The budget director of Birds and Beyond, 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 2021: Estimated sales for January: Birdhouse 7.500 units at $66 per unit Bird feeder 5,000 units at $82 per unit Estimated inventories at January 1: Direct Materials: Finished Products: Wood: 198 ft. Birdhouse: 500 units at $28 per unit. Plastic:
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 Birds and Beyond, Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the
- Estimated sales for January:
Birdhouse 7.500 units at $66 per unit
Bird feeder 5,000 units at $82 per unit
- Estimated inventories at January 1:
Direct Materials: Finished Products:
Wood: 198 ft. Birdhouse: 500 units at $28 per unit.
Plastic: 420 lbs. Bird feeder: 210 units at $40 per unit.
- Desired inventories at January 31:
Direct Materials: Finished Products:
Wood: 220 ft. Birdhouse: 400 units at $28 per unit.
Plastic: 340 lbs. Bird feeder: 250 units at $40 per unit.
- Direct materials used in production:
In Mfg. of the Birdhouse: In Mfg. of the Bird Feeder:
Wood: 0.80 ft. per unit. 1.20 ft. per unit.
Plastic: 0.50 lb. per unit. 0.75 lb. per unit.
- Anticipated cost of purchases and beginning and ending inventory of direct materials:
Wood: $9 per ft. Plastic: $1.40 per lb.
- Direct labor requirements:
Birdhouse:
Fabrication Department: 0.25 hr. at $20 per hour.
Assembly Department: 0.30 hr. at $15 per hour.
Bird Feeder:
Fabrication Department: 0.40 hr. at $20 per hour.
Assembly Department: 0.35 hr. at $15 per hour.
- Estimated factory overhead costs for January:
Indirect Factory Wages: $92,000 Power and Light: $10,100
- Estimated operating expenses for January:
Sales Salaries Expense: $85,100
Advertising Expense: 17,600
Office Salaries Expense: 19,200
Depreciation Expense-Office Equipment 1,100
Telephone Expense-Selling: 1,000
Telephone Expense-Administrative: 400
Travel Expense-Selling: 3,800
Office Supplies Expense: 350
Miscellaneous Administrative Expense: 250
- Estimated other income and expense for January:
Interest Revenue: $450 Interest Expense: $294
- Estimated tax rate: 25%
Instructions
- Prepare a sales budget for January.
- Prepare a production budget for January.
- Prepare a direct materials purchases budget for January.
- Prepare a direct labor cost budget for January.
- Prepare a
factory overhead cost budget for January. - Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $33,600, and work in process at the end of January is estimated to be $41,200.
- Prepare a selling and administrative expenses budget for January.
- Prepare a budgeted income statement for January.
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