Question

The budget director for Bird House Unlimited, Inc., has gathered the following data for use in developing the budgeted income statement for January 2020.

Estimated sales for January Bird House Bird Feeder Amount Units 34,000 units 25,000 units $42 per unit $70 per unit Direct materials Estimated inventories at January 1(beginning) Wood Plastic Estimated inventories at January 31st(ending) Wood Plastic 2600 feet 3200 pounds 3500 feet 2800 pounds Direct materials used in production: In the manufacture of a Bird House: Wood Plastic In the manufacture of a Bird Feeder: Wood Plastic 0.80 feet per unit of product 0.50 pounds per unit of product 1.20 feet per unit of product 0.75 pounds per unit of product Estimated cost of direct materials Wood Plastic $6.50 per feet $0.90 per pound Work in process-given in total of the 2 products Estimated inventories at January 1(beginning) Estimated inventories at January 31 st(ending) $27,000 $32,400

Questions

1. Prepare a sales budget for January

2. Prepare a production budget for January.

3. Prepare a supporting schedule to determine required material for production and a direct materials purchase budget for January

4. Prepare a direct labor cost budget for January.

5. Prepare a factory overhead cost budget for January

Answer 1

A) Sales Budget

Product	Quantity	Rate	Amount
Bird House	34,000	42	$1,428,000
Bird Feeder	30,000	70	$2,100,000
Total			$3,528,000

B) Production Budget

Particulars	Bird House	Bird Feeder
Budgeted Sales	34,000	30,000
Add: Closing Stock	5,300	2,100
Less: Opening stock	-4,900	-2500
Production	34,400	29,600

C) Material purchase Budget

Particulars	Bird House	Rate	Amount	Bird Feeder	Rate	Amount
Production	34,400			29,600
[email protected]/1.2	27,520	6.5	178,880	35,520	6.5	230880
[email protected]/0.75	17,200	0.9	15,480	22,200	0.9	19980
T0tal purchase value				194,360		250,860

Material required for production:

Wood = 27,520+35,520 = 63,040

Plastic = 17,200+22,200 =39,400

D) Direct Labour Cost Budget

Particulars	Bird House	Rate	Amount	Bird Feeder	Rate	Amount
Production	34,400			29,600
Fabrication [email protected]/0.45	8,600	14	120,400	13,320	14	186480
Assembly [email protected]/0.35	10,320	10	103,200	10,360	10	103600
Total				223,600		290,080

E) Factory Overhead cost budget

Particulars	Amount
Indirect factory wages	550,000
Depreciation on plant & equipment	165,000
Power & light	42,000
Insurance & Property Tax	15,400
Total	$772,400