The budget director of Gold Medal Co., with assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for March: 1. Estimated sales for March: Batting helmet 1,200 units at $40 per unit Football helmet 6,500 units at $160 per units 2. Estimated inventories at March 1: Direct materials: Finished products: Plastic 90 lbs. Batting helmet 40 units at $25 per unit Foam lining 80 lbs. Football helmet 240 units at $77 per unit 3. Desired inventories at March 31: Direct materials: Finished products: Plastic 50 lbs Batting helmet 50 units at $25 per unit Foam lining 65 lbs Football helmet 220 units at $78 per unit 4. Direct materials used in production: In manufacture of batting helmet: Plastic 1.2 lbs per unit of product Foam lining 0.5 lb per unit of product In manufacture of football helmet: Plastic 3.5 lbs per unit of product Foam lining 1.5 lbs per unit of product 5. Anticipated cost of purchases and beginning and ending inventory of direct materials: Platic $6 per lb Foam lining $4 per lb 6. Direct labor requirements: Batting helmet: Molding department 0.2 hr at $20 per hr Assembly department 0.5 hr at $14 per hr Football helmet: Molding department 0.5 hr at $20 per hr Assembly department 1.8 hrs at $14 per hr 7. Estimated factory overhead costs for March: Indirect factory wages $86,000 Power and light $4,000 Depreciation of plant Insurance and and equipment 12,000 property tax 2,300 8. Estimated operating expenses for March: Sales salaries expense $184,300 Advertising expense 87,200 Office salaries expense 32,400 Depreciation expense- office equipment 3,800 Telephone expense- selling 5,800 Telephone expense- administrative 1,200 Travel expense- selling 9,000 Office supplies expense 1,100 Miscellaneous administrative expense 1,000 9. Estimated other revenueand expense for March: Interest revenue $940 Interest expense 872 10. Estimated tax rate: 30% Instructions: 1. Prepare a sales budget for March. 2. Prepare a production budget for March. 3. Prepare a direct material purchases budget for March. 4. Prepare a direct labor cost budget for March. 5. Prepare a factory overhead cost budget for March. 6. Prepare a cost of goods sold budget for March. Work in process at the beginning of March is estimated to be $15,300 and work in process at the end of March is desired to be $14,800. 7. Prepare a selling and administrative expenses bufget for March. 8. Prepare a budgeted income statement for March.
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 Gold Medal Co., with assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the
1. Estimated sales for March:
Batting helmet 1,200 units at $40 per unit
Football helmet 6,500 units at $160 per units
2. Estimated inventories at March 1:
Direct materials: Finished products:
Plastic 90 lbs. Batting helmet 40 units at $25 per unit
Foam lining 80 lbs. Football helmet 240 units at $77 per unit
3. Desired inventories at March 31:
Direct materials: Finished products:
Plastic 50 lbs Batting helmet 50 units at $25 per unit
Foam lining 65 lbs Football helmet 220 units at $78 per unit
4. Direct materials used in production:
In manufacture of batting helmet:
Plastic 1.2 lbs per unit of product
Foam lining 0.5 lb per unit of product
In manufacture of football helmet:
Plastic 3.5 lbs per unit of product
Foam lining 1.5 lbs per unit of product
5. Anticipated cost of purchases and beginning and ending inventory of direct materials:
Platic $6 per lb
Foam lining $4 per lb
6. Direct labor requirements:
Batting helmet:
Molding department 0.2 hr at $20 per hr
Assembly department 0.5 hr at $14 per hr
Football helmet:
Molding department 0.5 hr at $20 per hr
Assembly department 1.8 hrs at $14 per hr
7. Estimated factory overhead costs for March:
Indirect factory wages $86,000 Power and light $4,000
and equipment 12,000 property tax 2,300
8. Estimated operating expenses for March:
Sales salaries expense $184,300
Advertising expense 87,200
Office salaries expense 32,400
Depreciation expense- office equipment 3,800
Telephone expense- selling 5,800
Telephone expense- administrative 1,200
Travel expense- selling 9,000
Office supplies expense 1,100
Miscellaneous administrative expense 1,000
9. Estimated other revenueand expense for March:
Interest revenue $940
Interest expense 872
10. Estimated tax rate: 30%
Instructions:
1. Prepare a sales budget for March.
2. Prepare a production budget for March.
3. Prepare a direct material purchases budget for March.
4. Prepare a direct labor cost budget for March.
5. Prepare a
6. Prepare a cost of goods sold budget for March. Work in process at the beginning of March is estimated to be $15,300 and work in process at the end of March is desired to be $14,800.
7. Prepare a selling and administrative expenses bufget for March.
8. Prepare a budgeted income statement for March.
*RESPOND REMAINING SUBPARTS 6 - 7 - 8
Also, identify and explain each of the major components of the operating budget. And, explain the interrelationships among various components of the operating budget.
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