Question

Budgeted selling and administrative expenses for Wicker Works Inc. in P7-4 for the year ended December 31, 2013, were as follows:
Advertising expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $429,000
Office rent expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,000
Office salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .281,000
Office supplies expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 25,500
Officers' salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .166,000
Sales salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .688,000
Telephone and fax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 13,500
Travel expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .244,000
In P7-4
Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Chairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120,000
The budgeted selling price for tables was $175 per table, and it was $75 per chair. The beginning finished goods inventories were expected to be 1,000 tables and 4,000 chairs, for a total cost of $240,000, with desired ending inventories at 1,500 and 6,000, respectively, with a total cost of $360,000. There was no anticipated beginning or ending work-in-process inventory for either item. The standard materials quantities for each item were as follows:


The purchase prices of rattan and binding cane were $5 and $3 per yard, respectively. The desired ending inventories for rattan and binding cane were 51,000 and 25,500 yards, respectively. The estimated beginning inventories for rattan and binding cane were 34,000 and 17,000 yards, respectively. The direct labor hours required for each type of item were as follows:


The direct labor rate for each department is as follows:
Assembly Department...... $15 per hour
Finishing Department....... $13 per hour
Budgeted factory overhead costs for 2013 were as follows:
Indirect materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 98,500
Indirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132,200
Depreciation of building and equipment . . . . . . . . . . . . . . . . . 57,500
Power and light . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92,200
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $380,400

Required:
1. Prepare a selling and administrative expenses budget, in good form, for the year 2013.
2. Using the information above and the budgets prepared in P7-4, prepare a budgeted income statement for the year 2013, assuming an income tax rate of30%.


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  • CreatedMay 05, 2014
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