Question

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:

Estimated sales for March:

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

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

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

Direct materials used in production:

In manufacture of batting helmet:
Plastic	1.20 lbs. per unit of product
Foam lining	0.50 lb. per unit of product
In manufacture of football helmet:
Plastic	3.50 lbs. per unit of product
Foam lining	1.50 lbs. per unit of product

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

Plastic	$6.00 per lb.
Foam lining	$4.00 per lb.

Direct labor requirements:

Batting helmet:
Molding Department	0.20 hr. at $20 per hr.
Assembly Department	0.50 hr. at $14 per hr.
Football helmet:
Molding Department	0.50 hr. at $20 per hr.
Assembly Department	1.80 hrs. at $14 per hr.

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

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

Estimated other income and expense for March:

Interest revenue	$940
Interest expense	872

Estimated tax rate: 30%5. Prepare a factory overhead cost budget for March.

Gold Medal Athletic Co. Factory Overhead Cost Budget For the Month Ending March 31
Indirect factory wages	$
Depreciation of plant and equipment
Power and light
Insurance and property tax
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. Enter all amounts as positive numbers.

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 the 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:
Sales salaries expense
Advertising expense
Telephone expense—selling
Travel expense—selling
Total selling expenses
Administrative expenses:
Office salaries expense
Depreciation expense—office equipment
Telephone expense—administrative
Office supplies expense
Miscellaneous administrative expense
Total administrative expenses
Total operating expenses			$

Answer 1

a. Sales Budget						Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
	Unit Sales	Unit Selling Price	Total Sale
Batting Helmet	1200	$                               40.00	$                    48,000
Football Helmet	6500	$                             160.00	$              1,040,000
Total Revenue from Sale			$              1,088,000
b. Production Budget
	Batting Helmet	Football Helmet
Expected units to be sold	1,200	6,500
Desired Inventory, ending	50	220
Total units Available	1,250	6,720
Estimated Inventory , beginning	-40	-240
Total Units to be produced	1,210	6,480
Direct Material Purchase Budget-Plastic
	Batting Helmet	Football Helmet	Total
Production Requirement	1,210	6,480
Raw Material Required Per Helmet (pounds)	1.20	3.50
Raw Material Required for Production (Pounds)	1,452	22,680	24,132
Desired Inventory, Ending			50
Total Raw Material Needs			24,182
Estimated Inventory , Beginning			-90
Raw Material to be Purchased			24,092
Unit Price			$                         6.00
Cost of Purchase Plastic			$                  144,552
Direct Material Purchase Budget-Foam Lining
	Batting Helmet	Football Helmet	Total
Production Requirement	1,210	6,480
Raw Material Required Per Helmet (pounds)	0.50	1.50
Raw Material Required for Production (Pounds)	605	9,720	10,325
Desired Inventory, Ending			65
Total Raw Material Needs			10,390
Estimated Inventory , Beginning			-80
Raw Material to be Purchased			10,310
Unit Price			$                         4.00
Cost of Purchase (Foamlining)			$                    41,240
e.Direct Labor Cost Budget-Molding
	Batting Helmet	Football Helmet	Total
Hours required for production:
Production Requirement	1,210	6,480	7,690
Direct Labor Requirement per Helmet (Hours)	0.2000	0.5000
-Direct Labor Required production Hours	242	3,240	3,482
Hourly rate			$                       20.00
Total Direct Labor Cost			69,640
f.Direct Labor Cost Budget-Assembly
	Batting Helmet	Football Helmet	Total
Hours required for production:
Direct Material Purchase Budget-Foam Lining	1,210	6,480	7,690
Direct Labor Requirement per Helmet (Hours)	0.5000	1.8000
-Direct Labor Required production Hours	605	11,664	12,269
Hourly rate			$                       14.00
Total Direct Labor Cost			171,766
5. Manufacturing Overhead Cost Budget
Indirect Factory Wages	$                               86,000
Depreciation Plant Equipment	$                               12,000
Power and Light	$                                 4,000
Insurance and Property tax	$                                 2,300
Total	$                             104,300
Total Labor Hours	$                               15,751
Pretedermined Overhead Rate	$                                    6.62
6. Cost of Goods Sold Budget
Per unit cost of goods sold:	Batting Helmet			Football Helmet
	Quantity	Rate	Total Cost per unit	Quantity	Rate	Total Cost per unit
Plastic	1.2	$                                  6.00	$                         7.20	3.5	$       6.00	$                        21.00
Foam Lining	0.5	$                                  4.00	$                         2.00	1.5	$       4.00	$                          6.00
Direct Labor-Molding	0.2	$                               20.00	$                         4.00	0.5	$    20.00	$                        10.00
Direct Labor-Assembly	0.5	$                               14.00	$                         7.00	1.8	$    14.00	$                        25.20
Overheads-Molding	0.2	$                                  6.62	$                         1.32	0.5	$       6.62	$                          3.31
Overheads-Assembly	0.5	$                                  6.62	$                         3.31	1.8	$       6.62	$                        11.92
			$                             25			$                              77
				Working
Finished goods inventory, Mar 1			$                    19,480	(40*25)+(240*77)
Work in process inventory, Mar 1		$                             15,300
Direct materials:
Direct materials inventory, Mar 1	$                                     860			(90*6)+(80*4)
Direct materials purchases	$                             185,792
Cost of direct materials available for use	$                             186,652
Direct materials inventory, Mar 31	$                                   -560			(50*6)+(65*4)
Cost of direct materials placed in production	$                             186,092
Direct labor	$                             241,406
Factory overhead	$                             104,300
Total manufacturing costs		$                           531,798
Total work in process during period		$                           547,098
Work in process inventory, Mar 31		$                           -14,800
Cost of goods manufactured			$                  532,298
Cost of finished goods available for sale			$                  551,778
Finished goods inventory, Mar 31			$                   -18,410	(50*25)+(220*78)
Cost of goods sold			$                  533,368
6. Selling and Administrative Budget
Selling Expense:
Sales Salaries Expense	$                             184,300
Advedrtising Expense	$                               87,200
Telephone Expense-Selling	$                                 5,800
Travel Expense-Selling	$                                 9,000
Total Selling Expense		$                           286,300
Administration Expense:
Office Salaries Expense	$                               32,400
Depreciatiion Offcie Equipment	$                                 3,800
Telephone Expense-Admin	$                                 1,200
Office Supplies Expense	$                                 1,100
Misc Admin Expense	$                                 1,000
Total administrative expenses		$                             39,500
Total operating expenses			$                  325,800