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 2016: Estimated sales for December:
Bird house3,200 units at $50 per unit
Bird feeder3,000 units at $70 per unit
Estimated inventories at December 1:
Direct materials:
Wood200 ft.
Plastic240 lbs.
Finished products:
Bird house320 units at $27 per unit
Bird feeder270 units at $40 per unit
Desired inventories at December 31:
Direct materials:
Wood220 ft.
Plastic200 lbs.
Finished products:
Bird house290 units at $27 per unit
Bird feeder250 units at $41 per unit
Direct materials used in production:
In manufacture of Bird House:
Wood0.80 ft. per unit of product
Plastic0.50 lb. per unit of product
In manufacture of Bird Feeder:
Wood1.20 ft. per unit of product
Plastic0.75 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 Department0.20 hr. at $16 per hr.
Assembly Department0.30 hr. at $12 per hr.
Bird Feeder:
Fabrication Department0.40 hr. at $16 per hr.
Assembly Department0.35 hr. at $12 per hr.
Estimated factory overhead costs for December:
Indirect factory wages$75,000
Depreciation of plant and equipment23,000
Power and light$6,000
Insurance and property tax5,000
Estimated operating expenses for December:
Sales salaries expense$70,000
Advertising expense18,000
Office salaries expense21,000
Depreciation expense—office equipment600
Telephone expense—selling550
Telephone expense—administrative250
Travel expense—selling4,000
Office supplies expense200
Miscellaneous administrative expense400
Estimated other income and expense for December:
Interest revenue$200
Interest expense122
Estimated tax rate: 30%
1. Prepare asales budget for December.
2. Prepare a production budget for December.