In: Accounting
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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 | 1.2 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 |
Anticipated cost of purchases and beginning and ending inventory of direct materials:
Plastic | $6 per lb. |
Foam lining | $4 per lb. |
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. |
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%
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 |
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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 |
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---|---|---|
Units | ||
Batting helmet | Football helmet | |
Expected units to be sold | ||
Desired inventory, March 31 | ||
Total units available | ||
Estimated inventory, March 1 | ||
Total units to be produced |
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 |
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---|---|---|---|---|---|---|
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 |
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---|---|---|---|---|---|---|
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 |
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---|---|---|---|
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 | $ |
1
GOLD MEDAL ATHLETIC CO. |
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Sales Budget |
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For the Month Ending March 31, |
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Unit Sales |
Unit Selling |
Total |
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Product |
Volume |
Price |
Sales |
||||
Batting helmet |
1,200 |
$40.00 |
$ 48,000 |
||||
Football helmet |
6,500 |
$160.00 |
1,040,000 |
||||
Total revenue from sales |
$ 1,088,000 |
2
GOLD MEDAL ATHLETIC CO. |
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Production Budget |
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For the Month Ending March 31, |
||||||
Units |
||||||
Batting |
Football |
|||||
Helmet |
Helmet |
|||||
Expected units to be sold |
1,200 |
6,500 |
||||
Plus desired inventory, March 31, |
50 |
220 |
||||
Total |
1,250 |
6,720 |
||||
Less estimated inventory, March 1, |
40 |
240 |
||||
Total units to be produced |
1,210 |
6,480 |
3
GOLD MEDAL ATHLETIC CO. |
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Direct Materials Purchases Budget |
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For the Month Ending March 31, |
||||||||
Plastic |
Foam Lining |
|||||||
(lbs.) |
(lbs.) |
Total |
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Required units for production: |
||||||||
Batting helmet |
1,452 |
605 |
||||||
Football helmet |
22,680 |
9,720 |
||||||
Plus desired inventory, March 31, |
50 |
65 |
||||||
Total |
24,182 |
10,390 |
||||||
Less estimated inventory, March 1, |
90 |
80 |
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Total units to be purchased |
24,092 |
10,310 |
||||||
Unit price |
$6.00 |
$4.00 |
||||||
Total direct materials to be purchased |
$ 144,552 |
$ 41,240 |
$ 185,792 |
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Working notes for the above answer is as under
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