Selling and administrative expenses budget and budgeted income statement Budgeted selli...

Selling and administrative expenses budget and budgeted income statement

Budgeted selling and administrative expenses for Royal Tire Co. in P7-2 for the year ended December 31, 2013, were as follows:

Advertising expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $942,000

Office rent expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,000

Office salaries expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 821,000

Office supplies expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,500

Officers’ salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 661,000

Sales salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 868,000

Telephone and fax expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,500

Travel expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443,000

Required:

1. Prepare a selling and administrative expense budget, in good form, for the year 2013.

2. Using the information above and the budgets prepared in P7-2, prepare a budgeted income statement for the year 2013, assuming an income tax rate of 40%.Reference: P7-2

Sales, production, direct materials, direct labor, and factory overhead budgets (similar to Self-Study Problem 1)

Royal Tire Co.’s budgeted unit sales for the year 2013 were:

Passenger-car tires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000

Truck tires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000

The budgeted selling price for truck tires was $200 per tire, and for passenger car tires it was $65 per tire. The beginning finished goods inventories were expected to be 2,000 truck tires and 5,000 passenger tires, for a total cost of $326,478, with desired ending inventories at 2,500 and 6,000, respectively, with a total cost of $400,510. There was no anticipated beginning or ending work-in-process inventory for either type of tire. The standard materials quantities for each type of tire were as follows:

The purchase prices of rubber and steel were $2 and $3 per pound, respectively. The desired ending inventories for rubber and steel were 60,000 and 6,000 lb, respectively. The estimated beginning inventories for rubber and steel were 75,000 and 7,000 lb, respectively. The direct labor hours required for each type of tire were as follows:

The direct labor rate for each department is as follows:

Molding Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15 per hour

Finishing Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13 per hour

Budgeted factory overhead costs for 2013 were as follows:

Required:

Prepare each of the following budgets for Royal for the year ended 2013:

1. Sales budget.

2. Production budget.

3. Direct material budget.

4. Direct labor budget.

5. Factory overhead budget.

6. Cost of goods sold budget.

Reference: Self-Study Problem 1)

Sales, production, direct materials, direct labor, and factory overhead budgets

Kimo Tire Co.

Kimo Tire Co.’s budgeted unit sales for the year 2013 were:

Passenger-car tires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000

Truck tires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,500

The budgeted selling price for truck tires was $300 per tire and that for passenger-car tires was $90 per tire. The beginning finished goods inventories were expected to be 2,500 truck tires and 6,000 passenger tires, for a total cost of $400,510, with desired ending inventories at 2,000 and 5,000, respectively, and a total cost of $326,478. There was no anticipated beginning or ending work-in-process inventory for either type of tire.

The standard materials quantities for each type of tire were as follows:

The purchase prices of rubber and steel were $3 and $2 per pound, respectively. The desired ending inventories for rubber and steel were 60,000 and 6,000 lb, respectively. The estimated beginning inventories for rubber and steel were 75,000 and 7,500 lb, respectively. The direct labor hours required for each type of tire were as follows:

Required:

Prepare each of the following budgets for Kimo for the year ended 2013:

1. Sales budget

2. Production budget

3. Direct material budget

4. Direct labor budget

5. Factory overhead budget

6. Cost of goods sold budget