Question

Budgeted Income Statement and Supporting Budgets

The budget director of Jupiter Helmets 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 May:

a. Estimated sales for May:

Bicycle helmet	9,250 units at $24 per unit
Motorcycle helmet	6,250 units at $180 per unit

b. Estimated inventories at May 1:

Direct materials:					Finished products:
Plastic		1,480	lbs.		Bicycle helmet		200 units at $15 per unit
Foam lining		520	lbs.		Motorcycle helmet		100 units at $90 per unit

c. Desired inventories at May 31:

Direct materials:					Finished products:
Plastic		2,000	lbs.		Bicycle helmet		400 units at $15 per unit
Foam lining		800	lbs.		Motorcycle helmet		300 units at $100 per unit

d. Direct materials used in production:

In manufacture of bicycle helmet:
Plastic		0.90 lb. per unit of product
Foam lining		0.20 lb. per unit of product
In manufacture of motorcycle helmet:
Plastic		3.50 lbs. per unit of product
Foam lining		1.40 lbs. per unit of product

e. Anticipated cost of purchases and beginning and ending inventory of direct materials:

Plastic		$4.40 per lb.
Foam lining		$0.90 per lb.

f. Direct labor requirements:

Bicycle helmet:
Molding Department		0.30 hr. at $15 per hr.
Assembly Department		0.10 hr. at $14 per hr.
Motorcycle helmet:
Molding Department		0.50 hr. at $15 per hr.
Assembly Department		0.40 hr. at $14 per hr.

g. Estimated factory overhead costs for May:

Indirect factory wages		$125,000			Power and light		$23,000
Depreciation of plant and equipment		45,000			Insurance and property tax		11,000

h. Estimated operating expenses for May:

Sales salaries expense		$175,000
Advertising expense		120,000
Office salaries expense		92,000
Depreciation expense—office equipment		6,000
Miscellaneous expense—selling		5,000
Utilities expense—administrative		3,000
Travel expense—selling		50,000
Office supplies expense		2,500
Miscellaneous administrative expense		1,500

i. Estimated other income and expense for May:

Interest revenue		$14,560
Interest expense		3,000

j. Estimated tax rate: 25%

Required:

1. Prepare a sales budget for May.

Jupiter Helmets Inc.
Sales Budget
For the Month Ending May 31
	Unit Sales Volume	Unit Selling Price	Total Sales
Bicycle helmet		$	$
Motorcycle helmet
Total revenue from sales			$

2. Prepare a production budget for May.

Jupiter Helmets Inc.
Production Budget
For the Month Ending May 31
	Bicycle Helmet Units	Motorcycle Helmet Units
Expected units to be sold
Total
Total units to be produced

3. Prepare a direct materials purchases budget for May.

Jupiter Helmets Inc.
Direct Materials Purchases Budget
For the Month Ending May 31
	Plastic	Foam Lining	Total
Units required for production:
Bicycle helmet
Motorcycle helmet
Total
Total units to be purchased
Unit price	$	$
Total direct materials to be purchased	$	$	$

4. Prepare a direct labor cost budget for May.

Jupiter Helmets Inc.
Direct Labor Cost Budget
For the Month Ending May 31
	Molding Department	Assembly Department	Total
Hours required for production:
Bicycle helmet
Motorcycle helmet
Total
Hourly rate	$	$
Total direct labor cost	$	$	$

5. Prepare a factory overhead cost budget for May.

Jupiter Helmets Inc.
Factory Overhead Cost Budget
For the Month Ending May 31
Indirect factory wages	$
Depreciation of plant and equipment
Power and light
Insurance and property tax
Total	$

6. Prepare a cost of goods sold budget for May. Work in process at the beginning of May is estimated to be $4,200, and work in process at the end of May is desired to be $3,800.

Jupiter Helmets Inc.
Cost of Goods Sold Budget
For the Month Ending May 31
			$
		$
Direct materials:
	$
Direct materials purchases
Cost of direct materials available for use	$
Less: Direct materials inventory, May 31
	$
Direct labor
Factory overhead
Total manufacturing costs
Total work in process during period		$
Cost of finished goods available for sale			$
			$

7. Prepare a selling and administrative expenses budget for May.

Jupiter Helmets Inc.
Selling and Administrative Expenses Budget
For the Month Ending May 31
Selling expenses:
	$
Total selling expenses		$
Administrative expenses:
	$
Total administrative expenses
Total operating expenses		$

