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 2016:

a.     Estimated sales for March:

Batting helmet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      1,200 units at $40 per   unit

Football helmet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      6,500 units at $160 per   unit

b.     Estimated inventories at March 1:

 

 

Direct materials: Plastic . . . . . . . . . . . . .	  90 lbs.	Finished products: Batting helmet . . . . . . . .	  40 units at $25 per unit
Foam lining . . . . . . . .	80 lbs.	Football helmet . . . . . . .	240 units at $77 per unit

 

c.     Desired inventories at March 31:

Direct materials:                                                            Finished  products:

Plastic . . . . . . . . . . . . . .  50 lbs.                          Batting helmet . . . . . . . . .         50 units at $25 per unit Foam lining . . . . . . . . .                                    65 lbs.                                                       Football helmet . . . . . . . .                                                       220 units at $78 per unit

d.     Direct materials used in production:

In  manufacture  of  batting helmet:

Plastic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    1.20 lbs. per unit of    product

Foam lining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   0.50 lb. 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 purchases and beginning and ending inventory of direct materials:

Plastic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   $6.00 per lb.

Foam lining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $4.00 per lb.

f.      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.

 

g.	Estimated factory overhead costs for  March: Indirect factory wages                                                      $86,000               Power and light	    $4,000
Â	Depreciation of plant and equipment                       12,000               Insurance and property tax	2,300
h.	Estimated operating expenses for  March:	Â
Â	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	Â
i.	Estimated other income and expense for    March:	Â
Â	Interest revenue                                                   $940 Interest expense                                                      872	Â
j.	Estimated tax rate: 30%	Â

instructions

1.     Prepare a sales budget for March.

2.     Prepare a production budget for March.

3.     Prepare a direct materials purchases budget for March.

4.     Prepare a direct labor cost budget for March.

5.     Prepare a factory overhead cost budget for March.

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.

7.     Prepare a selling and administrative expenses budget for March.

8.     Prepare a budgeted income statement for March.