Question

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:

a. Estimated sales for June:

Product E: 96,000 units at $18 per unit

Product F: 43,500 units at $26 per unit

b. 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

c. 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

d. 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

e. 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

f. 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

            

g. 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

h. 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

i. Estimated other income and expense for June:

Interest income $15,700

Interest expense $11,350

j. Estimated tax rate: 40%.

Instructions

1. Prepare a sales budget for June.

2. Prepare a production budget for June.

3. Prepare a direct materials purchases budget for June.

4. Prepare a direct labor cost budget for June.

5. Prepare a factory overhead cost budget for June.

6. 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.

7. Prepare an operating expenses budget for June. Classify the expenses as either selling or administrative expenses.

8. Prepare a budgeted income statement for June.

Answer 1

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