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Budgeted income statement and supporting budgets The budget director of Birds of a Feather 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: a. Estimated sales for January: Birdhouse 6.000 units at $55 per unit Bird feeder 4,500 units at $75 per unit b. Estimated inventories at January 1: Direct materials: Finished products: Wood 220 ft. Birdhouse 300 units at $23 per unit Plastic 250 lb. Bird feeder 240 units at $34 per unit c. Desired inventories at January 31: Direct materials: Finished products: Wood 180 ft. Birdhouse 340 units at $23 per unit Plastic 210 lb. Bird feeder 200 units at $34 per unit d. Direct materials used in production: In manufacture of Birdhouse: In manufacture of Bird Feeder: Wood ... 0.80 ft. per unit of product Wood 1.20 ft. per unitof product Plastic . . 0.50 lb. per unit of product Plastic 0.75 lb. per unit of product e. Anticipated cost of purchases and beginning and ending inventory of direct materials: Wood $8.00 per ft. Plastic $1.20 per lb. f. f. Direct labor requirements: Birdhouse: Fabrication Department 0.20 hr. at$15 per hr. Assembly Department 0.30 hr. at $12 per hr. Bird Feeder: Fabrication Department 0.40 hr. at$15 per hr. Assembly Department 0.35 hr. at $12 per hr. g. Estimated factory overhead costs for January: Indirect factory wages $80,000 Power and light $8,000 Depreciation of plant and equipment 25,000 Insurance and property tax 2,000 h. Estimated operating expenses for January: Sales salaries expense $90,000 Advertising expense 20,000 Office salaries expense 18,000 Depredation expense—office equipment 800 Telephone expense—selling 500 Telephone expense—administrative 200 Travel expense—selling 5,000 Office supplies expense 250 Miscellaneous administrative expense 450 i. Estimated other income and expense for January: Interest revenue $300 Interest expense 224 j. Estimated tax rate: 30% Instructions 1. Prepare a sales budget for January. 2. Prepare a production budget for January. 3. Prepare a direct materials purchases budget for January. 4. Prepare a direct labor cost budget for January. 5. Prepare a factory overhead cost budget for January. 6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $29,000, and work in process at the end of January is estimated to be $35,400. 7. Prepare a selling and administrative expenses budget for January. 8. Prepare a budgeted income statement for January.

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 22, Problem 22.3APR
Textbook Problem

Budgeted income statement and supporting budgets

 The budget director of Birds of a Feather 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:

  1. a. Estimated sales for January:
Birdhouse  6.000 units at $55 per unit
Bird feeder  4,500 units at $75 per unit
  1. b.  Estimated inventories at January 1:
Direct materials:   Finished products:  
Wood 220 ft. Birdhouse 300 units at $23 per unit
Plastic 250 lb. Bird feeder 240 units at $34 per unit
  1. c.  Desired inventories at January 31:
Direct materials:   Finished products:  
Wood 180 ft. Birdhouse 340 units at $23 per unit
Plastic 210 lb. Bird feeder 200 units at $34 per unit
  1. d.  Direct materials used in production:
In manufacture of Birdhouse: In manufacture of Bird Feeder:
Wood ... 0.80 ft. per unit of product Wood  1.20 ft. per unitof product
Plastic . . 0.50 lb. per unit of product Plastic  0.75 lb. per unit of product
  1. e.  Anticipated cost of purchases and beginning and ending inventory of direct materials:
Wood $8.00 per ft. Plastic $1.20 per lb.
  1. f. f. Direct labor requirements:
Birdhouse:  
Fabrication Department 0.20 hr. at$15 per hr.
Assembly Department 0.30 hr. at $12 per hr.
Bird Feeder:  
Fabrication Department 0.40 hr. at$15 per hr.
Assembly Department 0.35 hr. at $12 per hr.
  1. g.  Estimated factory overhead costs for January:
Indirect factory wages $80,000 Power and light $8,000
Depreciation of plant and equipment 25,000 Insurance and property tax 2,000
  1. h. Estimated operating expenses for January:
Sales salaries expense $90,000
Advertising expense 20,000
Office salaries expense 18,000
Depredation expense—office equipment 800
Telephone expense—selling 500
Telephone expense—administrative 200
Travel expense—selling 5,000
Office supplies expense 250
Miscellaneous administrative expense 450
  1. i. Estimated other income and expense for January:
Interest revenue $300
Interest expense 224
  1. j.  Estimated tax rate: 30%

Instructions

  1. 1. Prepare a sales budget for January.
  2. 2. Prepare a production budget for January.

3. Prepare a direct materials purchases budget for January.

  1. 4. Prepare a direct labor cost budget for January.
  2. 5. Prepare a factory overhead cost budget for January.
  3. 6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $29,000, and work in process at the end of January is estimated to be $35,400.
  4. 7. Prepare a selling and administrative expenses budget for January.
  5. 8. Prepare a budgeted income statement for January.

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Chapter 22 Solutions

Accounting
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