Financial and Managerial Accounting: PR6-3A The budget director of Feathered Friends Inc.

Financial and Managerial Accounting

PR6-3A Budgeted Income Statement and Supporting Budgets

The budget director of Feathered Friends Inc., 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 October 2012:

a. Estimated sales for October:

Bird house 3,500 units at $45 per unit

Bird feeder 3,700 units at $65 per unit

b. Estimated inventories at October 1:

Direct materials: Finished Products:

Wood 240 ft. Bird house 300 units at $22 per unit

Plastic 360 lbs Bird feeder 200 units at $33 per unit

c. Desired inventories at October 31:

Direct materials: Finished Products:

Wood 290 ft. Bird house 360 units at $22 per unit

Plastic 340 lbs Bird feeder 180 units at $34 per unit

d. Direct materials used in production:

In manufacture of Bird House:

Wood 0.80 ft per unit of product

Plastic 0.50 lb per unit of product

In manufacture of Bird Feeder:

Wood 1.20 ft per unit of product

Plastic 0.75 lb per unit of product

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

Wood $6.00 per ft

Plastic $0.80 per lb

f. Direct labor requirements:

Bird House:

Fabrication Department 0.20 hr at $15 per hr

Assembly Department 0.30 hr at $11 per hr

Bird Feeder:

Fabrication Department 0.40 hr at $15 per hr

Assembly Department 0.35 hr at $11 per hr

g. Estimated factory overhead costs for October:

Indirect factory wages $70,000 Power and light

Depreciation of plant and equipment $18,000 Insurance and property tax

h. Estimated operating expenses for October:

Sales salaries expense 65,000

Advertising expense 15,000

Office salaries expense 22,000

Depreciation expense - office equipment 500

Telephone expense - selling 450

Telephone expense - administrative 150

Travel expense - selling 3,700

Office supplies expense 350

Miscellaneous administrative expense 500

i. Estimated other income and expense for October:

Interest revenue 170

Interest expense 118

j. Estimated tax rate: 30%

Instructions:

1. Prepare a sales budget for October.

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

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

4. Prepare a direct labor cost budget for October.

5. Prepare a factory overhead cost budget for October. Enter all amounts as positive numbers.

6. Prepare a cost of goods sold budget for October. Work in process at the beginning of October is estimated to be $27,000, and work in process at the end of October is estimated to be $32,400.

7. Prepare a selling and administrative expenses budget for October. Enter all amounts as positive numbers.

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