Water Filter Systems, Inc. has accumulated the following budget data for the year 2020. 1. Sales: 37,000 units, unit selling price $65. 2. Cost of one unit of finished goods: Direct materials 1.5 pounds at $4 per pound, direct labor 2.5 hours at $14 per hour, and manufacturing overhead $3 per direct labor hour. 3. Inventories (raw materials only) Beginning, 7,200lbs. ending 10,400lbs. 4. Raw materials cost: $4 per pound. 5. Selling and administrative expenses: $106,350. 6. Income taxes: 40% of income before income taxes. Instructions (a) Prepare a schedule showing the computation of cost of goods sold for 2020. (b) Prepare a budgeted income statement for 2020.
Water Filter Systems, Inc. has accumulated the following budget data for the year 2020. 1. Sales: 37,000 units, unit selling price $65. 2. Cost of one unit of finished goods: Direct materials 1.5 pounds at $4 per pound, direct labor 2.5 hours at $14 per hour, and manufacturing overhead $3 per direct labor hour. 3. Inventories (raw materials only) Beginning, 7,200lbs. ending 10,400lbs. 4. Raw materials cost: $4 per pound. 5. Selling and administrative expenses: $106,350. 6. Income taxes: 40% of income before income taxes. Instructions (a) Prepare a schedule showing the computation of cost of goods sold for 2020. (b) Prepare a budgeted income statement for 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Water Filter Systems, Inc. has accumulated the following budget data for the year 2020.
1. Sales: 37,000 units, unit selling price $65.
2. Cost of one unit of finished goods: Direct materials 1.5 pounds at $4 per pound, direct labor 2.5 hours at $14 per hour,
and manufacturing overhead $3 per direct labor hour.
3. Inventories (raw materials only) Beginning, 7,200lbs. ending 10,400lbs.
4. Raw materials cost: $4 per pound.
5. Selling and administrative expenses: $106,350.
6. Income taxes: 40% of income before income taxes.
Instructions
(a) Prepare a schedule showing the computation of cost of goods sold for 2020.
(b) Prepare a budgeted income statement for 2020.
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