Budgeted Income Statement and Supporting Budgets The budget director of Birding Homes & Feeders 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: Estimated sales for January: Bird house 15,000 units at $25 per unit Bird feeder 40,000 units at $15 per unit Estimated inventories at January 1: Direct materials: Wood 600 ft. Plastic 1,000 lbs. Finished products: Bird house 1,000 units at $15 per unit Bird feeder 2,500 units at $8 per unit Desired inventories at January 31: Direct materials: Wood 500 ft. Plastic 1,250 lbs. Finished products: Bird house 1,500 units at $15 per unit Bird feeder 3,000 units at $8 per unit Direct materials used in production: In manufacture of Bird House: Wood 0.80 ft. per unit of product Plastic 0.10 lb. per unit of product In manufacture of Bird Feeder: Wood 0.20 ft. per unit of product Plastic 1.00 lb. per unit of product Anticipated cost of purchases and beginning and ending inventory of direct materials: Wood $2.50 per ft. Plastic $0.80 per lb. Direct labor requirements: Bird House: Fabrication Department 0.40 hr. at $18 per hr. Assembly Department 0.20 hr. at $12 per hr. Bird Feeder: Fabrication Department 0.25 hr. at $18 per hr. Assembly Department 0.10 hr. at $12 per hr. Estimated factory overhead costs for January: Indirect factory wages $40,000 Depreciation of plant and equipment 20,000 Power and light 10,000 Insurance and property tax 5,000 Estimated operating expenses for January: Sales salaries expense $125,000 Advertising expense 80,000 Office salaries expense 40,000 Depreciation expense—office equipment 4,000 Travel expense—selling 25,000 Office supplies expense 2,500 Miscellaneous administrative expense 3,500 Estimated other revenue and expense for January: Interest revenue $4,540 Interest expense 3,000 Estimated tax rate: 25%

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Budgeted Income Statement and Supporting Budgets

The budget director of Birding Homes & Feeders 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:

Estimated sales for January:

Bird house 15,000 units at $25 per unit

Bird feeder 40,000 units at $15 per unit
Estimated inventories at January 1:

Direct materials:

Wood 600 ft.

Plastic 1,000 lbs.

Finished products:

Bird house 1,000 units at $15 per unit

Bird feeder 2,500 units at $8 per unit
Desired inventories at January 31:

Direct materials:

Wood 500 ft.

Plastic 1,250 lbs.

Finished products:

Bird house 1,500 units at $15 per unit

Bird feeder 3,000 units at $8 per unit

Direct materials used in production:

In manufacture of Bird House:
Wood	0.80 ft. per unit of product
Plastic	0.10 lb. per unit of product
In manufacture of Bird Feeder:
Wood	0.20 ft. per unit of product
Plastic	1.00 lb. per unit of product

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

Wood $2.50 per ft.

Plastic $0.80 per lb.

Direct labor requirements:

Bird House:
Fabrication Department	0.40 hr. at $18 per hr.
Assembly Department	0.20 hr. at $12 per hr.
Bird Feeder:
Fabrication Department	0.25 hr. at $18 per hr.
Assembly Department	0.10 hr. at $12 per hr.

Estimated factory overhead costs for January:

Indirect factory wages $40,000

Depreciation of plant and equipment 20,000

Power and light 10,000

Insurance and property tax 5,000

Estimated operating expenses for January:

Sales salaries expense	$125,000
Advertising expense	80,000
Office salaries expense	40,000
Depreciation expense—office equipment	4,000
Travel expense—selling	25,000
Office supplies expense	2,500
Miscellaneous administrative expense	3,500

Estimated other revenue and expense for January:

Interest revenue $4,540

Interest expense 3,000
Estimated tax rate: 25%

5. Prepare a factory overhead cost budget for January.
Birding Homes & Feeders Inc.
Factory Overhead Cost Budget
For the Month Ending January 31
Total factory overhead cost
6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $9,000, and work in process at the end of January is estimated to be $10,500. For those boxes in which you must enter subtracted
or negative numbers use a minus sign.
Direct materials:
Birding Homes & Feeders Inc.
Cost of Goods Sold Budget
For the Month Ending January 31
Cost of direct materials available for use
Total manufacturing costs
$ $
$ $
Cost of direct materials placed in production $ $
$

Total manufacturing costs
Total work in process during period
Cost of goods manufactured
Cost of finished goods available for sale
Cost of goods sold
$ $
=
$ $
tA
$ $

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Prepare a selling and administrative expenses budget for January

Prepare a budgeted income statement for January

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Bird house	15,000 units at $25 per unit
Bird feeder	40,000 units at $15 per unit

Direct materials:
Wood	600 ft.
Plastic	1,000 lbs.
Finished products:
Bird house	1,000 units at $15 per unit
Bird feeder	2,500 units at $8 per unit

Direct materials:
Wood	500 ft.
Plastic	1,250 lbs.
Finished products:
Bird house	1,500 units at $15 per unit
Bird feeder	3,000 units at $8 per unit

Indirect factory wages	$40,000
Depreciation of plant and equipment	20,000
Power and light	10,000
Insurance and property tax	5,000