In: Accounting
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 |
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---|---|---|---|
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 |
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 |