In: Accounting
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:
Batting helmet | 1,200 units at $40 per unit |
Football helmet | 6,500 units at $160 per unit |
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 |
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 |
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 |
Plastic | $6.00 per lb. |
Foam lining | $4.00 per lb. |
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. |
Indirect factory wages | $86,000 |
Depreciation of plant and equipment | 12,000 |
Power and light | 4,000 |
Insurance and property tax | 2,300 |
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 |
Interest revenue | $940 |
Interest expense | 872 |
Required:
1. Prepare a sales budget for March.
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. Enter all amounts as positive numbers.
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 | ||
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 |
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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 |
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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 |
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---|---|
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 |
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---|---|---|---|
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 |
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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 |
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---|---|---|---|
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 | $ |
Feedback
1) Sales Budget for March is shown as follows (Amounts in $)
Gold Medal Athletic Co. Sales Budget For the Month Ending March 31 |
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---|---|---|---|
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 |
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---|---|---|
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 |
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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 |
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---|---|---|---|
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 |