Bathworks produces hair and bath products.

P6-2 Bathworks produces hair and bath products. Bathworksâ€™ owner would like to have an estimate of the companyâ€™s net income in the coming year.

Required
Project Bathworksâ€™s net income next year by completing the operating budgets and budgeted income statement that follows. Assume that the selling price will remain constant.

1. Sales budget:

Bathworks Sales Budget For the year Ended December 31
	Quarter
	1	2	3	4	Year
Sales in units	4,000	3,000	5,000	5,000	17,000
SELLING price per unit	X$5	X?	X?	X?	X?
Total sales	$24,000	?	?	?	?

2. Production budget:

Bathworks Production Budget For the year Ended December 31
	Quarter
	1	2	3	4	year
Sales in units	4,000	?	?	?	?
Plus desired units of ending finished goods inventory	300	?	?	600	600
Desired total units	4,300	?	?	?	?
Less desired units of beginning Finished goods inventory b	?	?	?	?	400
Total products units	3,900	?	?	?	?

a. Desired units of ending finished goods inventory 5 10% of next quarterâ€™s budgeted sales.
b. Desired units of beginning finished goods inventory 5 10% of current quarterâ€™s budgeted sales.

3. Direct materials purchases budget:

Bathworks Direct Materials Purchases Budget For the year Ended December 31
	quarter
	1	2	3	4	Year
Total production units	3,900	3,200	5,000	5,100	17,200
Ounces per unit	X4	X4	X4	X4	X4
Total production needs in ounces	15,600	?	?	?	?
Plus desired ounces of ending direct materials inventory 1	2,560	?	?	3,600	3,600
	18,160	?	?	?	?
Less desired ounces of beginning
Direct materials inventory	3,120	?	?	?	3,120
Total ounces of direct materials to be purchased	15,040	?	?	?	?
Cost per ounce	X$0.10	X?	X?	X?	X?
Total cost of direct materials purchases	$1,504	?	?	?	?

a. Desired ounces of ending direct materials inventor = 20% of next quarter’s budgeted production needs in ounces.

b. Desired ounces of beginning direct materials inventory = 20% of current quarte’s budgeted production needs in ounces.

4. Direct labor budget:

Bathworks Direct labor Budget For the year Ended December 31
	Quarter
	1	2	3	4	Year
Total production units	3,900	?	?	?	?
Direct labor hours per unit	X0.10	X?	X?	X?	X?
Total direct labor hours	390	?	?	?	?
Direct labor cost per hour	X$20	X?	X?	X?	X?
Total direct labor cost	$7,8,00	?	?	?	?

5. Overhead budget:

Bathworkds Overhead Budget For the Year Ended December 31
	Quarter
	1	2	3	4	year
Variable costs:
Factory supplies($0.05)	$195	$?	$?	$?	$?
Employee benefits ($0.25)	975	?	?	?	?
Inspection($0.10)	390	?	?	?	?
Maintenance and repairs($0.15)	585	?	?	?	?
Utilities($0.05)	195	?	?	?	?
Total variable overhead costs	$2,340	$?	$?	$?	$?
Total fixed overhead costs	4,300	?	?	?	?
Toal overhead costs	$6,640	$?	$?	$?	$?

6. Selling and administrative expenses budget:

Bathworks Selling and administrative Expenses Budget For the year Ended December 31
	Quarter
	1	2	3	4	Year
Variable selling and administrative expenses:
Delivery expenses(0.10)	$400	$?	$?	$?	$?
Sales commission($0.15)	600	?	?	?	?
Accounting ($0.05)	200	?	?	?	?
Other administrative espenses($0.20)	800	?	?	?	?
Total variable selling and administrative expenses	$2,000	$?	$?	$?	$?
Total fixed selling and administrative expenses	5,000	?	?	?	?
Total selling and administrative expenses	$7,000	$?	$?	$?	$?

7. Cost of goods manufactured budget: 31

Bathworks Cost of Goods Manufactured Budget For the Year Ended December
Direct materials used:
Direct materials inventory, beginning	$?
Purchases	?
Cost of direct materials availale for use	$?
Less direct materials inventory, ending	?
Cost of direct materials used		$?
Direct labor costs		?
Overhead costs		?
Total manufacturing costs		$?
Work in process inventory, beginning		?
Less work in process inventory, ening		?
Cost of goods manufactured		$?
Units produced		?
Manufactured cost per unit		$?

8. Budgeted income statement:

10 years ago

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