Question

Budgeted Income Statement and Supporting Budgets The budget director of Gold Medal Athletic Co, 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 March a. Estimated sales for March: Batting helmet 1,200 units at $40 per unit Football helmet 6,500 units at $160 per unit b. Estimated inventories at March 1: Direct materials Plastic 90 lb Foam lining 80 lb Finished pducts Batting helmet 40 units at $25 per unit Football helmet 240 units at $77 per unit c. Desired inventories at March 31 Direct materials Plastic 50 lb Foam ining 65 lb Finished products Batting helmet 50 units at $25 per unit Football helmet 220 units at $78 per unit d. Direct materials used in production In manufacture of batting helmet Plastic 1.20 per unit of product Foam lining 0.50 per unit of product In manufacture of football helmet Plastic 3.50 per unit of product

Answer 1

Part 1: Sales Budget For the Month Ending March 31 Unit Sales Unit Selling Volume Price 1,200 40 Product Batting helmet Football helmet Total revenue from sales Total Sales 48,000 1,040,000 1,088,000 6,500 160 Part 2: Production Budget For the Month Ending March 31 Units Batting helmet Football helmet Expected units to be sold 1,200 Plus desired inventory, March 31 50 Total 1,250 Less estimated inventory, March 1 40 Total units to be produced 1,210 6,500 220 6,720 240 6,480 Foam lining (lbs.) Total 605 Part 3: Direct Materials Purchases Budget For the Month Ending March 31 Plastic (lbs.) Required units for production: Batting helmet 1,452 Football helmet 22,680 Plus desired inventory, March 31 Total 24,182 Less estimated inventory, March 1 90 Total units to be purchased 24,092 Unit price 6.00 Total direct materials to be purchased 144,552 9,720 50 65 10,390 80 10,310 4.00 41,240 185,792

Part 4: Direct Labor Cost Budget For the Month Ending March 31 Molding Department Assembly Department | Total Hours required for production: Batting helmet Football helmet Total Hourly rate Total direct labor cost 242 3,240 3,482 605 11,664 12,269 20 14 69,640 171,766 241,406 Part 5: Factory Overhead Cost Budget For the Month Ending March 31 Indirect factory wages Depreciation of plant and equipment Power and light Insurance and property tax Total 86,000 12,000 4,000 2,300 104,300

19,480 15,300 860 185,792 Part 6: Cost of Goods Sold Budget For the Month Ending March 31 Finished goods inventory, March 1 Work in process inventory, March 1 Direct materials: Direct materials inventory, March 1 Direct materials purchases Cost of direct materials available for use Less: Direct materials inventory, March 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, March 31 Cost of goods manufactured Cost of finished goods available for sale Less: Finished goods inventory, March 31 Cost of goods sold 186,652 560 186,092 241,406 104,300 531,798 547,098 14,800 532,298 551,778 18,410 533,368 Units Cost Total | 40 240 25 77 1,000 18,480 19,480 Supporting calculations: Finished goodsinventory, March 1: Batting helmet Football helmet Total Finished goodsinventory, March 31. : Batting helmet Football helmet Total Direct materials inventory, March 1, Plastic Foam lining 50 220 78 1,250 17,160 18,410 6.00 4.00 540 320 860 Total Direct materials inventory, March 31 Plastic Foam lining Total 6.00 4.00 300 260 560

Part 7 Selling and Administrative Expenses Budget For the Month Ending March 31 Selling expenses: Sales salaries expense 184,300 Advertising expense 87,200 Travel expense - selling 9,000 Telephone expense-selling 5,800 Total selling expenses Administrative expenses: Office salaries expense 32,400 Depreciation expense-office equipment 3,800 Telephone expense-administrative 1,200 Office supplies expense 1,100 Miscellaneous administrative expense 1,000 Total administrative expenses Total operating expenses 286,300 39,500 325,800 Part 8: 1,088,000 533,368 554,632 286,300 39,500 Budgeted Income Statement For the Month Ending March 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 at 30% Net income 325,800 228,832 940 872 68 228,900 68,670 160,230