Question

Budgeted income statement and supporting budgets for three months Newport Inc. gathered the following data for use in developing the budgets for the first quarter (June, July, August) of its fiscal year: a. Estimated sales at $36 per unit: June 300,000 units July 400,000 units August 500,000 units September 500,000 units b. Estimated finished goods inventories: May 31 16,000 units June 30 5% of next month's sales July 31 5% of next month's sales August 31 5% of next month's sales c. Work in process inventories are estimated to be insignificant (zero). d. Estimated direct materials inventories: May 31 June 30 July 31 August 31 35,000 pounds 40,000 pounds 45,000 pounds 50,000 pounds

Answer 1

Your calculations are all correct. Some of the boxes show the incorrect mark (X) because in those boxes you need to enter the amounts with a minus sign.

For example, in the cost of goods sold budget, you have to enter the amounts of ending finished goods inventory with a minus sign in each of the boxes.

Ending finished goods inventory

-400000

-500000

-500000

-500000

Similarly, in the budgeted income statement, you have to enter the amounts of cost of goods sold with a minus sign in each of the boxes.

Cost of goods sold

-6470400

-8228000

-10000000

-24698400

Also, in the budgeted income statement, the amount of selling expenses, administrative expenses, and total selling and administrative expenses will be entered with a minus sign in each of the boxes.

Selling expenses	-1700000	-2000000	-2300000	-6000000
Administrative expenses	-550000	-550000	-550000	-1650000
Total selling and administrative expenses	-2250000	-2550000	-2850000	-7650000