Budgeted income statement and supporting budgets for three months Bellaire Inc. gathered the following data for use in developing the budgets for the first quarter (January, February, March) of its fiscal year: Estimatedsales at $125 per unit: January 25,000 units February 30,000 units March 45,000 units April 50,000 units Estimatedfinished goods inventories: January 1 2,000 units January 31 10% of next month’s sales February 28 10% of next month’s sales March 31 10% of next month’s sales Work in process inventories areestimatedto be insignificant (zero). Estimateddirect materials inventories: January 1 1,000 lbs. January 31 1,500 lbs. February 28 2,000 lbs. March 31 2,500 lbs. Manufacturingcosts: Per Unit Direct materials (0.8 lb. per unit × $15 per lb.) $ 12 Direct labor (2.5 hrs. per unit × $24 per hr.) 60 Variable factory overhead ($1.20 per direct labor hour) 3 Fixed factory overhead ($200,000 per month, allocated using 40,000 units) 5 Total per-unit manufacturing costs $80 Sellingexpenses: Variable selling expenses $4 per unit Fixed selling expenses $150,000 Administrative expenses (all fixed costs) $400,000 Preparea factory overhead cost budget for March. Bellaire Inc. Factory Overhead Cost Budget For the First Quarter Ending March 31 January February March First Quarter Variable factory overhead: Budgeted fixed factory overhead hrs. hrs. hrs. hrs. Variable factory overhead rate x$ x$ x$ x$ Budgeted variable factory overhead $ $ $ $ Fixed factory overhead: Budgeted fixed factory overhead Total factory overhead cost $ $ $ $ Preparea cost of goods sold budget for March. Bellaire Inc. Cost of Goods Sold Budget For the First Quarter Ending March 31 January February March First Quarter Beginning finished goods inventory $ $ $ $ Cost of goods manufactured: $ $ $ $ Total cost of goods manufactured $ $ $ $ $ $ $ $ $ $ $ $ Preparea selling and administrative expenses budget for March. Enter all amounts as positive number. Bellaire Inc. Selling and Administrative Expenses Budget For the First Quarter Ending March 31 January February March First Quarter Selling expenses: Direct materials x$ x$ x$ x$ Total variable selling expenses $ $ $ $ Total selling expenses $ $ $ $ Administrative expenses: Total selling and administrative expenses $ $ $ $ Preparea budgeted income statement with budgeted operating income for March. Bellaire Inc. Budgeted Income Statement For the First Quarter Ending March 31 January February March First Quarter Sales $ $ $ $ Cost of goods sold Gross profit $ $ $ $ Selling and administrative expenses: Selling expenses $ $ $ $ Administrative expenses Total selling and administrative expenses $ $ $ $ Operating income $ $ $ $
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.
Bellaire Inc. gathered the following data for use in developing the budgets for the first quarter (January, February, March) of its fiscal year:
- Estimatedsales at $125 per unit:
|
January |
25,000 |
units |
|
February |
30,000 |
units |
|
March |
45,000 |
units |
|
April |
50,000 |
units |
- Estimatedfinished goods inventories:
|
January 1 |
2,000 |
units |
|
January 31 |
10% |
of next month’s sales |
|
February 28 |
10% |
of next month’s sales |
|
March 31 |
10% |
of next month’s sales |
- Work in process inventories areestimatedto be insignificant (zero).
- Estimateddirect materials inventories:
|
January 1 |
1,000 |
lbs. |
|
January 31 |
1,500 |
lbs. |
|
February 28 |
2,000 |
lbs. |
|
March 31 |
2,500 |
lbs. |
- Manufacturingcosts:
|
|
Per Unit |
|
Direct materials (0.8 lb. per unit × $15 per lb.) |
$ 12 |
|
Direct labor (2.5 hrs. per unit × $24 per hr.) |
60 |
|
Variable factory |
3 |
|
Fixed factory overhead ($200,000 per month, allocated using 40,000 units) |
5 |
|
Total per-unit manufacturing costs |
$80 |
- Sellingexpenses:
|
Variable selling expenses |
$4 |
per unit |
|
Fixed selling expenses |
$150,000 |
|
|
Administrative expenses (all fixed costs) |
$400,000 |
|
- Preparea
factory overhead cost budget for March.
|
Bellaire Inc. |
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Factory Overhead Cost Budget |
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For the First Quarter Ending March 31 |
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|
|
January |
February |
March |
First Quarter |
|
Variable factory overhead: |
|
|
|
|
|
Budgeted fixed factory overhead |
hrs. |
hrs. |
hrs. |
hrs. |
|
Variable factory overhead rate |
x$ |
x$ |
x$ |
x$ |
|
Budgeted variable factory overhead |
$ |
$ |
$ |
$ |
|
Fixed factory overhead: |
|
|
|
|
|
Budgeted fixed factory overhead |
|
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|
|
|
Total factory overhead cost |
$ |
$ |
$ |
$ |
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|
- Preparea cost of goods sold budget for March.
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Bellaire Inc. |
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Cost of Goods Sold Budget |
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For the First Quarter Ending March 31 |
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|
|
|
|
January |
February |
March |
First Quarter |
|
Beginning finished goods inventory |
$ |
$ |
$ |
$ |
|
Cost of goods manufactured: |
|
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|
|
|
|
$ |
$ |
$ |
$ |
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Total cost of goods manufactured |
$ |
$ |
$ |
$ |
|
|
$ |
$ |
$ |
$ |
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$ |
$ |
$ |
$ |
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- Preparea selling and administrative expenses budget for March. Enter all amounts as positive number.
|
Bellaire Inc. |
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|
|
|
Selling and Administrative Expenses Budget |
|
|
|
|
|
For the First Quarter Ending March 31 |
|
|
|
|
|
|
January |
February |
March |
First Quarter |
|
Selling expenses: |
|
|
|
|
|
Direct materials |
|
|
|
|
|
|
x$ |
x$ |
x$ |
x$ |
|
Total variable selling expenses |
$ |
$ |
$ |
$ |
|
|
|
|
|
|
|
Total selling expenses |
$ |
$ |
$ |
$ |
|
Administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
Total selling and administrative expenses |
$ |
$ |
$ |
$ |
|
|
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|
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|
|
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|
- Preparea budgeted income statement with budgeted operating income for March.
|
Bellaire Inc. |
|
|
|
|
|
Budgeted Income Statement |
|
|
|
|
|
For the First Quarter Ending March 31 |
|
|
|
|
|
|
January |
February |
March |
First Quarter |
|
Sales |
$ |
$ |
$ |
$ |
|
Cost of goods sold |
|
|
|
|
|
Gross profit |
$ |
$ |
$ |
$ |
|
Selling and administrative expenses: |
|
|
|
|
|
Selling expenses |
$ |
$ |
$ |
$ |
|
Administrative expenses |
|
|
|
|
|
Total selling and administrative expenses |
$ |
$ |
$ |
$ |
|
Operating income |
$ |
$ |
$ |
$ |
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