Question

Wildhorse Inc. is preparing its annual budgets for the year ending December 31, 2020. Accounting assistants furnish the data shown below. Product JB 50 Product JB 60 402,800 $23 203,900 $28 27,800 34,900 19,000 13,600 Sales budget: Anticipated volume in units Unit selling price Production budget: Desired ending finished goods units Beginning finished goods units Direct materials budget: Direct materials per unit (pounds) Desired ending direct materials pounds Beginning direct materials pounds Cost per pound Direct labor budget: Direct labor time per unit Direct labor rate per hour Budgeted income statement: Total unit cost 2 32,100 43,000 18,500 14,600 $3 0.6 $12 $12 $14 $21 An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of $661,000 for product JB 50 and $365,000 for product JB 60, and administrative expenses of $543,000 for product JB 50 and $342,000 for product JB 60. Interest expense is $150,000 (not allocated to products). Income taxes are expected to be 30%.

Answer 1

Solution:

Budgeted Income Statement - Wildhorse Co. For the year ended Dec 31, 2020
Particulars	JB50	JB60	Total
Sales Revenue	$9,264,400.00	$5,709,200.00	$14,973,600.00
Cost of goods sold JB 50 - 402800*$14 JB 60 - 203900*$21	$5,639,200.00	$4,281,900.00	$9,921,100.00
Gross Profit	$3,625,200.00	$1,427,300.00	$5,052,500.00
Operating Expenses:
Selling Expenses	$661,000.00	$365,000.00	$1,026,000.00
Administrative expenses	$543,000.00	$342,000.00	$885,000.00
Total Operating expenses	$1,204,000.00	$707,000.00	$1,911,000.00
Operating Income	$2,421,200.00	$720,300.00	$3,141,500.00
Interest expense			$150,000.00
Income before taxes			$2,991,500.00
Income tax expense (30%)			$897,450.00
Net Income			$2,094,050.00