Black & Decker (B&D) manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Use the following fictitious information about this product line to complete the problem requirements. Each handisaw sells for $40. B&D expects the following unit sales.
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| January |
2,100 |
| February |
2,500 |
| March |
3,000 |
| April |
2,600 |
| May |
2,000 |
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B&D’s ending finished goods inventory policy is 20 percent of the next month’s sales.
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Suppose each handisaw takes approximately .55 hours to manufacture, and B&D pays an average labor wage of $14.50 per hour.
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Each handisaw requires a plastic housing that B&D purchases from a supplier at a cost of $6.00 each. The company has an ending raw materials inventory policy of 10 percent of the following month’s production requirements. Materials other than the housing unit total $3.50 per handisaw.
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Manufacturing overhead for this product includes $69,000 annual fixed overhead (based on production of 24,000 units) and $.90 per unit variable manufacturing overhead. B&D’s selling expenses are 6 percent of sales dollars, and administrative expenses are fixed at $18,000 per month.
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| Requirement 1: |
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Calculate the cost of goods sold budget for Black & Decker (B&D) for the first quarter (January, February, and March). Include each month as well as the first quarter. (Round cost per unit to 2 decimal places. Round final answers to the nearest dollar amount. Omit the “$” sign in your response.)
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January |
February |
March |
1st Quarter |
| Budgeted cost of goods sold |
$ |
$ |
$ |
$ |
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| Requirement 2: |
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Calculate the selling and administrative expense budget for Black & Decker (B&D) for the first quarter (January, February, and March). Include each month as well as the first quarter. (Omit the “$” sign in your response.)
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January |
February |
March |
1st Quarter |
| Budgeted selling and adm. expenses |
$ |
$ |
$ |
$ |
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| Requirement 3: |
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Calculate the budgeted income statement for the handisaw product for Black & Decker (B&D) for the first quarter (January, February, and March). Include each month as well as the first quarter. (Input all amounts as positive value. Round cost per unit to 2 decimal places. Round final answers to the nearest dollar amount. Omit the “$” sign in your response.)
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January |
February |
March |
1st Quarter |
| Budgeted sales revenue |
$ |
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$ |
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$ |
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$ |
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| Budgeted cost of goods sold |
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| Budgeted gross profit |
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| Budgeted selling and adm. expenses |
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| Budgeted net income |
$ |
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$ |
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$ |
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$ |
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