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:

Estimated sales for December:

Bird house 3,200 units at $50 per unit
Bird feeder 3,000 units at $70 per unit

 

Estimated inventories at December 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

 

Desired inventories at December 31:

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

 

Direct materials used in production:

In manufacture of Bird House:
Wood 0.80 ft. per unit of product
Plastic 0.50 lb. per unit of product
In manufacture of Bird Feeder:
Wood 1.20 ft. per unit of product
Plastic 0.75 lb. per unit of product

 

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

Wood $7.00 per ft.
Plastic $1.00 per lb.

 

Direct labor requirements:

Bird House:
Fabrication Department 0.20 hr. at $16 per hr.
Assembly Department 0.30 hr. at $12 per hr.
Bird Feeder:
Fabrication Department 0.40 hr. at $16 per hr.
Assembly Department 0.35 hr. at $12 per hr.

 

Estimated factory overhead costs for December:

Indirect factory wages $75,000
Depreciation of plant and equipment 23,000
Power and light 6,000
Insurance and property tax 5,000

 

Estimated operating expenses for December:

Sales salaries expense $70,000
Advertising expense 18,000
Office salaries expense 21,000
Depreciation expense—office equipment 600
Telephone expense—selling 550
Telephone expense—administrative 250
Travel expense—selling 4,000
Office supplies expense 200
Miscellaneous administrative expense 400

Estimated other income and expense for December:

Interest revenue $200
Interest expense 122

 

Estimated tax rate: 30%

  1. Prepare a sales budget for December.
  2. Prepare a production budget for December.
  3. Prepare a direct materials purchases 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 $35,400.
  7. Prepare a selling and administrative budget for December.
  8. Prepare a budgeted income statement for December.

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