	Total units to be purchased					10144	6325
	Unit price					8	1.2
	Total direct materials to be purchased					81152	7590	88742
4			Direct labor cost budget
						Fabrication department	Assembly department	Total
	Hours required for production:
	Birdhouse					1208	1812
						(6040*0.20)	(6040*0.30)
	Bird feeder					1784	1561
						(4460*0.40)	(4460*0.35)
	Total					2992	3373
	Hourly rate					15	12
	Total direct labor cost					44880	40476	85356