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% Required: 1. Prepare a sales budget for January. Birding Homes & Feeders Inc. Sales Budget For the Month Ending January 31 Unit Sales Volume Unit Selling Price Total Sales Bird house fill in the blank 1 $fill in the blank 2 $fill in the blank 3 Bird feeder fill in the blank 4 fill in the blank 5 fill in the blank 6 Total revenue from sales $fill in the blank 7 2. Prepare a production budget for January. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Birding Homes & Feeders Inc. Production Budget For the Month Ending January 31 Units Bird House Bird Feeder 3. Prepare a direct materials purchases budget for January. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Birding Homes & Feeders Inc. Direct Materials Purchases Budget For the Month Ending January 31 Wood Plastic Total Required units for production:
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 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
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%
Required:
1. Prepare a sales budget for January.
Birding Homes & Feeders Inc.
Sales Budget
For the Month Ending January 31
Unit Sales
Volume Unit Selling
Price Total Sales
Bird house fill in the blank 1 $fill in the blank 2 $fill in the blank 3
Bird feeder fill in the blank 4 fill in the blank 5 fill in the blank 6
Total revenue from sales $fill in the blank 7
2. Prepare a production budget for January. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Birding Homes & Feeders Inc.
Production Budget
For the Month Ending January 31
Units
Bird House Bird Feeder
3. Prepare a direct materials purchases budget for January. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Birding Homes & Feeders Inc.
Direct Materials Purchases Budget
For the Month Ending January 31
Wood Plastic Total
Required units for production:
4. Prepare a direct labor cost budget for January.
5. Prepare a
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.
Birding Homes & Feeders Inc.
Cost of Goods Sold Budget
For the Month Ending January 31
8. Prepare a budgeted income statement for January. In the Other revenue and expense section, indicate expenses as negative amounts.
Birding Homes & Feeders Inc.
Budgeted Income Statement
For the Month Ending January 31
$fill in the blank 103
fill in the blank 105
$fill in the blank 107
Operating expenses:
$fill in the blank 109
fill in the blank 111
Total operating expenses fill in the blank 112
Operating income $fill in the blank 113
Other revenue and expense:
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