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Budgeted Income Statement and Supporting Budgets The budget director of Gold Medal Athletic Co., with the...

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:

  1. Estimated sales for March:
    Batting helmet 1,200 units at $40 per unit
    Football helmet 6,500 units at $160 per unit
  2. Estimated inventories at March 1:
    Direct materials:
      Plastic 90 lb.
      Foam lining 80 lb.
    Finished products:
      Batting helmet 40 units at $25 per unit
      Football helmet 240 units at $77 per unit
  3. Desired inventories at March 31:
    Direct materials:
      Plastic 50 lb.
      Foam lining 65 lb.
    Finished products:
      Batting helmet 50 units at $25 per unit
      Football helmet 220 units at $78 per unit
  4. Direct materials used in production:
    In manufacture of batting helmet:
      Plastic 1.20 lb. per unit of product
      Foam lining 0.50 lb. per unit of product
    In manufacture of football helmet:
      Plastic 3.50 lb. per unit of product
      Foam lining 1.50 lb. per unit of product
  5. Anticipated cost of purchases and beginning and ending inventory of direct materials:
    Plastic $6.00 per lb.
    Foam lining $4.00 per lb.
  6. 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.
  7. 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
  8. 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
  9. Estimated other income and expense for March:
    Interest revenue $940
    Interest expense 872
  10. Estimated tax rate: 30%

Required:

1. Prepare a sales budget for March.

Gold Medal Athletic Co.
Sales Budget
For the Month Ending March 31
Unit Sales
Volume
Unit Selling
Price
Total Sales
Batting helmet $ $
Football helmet
Total revenue from sales $


2. Prepare a production budget for March. Enter all amounts as positive numbers.

Gold Medal Athletic Co.
Production Budget
For the Month Ending March 31
Units
Batting helmet Football helmet
Expected units to be sold
Plus desired inventory, March 31
  Total units required
Less estimated inventory, March 1
Total units to be produced


3. Prepare a direct materials purchases budget for March. Enter all amounts as positive numbers.

Gold Medal Athletic Co.
Direct Materials Purchases Budget
For the Month Ending March 31
Plastic Foam Lining Total
Units required for production:
  Batting helmet
  Football helmet
Plus desired units of inventory, March 31
Total units required
Less 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.

Gold Medal Athletic Co.
Direct Labor Cost Budget
For the Month Ending March 31
Molding
Department
Assembly
Department
Total
Hours required for production:
  Batting helmet
  Football helmet
Total hours required
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
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
Finished goods inventory, March 1
Work in process inventory, March 1
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 $


8. Prepare a budgeted income statement for March. Enter all amounts as positive numbers.

Gold Medal Athletic Co.
Budgeted Income Statement
For the Month Ending March 31
Revenue from sales
Cost of goods sold
Gross profit
Operating expenses:
  Selling expenses
  Administrative expenses
Total operating expenses
Income from operations
Other income:
  Interest revenue
Other expenses:
  Interest expense
Income before income tax
  Income tax expense (30% rate)
Net income $

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Solutions

Expert Solution

1) Sales Budget for March is shown as follows (Amounts in $)

Gold Medal Athletic Co.
Sales Budget
For the Month Ending March 31
Unit Sales
Volume (a)
Unit Selling
Price (b)
Total Sales (a*b)
Batting helmet 1,200 $40 48,000
Football helmet 6,500 $160 1,040,000
Total revenue from sales 1,088,000

2) Production budget for March is shown as follows (Amounts in $)

Gold Medal Athletic Co.
Production Budget
For the Month Ending March 31
Units
Batting helmet Football helmet
Expected units to be sold 1,200 6,500
Plus desired inventory, March 31 50 220
  Total units required 1,250 6,720
Less estimated inventory, March 1 40 240
Total units to be produced 1,210 6,480

3) Direct materials purchases budget for March is shown as follows (Amounts in $)

Gold Medal Athletic Co.
Direct Materials Purchases Budget
For the Month Ending March 31
Plastic Foam Lining Total
Units required for production:
  Batting helmet 1,452 (1,210*1.20) 605 (1,210*0.50)
  Football helmet 22,680 (6,480*3.50) 9,720 (6,480*1.50)
Plus desired units of inventory, March 31 50 65
Total units required 24,182 10,390
Less estimated units of inventory, March 1 90 80
Total units to be purchased (c) 24,092 10,310
Unit price (d) $6.00 $4.00
Total direct materials to be purchased (c*d) $144,552 $41,240 $185,792

4) Direct labor cost budget for March (Amounts in $)

Gold Medal Athletic Co.
Direct Labor Cost Budget
For the Month Ending March 31
Molding
Department
Assembly
Department
Total
Hours required for production:
  Batting helmet 242 (1,210*0.20) 605 (1,210*0.50)
  Football helmet 3,240 (6,480*0.50) 11,664 (6,480*1.80)
Total hours required (e) 3,482 12,269
Hourly rate (f) $20 per hour $14 per hour
Total direct labor cost (e*f) $69,640 $171,766 $241,406

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Budgeted Income Statement and Supporting Budgets The budget director of Gold Medal Athletic Co., with the...
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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...
Budgeted Income Statement and Supporting Budgets The budget director of Gold Medal Athletic Co., with the...
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