8. Prepare a budgeted income statement for May. If required, round your interim calculations to nearest whole value.

Jupiter Helmets Inc.
Budgeted Income Statement
For the Month Ending May 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
Net income		$

****ITS ALL 1 QUESTION JUST DIFFERENT PARTS*****

Answer 1

1. sales Budget Sales Budget Unit sales Volume Unit Selling Price 9250 $ 24 6250 $ 180 Bicycle Helmet Motorcycle Helmet Total revenue from sales Total sales $ 222,000 $ 1,125,000 $ 1,347,000 2. Production Budget Production Budget Bicycle Helmet Motorcycle Helmet Add Expected Units to be Sold Desired Inventory, May 31 Total Estimated Inventory, May 1 Total Units to be produced 9250 400 9650 200 9450 6250 300 6550 Less 100 6450 3. Direct material Purchase Budget Total Direct material Purchase Budget Plastic Foam lining Required Units of Production Bicycle Helmet 8505 1890 Motorcycle Helmet 22575 9030 Add Desired units of inventory, May 31 800 Total 33080 11720 Less Estimated units of inventory, May 1 1480 520 Total units to be purchased 31600 112001 Multiply Unit Price 4.40 $ 0.90 Total Direct material to be purchased 139,040 $ 10,080 $ 2000 149,120 Working of Required Units of Production Bicycle Helmet Motorcycle Helmet Plastic 9450 x 0.90 6450 x 3.50 Foam lining 9450 x 0.20 6450 x 1.40 4.Direct Labor Cost Budget Total Direct Labor Cost Budget Molding Dept Assembly Dept Hours required for production: Bicycle Helmet 2835 945 Motorcycle Helmet 3225 2580 Total 6060 3525 Hourly Rate 15.00 $ 14.00 Total direct labor cost 90,900 $ 49,350 $ 140,250 Working of Hours required for Production Bicycle Helmet Motorcycle Helmet Molding Dept 9450 x 0.30 6450 x 0.50 Assembly Dept 9450 x 0.10 6450 x 0.40 5. Factory Overhead Cost Budget Factory Overhead Cost Budget Indirect Factory Wages Depreciation of Plant & Equipments Power & Light Insurance & Property Tax Total 125,000 45,000 23,000 11,000 204,000 6. Cost of Goods Sold Cost of Goods Sold 12,000 (200 x 15) + (100 x 90) given 4,200 (1480 x 4.40) + (520 x 0.90) calculated above Add less Finished Goods Inventory, May 1 Work In Process Inventory, May 1 Direct Material :- Direct Materials Inventory, May 1 Direct Material purchased Cost of Direct material Available for use $ Direct Materials Inventory, May 31 Cost of Direct Material Placed in Product| $ Direct Labor Factory Overhead Total Manufacturing cost Total Work In Process during the period Work In Process Inventory, May 31 Cost of Goods Manufactured Cost of finished goods available for sale Finished Goods Inventory, May 31 Cost Of Goods Sold 6,980 149,120 156,100 9,520 146,580 140,250 204,000 (2000 x 4.40) + (800 x 0.90) calculated above calculated above $ $ 495,030 3,800 less $ $ $ given 491,230 503,230 36,000 (400 x 15) + (300 x 100) 467,230 less $ $ calculate beginning & ending inv of material and finished goods by multiplying units in inv by cost per unit. 7. Selling & Administrative Budget $ $ 350,000 Selling & Administrative Expense Selling Expenses: Sales Salaries expenses 175,000 Advertising Expenses 120,000 Travel Expenses-Selling 50,000 Miscellaneous Expenses-Selling 5,000 Total Selling Expenses Administrative Expenses: Office Salaries Expenses 92,000 Depreciation expense-office equipm 6,000 Utilities-administrative 3,000 Office supplies expense 2,500 Misc Adm expense 1,500 Total Adm Expense Total operating Expense $ 105,000 455,000 8. Income Statement Income Statement less 1,347,000 calculated above 467,230 calculated above 879,770 $ 350,000 105,000 calculated above calculated above $ $ Revenue From Sales Cost of Goods Sold Gross Profit Operating Expense: Selling Expense Administrative Expense Total operating Expense Income from Operation Other Income: Interest Revenue Other Expense: Interest Expense Income Before Income Tax Income Tax Expense (25%) Net Income 455,000 424,770 $ 14,560 $ 3,000 $ $ 11,560 436,330 109,083 (436330 x 25%) 327,248 $