accounting 8,1

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 December.

Using the information they gathered, create the budgets and budget statements requested by management. Once you have your solutions, compare and contrast your solutions against the model answers provided.

1. Prepare a sales budget for December 2. Prepare a production budget for December 3. Prepare a direct materials budget for December 4. Prepare a direct labor cost budget for December 5. Prepare a factory overhead cost budget for December 6. Prepare a cost of goods sold budget for December. Work in process at the

beginning of December is estimated to be $29,000 and work in process at the end of December is estimated to be $35,400

7. Prepare a selling and administrative expenses budget for December 8. Prepare a budgeted income statement for December

Answers

A Estimated sales for December

Bird house – 3200 units at $50 per unit

Bird feeder – 3000 units at $70 per unit

B Estimated inventories at Dec 1

Direct materials

Wood – 200 ft

Plastic – 240 lbs

Finished products

Bird house – 320 units at $27 per unit

Bird feeder – 270 units at $40 per unit

C Direct materials used in production

Direct materials

Wood – 220 ft

Plastic 200 lbs

Finished products

Bird house – 290 units at $27 per unit

Bird feeder – 250 units at $41 per unit

D Direct materials used in production

In manufacturing of the bird house

Wood – 0.80 ft per unit of product

Plastic 0.50 lbs per unit of product

In manufacturing of bird feeder

Wood 1.20 ft per unit of product

Plastic 0.75 lbs per unit of product

E Anticipated cost of purchases and beginning and ending inventory of direct materials

Wood $7.00 per ft

Plastic $1.00 per ft

F Direct labor

Bird house

Fabrication department - 0.20 hr at $16 per hour

Assembly department 0.30 hr at $12 per hour

Bird feeder

Fabrication department – 0.40 hr at $16 per hour

Assembly department – 0.35 hr at $12 per hour

G Estimated factory overhead costs for December

Indirect wages $75,000

Depreciation of plant and equipment $23,000

Power and light $6,000

Insurance and property tax $5000

H Estimated operating expenses for December

Sales salaries expense $70,000

Advertising expense $18,000

Office salaries expense 21,000

Depreciation office equipment 600

Telephone expense selling 550

Telephone expense admin 250

Travel expense – selling 4,000

Office supplies expense 200

Miscellaneous administrative expense 400

I Estimated other income and expense for December

Interest revenue $200

Interest expense 122

J Estimated Tax Rate

Rate 30%