AN: Q3 Q4 The budget director of Birds and Beyond, 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 January 2021: Estimated sales for January: Birdhouse 7.500 units at $66 per unit Bird feeder 5,000 units at $82 per unit Estimated inventories at January 1: Direct Materials: Finished Products: Wood: 198 ft. Birdhouse: 500 units at $28 per unit. Plastic: 420 lbs. Bird feeder: 210 units at $40 per unit. Desired inventories at January 31: Direct Materials: Finished Products: Wood: 220 ft. Birdhouse: 400 units at $28 per unit. Plastic: 340 lbs. Bird feeder: 250 units at $40 per unit. Direct materials used in production: In Mfg. of the Birdhouse: In Mfg. of the Bird Feeder: Wood: 0.80 ft. per unit. 1.20 ft. per unit. Plastic: 0.50 lb. per unit. 0.75 lb. per unit. Anticipated cost of purchases and beginning and ending inventory of direct materials: Wood: $9 per ft. Plastic: $1.40 per lb. Direct labor requirements: Birdhouse: Fabrication Department: 0.25 hr. at $20 per hour. Assembly Department: 0.30 hr. at $15 per hour. Bird Feeder: Fabrication Department: 0.40 hr. at $20 per hour. Assembly Department: 0.35 hr. at $15 per hour. Estimated factory overhead costs for January: Indirect Factory Wages: $92,000 Power and Light: $10,100 Depreciation-Plant and Equip.: $34,000 Insurance and Property Tax: $2,800 Estimated operating expenses for January: Sales Salaries Expense: $85,100 Advertising Expense: 17,600 Office Salaries Expense: 19,200 Depreciation Expense-Office Equipment 1,100 Telephone Expense-Selling: 1,000 Telephone Expense-Administrative: 400 Travel Expense-Selling: 3,800 Office Supplies Expense: 350 Miscellaneous Administrative Expense: 250 Estimated other income and expense for January: Interest Revenue: $450 Interest Expense: $294 Estimated tax rate: 25%
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
AN: Q3 Q4
The budget director of Birds and Beyond, Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the
- Estimated sales for January:
Birdhouse 7.500 units at $66 per unit
Bird feeder 5,000 units at $82 per unit
- Estimated inventories at January 1:
Direct Materials: Finished Products:
Wood: 198 ft. Birdhouse: 500 units at $28 per unit.
Plastic: 420 lbs. Bird feeder: 210 units at $40 per unit.
- Desired inventories at January 31:
Direct Materials: Finished Products:
Wood: 220 ft. Birdhouse: 400 units at $28 per unit.
Plastic: 340 lbs. Bird feeder: 250 units at $40 per unit.
- Direct materials used in production:
In Mfg. of the Birdhouse: In Mfg. of the Bird Feeder:
Wood: 0.80 ft. per unit. 1.20 ft. per unit.
Plastic: 0.50 lb. per unit. 0.75 lb. per unit.
- Anticipated cost of purchases and beginning and ending inventory of direct materials:
Wood: $9 per ft. Plastic: $1.40 per lb.
- Direct labor requirements:
Birdhouse:
Fabrication Department: 0.25 hr. at $20 per hour.
Assembly Department: 0.30 hr. at $15 per hour.
Bird Feeder:
Fabrication Department: 0.40 hr. at $20 per hour.
Assembly Department: 0.35 hr. at $15 per hour.
- Estimated factory
overhead costs for January:
Indirect Factory Wages: $92,000 Power and Light: $10,100
- Estimated operating expenses for January:
Sales Salaries Expense: $85,100
Advertising Expense: 17,600
Office Salaries Expense: 19,200
Depreciation Expense-Office Equipment 1,100
Telephone Expense-Selling: 1,000
Telephone Expense-Administrative: 400
Travel Expense-Selling: 3,800
Office Supplies Expense: 350
Miscellaneous Administrative Expense: 250
- Estimated other income and expense for January:
Interest Revenue: $450 Interest Expense: $294
- Estimated tax rate: 25%
Instructions
- Prepare a sales budget for January.
- Prepare a production budget for January.
- Prepare a direct materials purchases budget for January.
- Prepare a direct labor cost budget for January.
- Prepare a
factory overhead cost budget for January. - Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $33,600, and work in process at the end of January is estimated to be $41,200.
- Prepare a selling and administrative expenses budget for January.
- Prepare a budgeted income statement for January.
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