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:
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%.