Question

The Budget director of Sunhelmet Corp, with your assistance, has gathered the following data for use in developing the budgeted income statement for january 2020:

A. Esstimated Sales for January:

Batting Helmet..........3,000 units at $50 per unit

Football Helmet.........5,000 units at $150 per unit

B. Estimated Inventories (beginning) at January 1:

Direct Materials:

Plastic.........300 lbs

Foam Lining......400lbs

Finished Products

Batting Helmet...500 units at $30 per unit

Football helmet...250 units at $90 per unit

C. Desired Inventories (ending) at january 31:

Direct Materials: Finished Products:
Platic....4000lbs Batting herlmet.....330 units at $30 per unit

Foam Lining....450lbs football helmet....200 units at $90 per unit

D. Direct Materials used in production:

In manufacture of batting helmet:

plastic......1.20 lbs. per unit of product

foam lining.... .50lbs 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

E. Anticipated cost of purchase and beginning and ending inventory of direct materials:

Plastic........ $7.10 per lb

Foam Lining..... $4.60 per lb

F. Direct labor requirements:

Batting helmet:

Molding department..... .20 hour at $13 per hour

Assembly department.... .60 hour at $15 per hour

Football Helmet:

Molding Department ..... .60 hour at 414 per hour

Assembly Department ... 1.90 hour at $17 per hour

G. estimated factory overhead costs for january:

Indirect Facrtory Wager ... 110,000

Depreciation of plant and equipment 20,000

power and light ... 10,000

Insurance and property tax 6,300

H. Estimated operating expenses for January:

Sales salaries expense $200,000

Advertising Expense 92,000

Office salaries expense 38,000

depreciation expense-office equipment 5,000

telephone expense-selling 1,800

telephone expense-administrative 1,000

travel expense- selling 15,000

office supplies expense 2,000

Miscellaneous administrative expense 1,300

I. Estimated other income and expense for january:

Interest revenue .... 2,000

Interest expense ... 4,000

J. estimated tax rate ... 15%

REQUIRED: PREPARE THE FOLLOWING FOR JANUARY 2019:

1.Sales Budget

2.Production Budget

3. Direct Materials purchases budget

4. director labor cost budget

5. factory overhead budget

6. cost of goods sold budget. work in process at the beginning of january estimated to be $25,000 and work in process at the end of january desired to be $30,000

7. selling and administrative expenses budget

Answer 1

Solution:

Part 1 –

Sales Budget
	Unit Sales Volume	Unit Selling Price	Total Sales
Batting Helmet	3000	$50	$150,000
Football Helmet	5000	$150	$750,000
Total Revenue from Sales			$900,000

Part 2 –

Production Budget
	Batting Helmet	Football Helmet
Expected Units to be sold	3000	5000
Plus: Desired Ending Inventory Jan 31	330	200
Total Need	3330	5200
Less: Estimated Beginning Inventory Jan 1	500	250
Total Units to be produced	2830	4950

Part 3 –

Direct Materials Purchases Budget
	Plastic	Foam lining	Total
Units required for production:
Batting Helmet	3396 (2830*1.2)	1415 (2830*0.5)
Football helmet	17325 (4950*3.5)	7425 (4950*1.5)
Plus: Desired Ending Inventory Jan 31	4000	450
Total	24721	9290
Less: Estimated Beginning Inventory Jan 1	300	400
Total units to be purchased	24421	8890
Unit Price	$7.10	$4.60
Total direct materials to be purchased	$173,389	$40,894	$214,283

Part 4 –

Direct labor Cost budget
	Molding Department	Assembly Department	Total
Hours required for Production:
Batting Helmet	566	1698
Hourly Rate	$13	$15
Total Direct labor cost for Batting Helmet (A)	$7,358	$25,470
Football helmet	2970	9405
Hourly Rate	$14	$17
Total Direct labor cost for Football Helmet (B)	$41,580	$159,885
Total Direct labor cost (A + B)	$48,938	$185,355	$234,293

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

Pls ask separate question for other parts problems