Budgeted Income Statement and Supporting Budgets 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% Required: 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. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Feathered Friends Inc. Cost of Goods Sold Budget For the Month Ending December 31 Finished goods inventory, December 1 Work in process inventory, December 1 Direct materials: Direct materials inventory, December 1 Direct materials purchases Cost of direct materials available for use Direct materials inventory, December 31 Cost of direct materials placed in production Direct labor Factory overhead Total manufacturing costs Total work in process during period Work in process inventory, December 31 Cost of goods manufactured Cost of finished goods available for sale Finished goods inventory, December 31 Cost of goods sold 7. Prepare a selling and administrative expenses budget for December. Feathered Friends Inc. Selling and Administrative Expenses Budget For the Month Ending December 31 Selling expenses: Sales salaries expense $ Advertising expense Telephone expense—selling Travel expense—selling Total selling expenses $ Administrative expenses: Office salaries expense $ Depreciation expense—office equipment Telephone expense—administrative Office supplies expense Miscellaneous administrative expense Total administrative expenses Total operating expenses $ 8. Prepare a budgeted income statement for December. In the Other revenue and expense section, indicate expenses as negative amounts. Feathered Friends Inc. Budgeted Income Statement For the Month Ending December 31 Revenue from sales $ Cost of goods sold Gross profit $ Operating expenses: Selling expenses $ Administrative expenses Total operating expenses Income from operations $ Other revenue and expense: Interest revenue $ Interest expense Income before income tax $ Income tax expense Net income

Question

Budgeted Income Statement and Supporting Budgets

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%

Required:

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. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Feathered Friends Inc. Cost of Goods Sold Budget For the Month Ending December 31
Finished goods inventory, December 1
Work in process inventory, December 1
Direct materials:
Direct materials inventory, December 1
Direct materials purchases
Cost of direct materials available for use
Direct materials inventory, December 31
Cost of direct materials placed in production
Direct labor
Factory overhead
Total manufacturing costs
Total work in process during period
Work in process inventory, December 31
Cost of goods manufactured
Cost of finished goods available for sale
Finished goods inventory, December 31
Cost of goods sold

7. Prepare a selling and administrative expenses budget for December.

Feathered Friends Inc. Selling and Administrative Expenses Budget For the Month Ending December 31
Selling expenses:
Sales salaries expense	$
Advertising expense
Telephone expense—selling
Travel expense—selling
Total selling expenses		$
Administrative expenses:
Office salaries expense	$
Depreciation expense—office equipment
Telephone expense—administrative
Office supplies expense
Miscellaneous administrative expense
Total administrative expenses
Total operating expenses		$

8. Prepare a budgeted income statement for December. In the Other revenue and expense section, indicate expenses as negative amounts.

Feathered Friends Inc. Budgeted Income Statement For the Month Ending December 31
Revenue from sales		$
Cost of goods sold
Gross profit		$
Operating expenses:
Selling expenses	$
Administrative expenses
Total operating expenses
Income from operations		$
Other revenue and expense:
Interest revenue	$
Interest expense
Income before income tax		$
Income tax expense
Net income		$