The budget director of Jupiter Helmets 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 May: a. Estimated sales for May: Bicycle helmet 9,500 units at $24 per unit Motorcycle helmet 6,000 units at $180 per unit b. Estimated inventories at May 1: Direct materials: Finished products: Plastic 1,480 lbs. Bicycle helmet 200 units at $15 per unit Foam lining 520 lbs. Motorcycle helmet 100 units at $90 per unit c. Desired inventories at May 31: Direct materials: Finished products: Plastic 2,000 lbs. Bicycle helmet 400 units at $15 per unit Foam lining 800 lbs. Motorcycle helmet 300 units at $100 per unit d. Direct materials used in production: In manufacture of bicycle helmet: Plastic 0.90 lb. per unit of product Foam lining 0.20 lb. per unit of product In manufacture of motorcycle helmet: Plastic 3.50 lbs. per unit of product Foam lining 1.40 lbs. per unit of product e. Anticipated cost of purchases and beginning and ending inventory of direct materials: Plastic $4.40 per lb. Foam lining $0.90 per lb. f. Direct labor requirements: Bicycle helmet: Molding Department 0.30 hr. at $15 per hr. Assembly Department 0.10 hr. at $14 per hr. Motorcycle helmet: Molding Department 0.50 hr. at $15 per hr. Assembly Department 0.40 hr. at $14 per hr. g. Estimated factory overhead costs for May: Indirect factory wages $125,000 Power and light $23,000 Depreciation of plant and equipment 45,000 Insurance and property tax 11,000 h. Estimated operating expenses for May: Sales salaries expense $175,000 Advertising expense 120,000 Office salaries expense 92,000 Depreciation expense—office equipment 6,000 Miscellaneous expense—selling 5,000 Utilities expense—administrative 3,000 Travel expense—selling 50,000 Office supplies expense 2,500 Miscellaneous administrative expense 1,500 i. Estimated other income and expense for May: Interest revenue $14,560 Interest expense 3,000 j. Estimated tax rate: 25% Required: 1. Prepare a sales budget for May.
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 Jupiter Helmets Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the
a. Estimated sales for May:
Bicycle helmet | 9,500 units at $24 per unit |
Motorcycle helmet | 6,000 units at $180 per unit |
b. Estimated inventories at May 1:
Direct materials: | Finished products: | ||||||
Plastic | 1,480 | lbs. | Bicycle helmet | 200 units at $15 per unit | |||
Foam lining | 520 | lbs. | Motorcycle helmet | 100 units at $90 per unit |
c. Desired inventories at May 31:
Direct materials: | Finished products: | ||||||
Plastic | 2,000 | lbs. | Bicycle helmet | 400 units at $15 per unit | |||
Foam lining | 800 | lbs. | Motorcycle helmet | 300 units at $100 per unit |
d. Direct materials used in production:
In manufacture of bicycle helmet: | ||
Plastic | 0.90 lb. per unit of product | |
Foam lining | 0.20 lb. per unit of product | |
In manufacture of motorcycle helmet: | ||
Plastic | 3.50 lbs. per unit of product | |
Foam lining | 1.40 lbs. per unit of product |
e. Anticipated cost of purchases and beginning and ending inventory of direct materials:
Plastic | $4.40 per lb. | |
Foam lining | $0.90 per lb. |
f. Direct labor requirements:
Bicycle helmet: | ||
Molding Department | 0.30 hr. at $15 per hr. | |
Assembly Department | 0.10 hr. at $14 per hr. | |
Motorcycle helmet: | ||
Molding Department | 0.50 hr. at $15 per hr. | |
Assembly Department | 0.40 hr. at $14 per hr. |
g. Estimated
Indirect factory wages | $125,000 | Power and light | $23,000 | ||||
45,000 | Insurance and property tax | 11,000 |
h. Estimated operating expenses for May:
Sales salaries expense | $175,000 | |
Advertising expense | 120,000 | |
Office salaries expense | 92,000 | |
Depreciation expense—office equipment | 6,000 | |
Miscellaneous expense—selling | 5,000 | |
Utilities expense—administrative | 3,000 | |
Travel expense—selling | 50,000 | |
Office supplies expense | 2,500 | |
Miscellaneous administrative expense | 1,500 |
i. Estimated other income and expense for May:
Interest revenue | $14,560 | |
Interest expense | 3,000 |
j. Estimated tax rate: 25%
Required:
1. Prepare a sales budget for May.
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