Budgeted income statement and supporting budgets The budget director of Gold Medal Athletic Co., 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 March: a. Estimated sales for March Batting helmet 1,200 units at $40 per unit Football Helmet 6,500 units at $160 per unit b. Estimated inventories at March 1: Direct materials Finished products: Plastic 90 lb Batting helmet 40 units at $25 per unit Foam lining 80 lb Football helmet 240 units at $77 per unit c. Desired inventories at March 31: Directmaterials: Finishedproducts: Plastic 50lb. Batting helmet 50 units at $25 per unit Foam lining 65lb. Football Helmet 220 its at $78 per unitd. Direct materials used inproduction: In manufacture ofbatting helmet: Plastic 1.20 lb. per unit of product Foam lining 0.50 lb. per unit of product In manufacture offootball helmet Plastic 3.50 lb. per unit of product Foam lining 1.50lb. per unit of producte. Anticipated cost of purchases and beginning andending inventory of direct materials: Plastic $6.00 per lb. Foam lining $4.00 per lb. f. Direct labor requirements: Batting helmet: Molding Department 0.20 hr. at $20 per hr Assembly Department 0.50 hr. at $14 per hr Football helmet: Molding Department 0.50 hr. at $20 per hr Assembly Department l.80 hrs.at $14perhr g. Estimated factory overhead costs for March: Indirect factory wages $86,000 Power and light $4,000 Depreciation of plant and equipment 12,000 Insurance and property tax 2300 h. Estimated operating for March: Sales salaries expense $184,300 Advertising expense 87,200 office salaries expense 32,400 Depreciation expense—office equipment 3,800 Telephone expense—selling 5,800 Telephone expense—administrative 1,200 Travel expense—selling 9,000 office supplies expense 1,100 Miscellaneous administrative expense 1,000 i. Estimated other income and expense for March: Interest Revenue $940 Interest Expense 872 j. Estimated tax rate: 30% Instructions 1. Prepare a sales budget for March. 2. Prepare a production budget for March. 3. Prepare a direct materials purchases budget for March. 4. Prepare a direct labor cost budget for March. 5. Prepare a factory overhead cost budget for March. 6. Prepare a cost of goods sold budget for March. Work in process at the beginning ofMarch is estimated to be $15,300, and work in process at the end of March is desired to be$14,800.7. Prepare a selling and administrative expenses budget for March. 8. Prepare a budgeted income statement for March. 9. Prepare a factory overhead cost budget for March. 10. Prepare a cost of goods .sold budget for March. Work in process at the beginning of March is estimated to the 115,300, and work in process at the end of March is desired to be $14,800. 11. Prepare a selling and administrative expenses budget for March.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The budget director of Gold Medal Athletic Co., 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 March:
a. Estimated sales for March
| Batting helmet | 1,200 units at $40 per unit |
| Football Helmet | 6,500 units at $160 per unit |
b. Estimated inventories at March 1:
| Direct materials | Finished products: | ||
| Plastic | 90 lb | Batting helmet | 40 units at $25 per unit |
| Foam lining | 80 lb | Football helmet | 240 units at $77 per unit |
c. Desired inventories at March 31:
| Direct materials: |
Finished products: |
||
| Plastic | 50 lb. |
Batting helmet | 50 units at $25 per unit |
| Foam lining | 65 lb. |
Football Helmet | 220 its at $78 per unit d. Direct materials used in production: |
| In manufacture of batting helmet: |
|
| Plastic | 1.20 lb. per unit of product |
| Foam lining | 0.50 lb. per unit of product |
| In manufacture of football helmet |
|
| Plastic | 3.50 lb. per unit of product |
| Foam lining | 1.50lb. per unit of product e. Anticipated cost of purchases and beginning and ending inventory of direct materials: |
| Plastic | $6.00 per lb. |
| Foam lining | $4.00 per lb. |
f. Direct labor requirements:
| Batting helmet: | |
| Molding Department | 0.20 hr. at $20 per hr |
| Assembly Department | 0.50 hr. at $14 per hr |
| Football helmet: | |
| Molding Department | 0.50 hr. at $20 per hr |
| Assembly Department | l.80 hrs.at $14perhr |
g. Estimated factory
| Indirect factory wages | $86,000 | Power and light | $4,000 |
| 12,000 | Insurance and property tax | 2300 |
h. Estimated operating for March:
| Sales salaries expense | $184,300 |
| Advertising expense | 87,200 |
| office salaries expense | 32,400 |
| Depreciation expense—office equipment | 3,800 |
| Telephone expense—selling | 5,800 |
| Telephone expense—administrative | 1,200 |
| Travel expense—selling | 9,000 |
| office supplies expense | 1,100 |
| Miscellaneous administrative expense | 1,000 |
i. Estimated other income and expense for March:
| Interest Revenue | $940 |
| Interest Expense | 872 |
j. Estimated tax rate: 30%
Instructions
1. Prepare a sales budget for March.
2. Prepare a production budget for March.
3. Prepare a direct materials purchases budget for March.
4. Prepare a direct labor cost budget for March.
5. Prepare a
6. Prepare a cost of goods sold budget for March. Work in process at the beginning ofMarch is estimated to be $15,300, and work in process at the end of March is desired to be$14,800.
7. Prepare a selling and administrative expenses budget for March.
8. Prepare a budgeted income statement for March.
9. Prepare a factory overhead cost budget for March.
10. Prepare a cost of goods .sold budget for March. Work in process at the beginning of March is estimated to the 115,300, and work in process at the end of March is desired to be $14,800.
11. Prepare a selling and administrative expenses budget for March.
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