The budget director of Safety Athletic 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 January 2008:
a. Estimated sales for January:
|
Batting helmet |
3,500 units at $65 per unit |
|
Football helmet |
6,800 units at $130 per unit |
b. Estimated inventories at January 1:
|
Direct materials: |
|
Finished products: |
|
|
Plastic |
900 lbs. |
Batting helmet |
270 units at $32 per unit |
|
Foam lining |
490 lbs. |
Football helmet |
400 units at $52 per unit |
c. Desired inventories at January 31:
|
Direct materials: |
|
Finished products: |
|
|
Plastic |
1,240 lbs. |
Batting helmet |
240 units at $34 per unit |
|
Foam lining |
470 lbs. |
Football helmet |
360 units at $55 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 |
2.80 lbs. per unit of product |
|
Foam lining |
1.40 lbs. per unit of product |
e. Anticipated cost of purchases and beginning and ending inventory of direct materials:
|
Plastic |
$7.00 per lb. |
|
Foam lining |
$4.00 per lb. |
f. Direct labor requirements:
|
Batting helmet: |
|
|
Molding Department |
0.20 hour at $14 per hour |
|
Assembly Department |
0.50 hour at $12 per hour |
|
Football helmet: |
|
|
Molding Department |
0.30 hour at $14 per hour |
|
Assembly Department |
0.65 hour at $12 per hour |
g. Estimated factory overhead costs for January:
|
Indirect factory wages |
$105,000 |
Power and light |
$16,000 |
|
Depreciation of plant and equipment |
30,000 |
Insurance and property tax |
8,700 |
h. Estimated operating expenses for January:
|
Sales salaries expense |
$265,800 |
|
Advertising expense |
135,600 |
|
Office salaries expense |
84,300 |
|
Depreciation expense—office equipment |
5,200 |
|
Telephone expense—selling |
3,500 |
|
Telephone expense—administrative |
700 |
|
Travel expense—selling |
43,100 |
|
Office supplies expense |
4,900 |
|
Miscellaneous administrative expense |
5,200 |
i. Estimated other income and expense for January:
|
Interest revenue |
$14,500 |
|
Interest expense |
18,700 |
j. Estimated tax rate: 30%
Instructions
1. Prepare a sales budget for January.
2. Prepare a production budget for January.
3. Prepare a direct materials purchases budget for January.
4. Prepare a direct labor cost budget for January.
5. Prepare a factory overhead cost budget for January.
6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $12,500, and work in process at the end of January is desired to be $13,500.
7. Prepare a selling and administrative expenses budget for January.
8. Prepare a budgeted income statement for January.