Question

1. Budgeted Income Statement and Supporting Budgets

   The budget director of Gold Medal Athletic Co., 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 March:

   1. Estimated sales for March:

      Batting helmet	1,200 units at $40 per unit
      Football helmet	6,500 units at $160 per unit

   2. Estimated inventories at March 1:

      Direct materials:
      Plastic	90 lbs.
      Foam lining	80 lbs.
      Finished products:
      Batting helmet	40 units at $25 per unit
      Football helmet	240 units at $77 per unit

   3. Desired inventories at March 31:

      Direct materials:
      Plastic	50 lbs.
      Foam lining	65 lbs.
      Finished products:
      Batting helmet	50 units at $25 per unit
      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:

      Plastic	$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
      Depreciation of plant and equipment	12,000
      Power and light	4,000
      Insurance and 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 income and expense for March:

      Interest revenue	$940
      Interest expense	872

   10. Estimated tax rate: 30%

   Required:

   1. Prepare a sales budget for March. Enter all amounts as positive numbers.

   Gold Medal Athletic Co. Sales Budget For the Month Ending March 31
   	Unit Sales Volume	Unit Selling Price			Total Sales
   Batting helmet		$			$
   Football helmet
   Total revenue from sales					$

   2. Prepare a production budget for March. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

   Gold Medal Athletic Co. Production Budget For the Month Ending March 31
   	Units
   	Batting helmet	Football helmet

   3. Prepare a direct materials purchases budget for March. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

   Gold Medal Athletic Co. Direct Materials Purchases Budget For the Month Ending March 31
   		Plastic		Foam Lining		Total
   Units required for production:
   Batting helmet
   Football helmet
   Desired units of inventory, March 31
   Total units available
   Estimated units of inventory, March 1
   Total units to be purchased
   Unit price	$		$
   Total direct materials to be purchased	$		$		$

   4. Prepare a direct labor cost budget for March. Enter all amounts as positive numbers.

   Gold Medal Athletic Co. Direct Labor Cost Budget For the Month Ending March 31
   		Molding Department		Assembly Department		Total
   Hours required for production:
   Batting helmet
   Football helmet
   Total
   Hourly rate	$		$
   Total direct labor cost	$		$		$

   5. Prepare a factory overhead cost budget for March.

   Gold Medal Athletic Co. Factory Overhead Cost Budget For the Month Ending March 31
   	$
   Total	$

   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. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

   Gold Medal Athletic Co. Cost of Goods Sold Budget For the Month Ending March 31
   			$
   		$
   Direct materials:
   	$
   Cost of direct materials available for use	$
   Cost of direct materials placed in production	$
   Total manufacturing costs
   Total work in process during period		$
   Cost of goods manufactured
   Cost of finished goods available for sale			$
   Cost of goods sold			$

   7. Prepare a selling and administrative expenses budget for March.

   Gold Medal Athletic Co. Selling and Administrative Expenses Budget For the Month Ending March 31
   Selling expenses:
   		$
   Total selling expenses			$
   Administrative expenses:
   		$
   Total administrative expenses
   Total operating expenses			$

   8. Prepare a budgeted income statement for March.

   Gold Medal Athletic Co. Budgeted Income Statement For the Month Ending March 31
   			$
   			$
   Operating expenses:
   		$
   Total operating expenses
   Income from operations			$
   Other revenue and expense:
   		$
   Income before income tax			$
   Net income			$

Answer 1