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Budgeted Income Statement and Supporting Budgets The budget director of Feathered Friends Inc., with the assistance...

Budgeted Income Statement and Supporting Budgets

The budget director of Feathered Friends 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 December 2016:

Estimated sales for December:

Bird house 3,200 units at $50 per unit
Bird feeder 3,000 units at $70 per unit

Estimated inventories at December 1:

Direct materials:
Wood 200 ft.
Plastic 240 lbs.
Finished products:
Bird house 320 units at $27 per unit
Bird feeder 270 units at $40 per unit

Desired inventories at December 31:

Direct materials:
Wood 220 ft.
Plastic 200 lbs.
Finished products:
Bird house 290 units at $27 per unit
Bird feeder 250 units at $41 per unit

Direct materials used in production:

In manufacture of Bird House:
Wood 0.80 ft. per unit of product
Plastic 0.50 lb. per unit of product
In manufacture of Bird Feeder:
Wood 1.20 ft. per unit of product
Plastic 0.75 lb. per unit of product

Anticipated cost of purchases and beginning and ending inventory of direct materials:

Wood $7.00 per ft.
Plastic $1.00 per lb.

Direct labor requirements:

Bird House:
Fabrication Department 0.20 hr. at $16 per hr.
Assembly Department 0.30 hr. at $12 per hr.
Bird Feeder:
Fabrication Department 0.40 hr. at $16 per hr.
Assembly Department 0.35 hr. at $12 per hr.

Estimated factory overhead costs for December:

Indirect factory wages $75,000
Depreciation of plant and equipment 23,000
Power and light $6,000
Insurance and property tax 5,000

Estimated operating expenses for December:

Sales salaries expense $70,000
Advertising expense 18,000
Office salaries expense 21,000
Depreciation expense—office equipment 600
Telephone expense—selling 550
Telephone expense—administrative 250
Travel expense—selling 4,000
Office supplies expense 200
Miscellaneous administrative expense 400

Estimated other income and expense for December:

Interest revenue $200
Interest expense 122

Estimated tax rate: 30%

3. Prepare a direct materials purchases budget for December.

Feathered Friends Inc.
Direct Materials Purchases Budget
For the Month Ending December 31, 2016
Wood Plastic Total
Required units for production:
Bird house
Bird feeder
Plus desired units of inventory, December 31, 2016
Total
Less estimated units of inventory, December 1, 2016
Total units to be purchased
Unit price
Total direct materials to be purchased

4. Prepare a direct labor cost budget for December.

Feathered Friends Inc.
Direct Labor Cost Budget
For the Month Ending December 31, 2016
Fabrication
Department
Assembly Department Total
Hours required for production:
Bird house
Bird feeder
Total
Hourly rate
Total direct labor cost

Solutions

Expert Solution

Calculation of Units
Bird house Bird feeder
Sales 3200 3000
Add: closing inventory 290 250
Less: opening inventory 320 270
3170 2980

Direct material purchase budget

Wood(ft.) plastic (lb.) Total
Required units for production:
Bird house 2536 3170*0.8 1585 3170*0.5
Bird feeder 3576 2980*1.2 2235 2980*.75
Add: inventory on dec 31, 2016 220 200
Total 6332 4020 10352
Less: inentory on dec 31, 2016 200 240
Total units to be purchased 6132 3780 9912
Unit price 7 1
Total direct material to be purchased 42924 3780 46704

Direct labor cost budget

Fabrication
department
Assembly
department
Total
Hours required for production
Bird house 634 3170*.2 951 3170*.2
Bird feeder 1192 2980*.4 1043 2980*.35
Total 1826 1994 3820
Hourly rate 16 12
Total direct labor cost 29216 23928 53144

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