The Bottled Water Company has been bottling and selling water since 1940. Ginnie Adams, the current owner of The Bottled Water Company, would like to know how a new product would affect the company's net income in the coming year.

Required

Calculate The Bottled Water Company's net income for the new product in the coming year by completing the operating budgets and budgeted income statement that follow.

1. Sales Budget:

2. Production Budget:

3. Direct Materials Purchases Budget:

4. Direct Labor Budget:

5. Overhead Budget:

6. Selling and Administrative Expense Budget:

7. Cost of Goods Manufactured Budget:

8. Budgeted IncomeStatement:

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The Bottled Water Company Sales Budget For the Year Ended December 31 Quarter 2 4 Year Sales in units 40,000 30,000 50,000 55,000 175,000 ×Selling price per unit x $1 x ? x ? X ? x ? Total sales $40,000 The Bottled Water Company Production Budget For the Year Ended December 31 Quarter Year Sales in units Plus desired units of ending 40,000 ?? finished goods inventory"3,000 43,000 ? ?6,000 6,000 Desired total units Less desired units of beginning finished goods inventoryt 4000 Total production units 4,000 39,000 7? "Desired units of ending finished goods inventory-10% of next quarter's budgeted sales tDesired units of beginning finished goods inventory:: 10% of current quarter's budgeted sales. The Bottled Water Company Direct Materlals Purchases Budget For the Year Ended December 31 Quarter 2 Year Total production units x 20 ounces per unit Total production needs in ounces Plus desired ounces of ending direct materials inventory1 39,000 32,000 50,500 55,500 780,000 240,000 240000 908,000 Less desired ounces of beginning direct materials 156,000 156,000 Total ounces of direct materials to be purchased x Cost per ounce Total cost of direct materials purchases 752,000 7520 "Desired ounces of ending direct mater alsnventory 20% of next quarter's budgeted production needs in ounces t Desired ounces of begning direct materials inventory:: 20% of current quarter's budgeted production needs in ounces The Bottled Water Company Direct Labor Budget For the Year Ended December 31 Quarter Year 2 39,000 ???? x ? 39.0 ?? ×? 3 Total production units x Direct labor hours per unit Total direct labor hours x Direct labor cost per hour Total direct labor cost ×0.001 ×? x ? ×? × sa $312 ×? ×? The Bottled Water Company Overhead Budget For the Year Ended December 31 Quarter 2 3 4 Year Variable overhead costs Factory supplies ($0.01) Employee benefits ($0.05) Inspection ($0.01) $ 390 ?? 1,950?7? 390 ? Maintenance and repairs (S0.02) 780 ??? 390 ??? Total variable overhead costs $3,900 7? Utilities ($o.01) Total fixed overhead costs Total overhead costs 1500 ? 5,400 Note: The figures in parentheses are variable costs per unit. The Bottled Water Company Selling and Administrative Expense Budget For the Year Ended December 31 Quarter 2 3 Year Variable selling and administrative expenses Delivery expenses (s0.01) Sales commissions ($0.02 Accounting ($0.01) Other administrative expenses (S0.01) S 400 800? 400 ?? 400?? Total variable selling and administrative expenses $2,000 ??? Total fixed selling and administrative expenses Total selling and administrative expenses 5,000? $7000 ? Note: The figures in parentheses are variable costs per unit. The Bottled Water Company Cost of Goods Manufactured Budget For the Year Ended December 31 Direct materials used Direct materials inventory, beginning Purchases during the year Cost of direct materials available for use Less direct materials inventory, ending Cost of direct materials used Direct labor costs Overhead costs Total manufacturing costs Work in process inventory, beginning Less work in process inventory, ending Cost of goods manufactured Manufactured Cost per Unit- Cost of Goods 0 ManufacturedUnits Produced "It is the company's policy to have no units in process at the end of the year. The Bottled Water Company Budgeted Income Statement For the Year Ended December 3 Sales Cost of goods sold Finished goods inventory. Cost of goods manufactured Cost of goods available for sale Less finished goods inventory, ending Cost of goods sold Gross margin Selling and administrative expenses Income from operations Income taxes expense (30%). Net income "The figure in parentheses is the company's income tax rate