The budget director of Asada 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 June: Estimated sales for June: Product E: 96,000 units at $18 per unit Product F: 43,500 units at $26 per unit Estimated inventories at June 1: Direct materials: Finished products: Material TY‑1: 2,500 lbs. Product E: 5,400 units at $11 per unit Material AA‑5: 3,200 lbs. Product F: 2,100 units at $15 per unit Desired at June 30. Direct materials: Finished products: MaterialTY‑1: 2,8001bs. Product E: 6,000 units at$11 per unit Material AA‑5: 3,050 lbs. Product F: 2,350 units at $15 per unit Direct materials used in production: In manufacture of Product E: Material TY‑1: 0.9 lb. per unit of product Material AA‑5: 0.4 lb. per unit of product In manufacture of Product F: Material AA‑5: 1.2 lbs. per unit of product Anticipated cost of purchases and beginning and ending inventory of direct materials: Material TY‑1: $1.30 per lb Material AA‑5: $3.20 per lb Direct labor requirements: Product E: Department 100: .2 hour at $10 per hour Department 200: .25 hour at $15 per hour Product F: Department 100: .5 hour at $10 per hour Department 300: .2 hour at $13 per hour Estimated factory overhead costs for June: Indirect factory wages $185,000 Depreciation of plant & Equip. 28,000 Supervisory Salaries 85,500 Power and light 12,800 Indirect materials 32,000 Maintenance 26,400 Insurance and property taxes . 8,400 Estimated operating expenses for June: Sales salaries expense $144,300 Officers salaries expense 90,500 Advertising expense 111,900 Office salaries expense 65,800 Depreciation expense-office equip 4,600 Telephone Expense-selling 3250 Telephone expense—administrative 1,400 Travel expense selling 24,300 Travel expense—administrative 12,600 Office supplies expense 3,200 Miscellaneous selling expense 6,860 Miscellaneous administrative expense 4,570 Estimated other income and expense for June: Interest income $15,700 Interest expense $11,350 Estimated tax rate: 40%. Instructions Prepare a sales budget for June. Prepare a production budget for June. Prepare a direct materials purchases budget for June. Prepare a direct labor cost budget for June. Prepare a factory overhead cost budget for June. Prepare a cost of goods sold budget for June. Work in process at the beginning of June is estimated to be $28,500, and work in process at the end of June is estimated to be $34,200. Prepare an operating expenses budget for June. Classify the expenses as either selling or administrative expenses. Prepare a budgeted income statement for June.
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 Asada 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 June:
- Estimated sales for June:
Product E: 96,000 units at $18 per unit
Product F: 43,500 units at $26 per unit
- Estimated inventories at June 1:
Direct materials: Finished products:
Material TY‑1: 2,500 lbs. Product E: 5,400 units at $11 per unit
Material AA‑5: 3,200 lbs. Product F: 2,100 units at $15 per unit
- Desired at June 30.
Direct materials: Finished products:
MaterialTY‑1: 2,8001bs. Product E: 6,000 units at$11 per unit
Material AA‑5: 3,050 lbs. Product F: 2,350 units at $15 per unit
- Direct materials used in production:
In manufacture of Product E:
Material TY‑1: 0.9 lb. per unit of product
Material AA‑5: 0.4 lb. per unit of product
In manufacture of Product F:
Material AA‑5: 1.2 lbs. per unit of product
- Anticipated cost of purchases and beginning and ending inventory of direct materials:
Material TY‑1: $1.30 per lb
Material AA‑5: $3.20 per lb
- Direct labor requirements:
Product E:
Department 100: .2 hour at $10 per hour
Department 200: .25 hour at $15 per hour
Product F:
Department 100: .5 hour at $10 per hour
Department 300: .2 hour at $13 per hour
- Estimated factory overhead costs for June:
Indirect factory wages $185,000
Supervisory Salaries 85,500
Power and light 12,800
Indirect materials 32,000
Maintenance 26,400
Insurance and property taxes . 8,400
- Estimated operating expenses for June:
Sales salaries expense $144,300
Officers salaries expense 90,500
Advertising expense 111,900
Office salaries expense 65,800
Depreciation expense-office equip 4,600
Telephone Expense-selling 3250
Telephone expense—administrative 1,400
Travel expense selling 24,300
Travel expense—administrative 12,600
Office supplies expense 3,200
Miscellaneous selling expense 6,860
Miscellaneous administrative expense 4,570
- Estimated other income and expense for June:
Interest income $15,700
Interest expense $11,350
- Estimated tax rate: 40%.
Instructions
- Prepare a sales budget for June.
- Prepare a production budget for June.
- Prepare a direct materials purchases budget for June.
- Prepare a direct labor cost budget for June.
- Prepare a
factory overhead cost budget for June.
- Prepare a cost of goods sold budget for June. Work in process at the beginning of June is estimated to be $28,500, and work in process at the end of June is estimated to be $34,200.
- Prepare an operating expenses budget for June. Classify the expenses as either selling or administrative expenses.
- Prepare a
budgeted income statement for June.
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