The budget director of Backyard Habitat 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 2008:
a. Estimated sales for December:
Bird House . . . . . . . . . . . . . . . . . 34,500 units at $40 per unit
Bird Feeder . . . . . . . . . . . . . . . . 25,800 units at $70 per unit
b. Estimated inventories at December 1:

c. Desired inventories at December 31:

d. Direct materials used in production:

e. Anticipated cost of purchases and beginning and ending inventory of direct materials:
Wood . . . . . . . $6.50 per ft.
Plastic . . . . . . $0.90 per lb.
f. Direct labor requirements:
Bird House:
Fabrication Department . . . . . . . . . 0.25 hour at $14 per hour
Assembly Department . . . . . . . . . . . 0.30 hour at $10 per hour
Bird Feeder:
Fabrication Department . . . . . . . . . 0.45 hour at $14 per hour
Assembly Department . . . . . . . . . . . 0.35 hour at $10 per hour
g. Estimated factory overhead costs for December:
Indirect factory wages ....... $650,000
Power and light .......... $42,000
Depreciation of plant and equipment . 165,000
Insurance and property tax ....... 15,400
h. Estimated operating expenses for December:
Sales salaries expense ....... $675,000
Advertising expense ......... 148,600
Office salaries expense ........ 214,800
Depreciation expense€”office equipment . 4,900
Telephone expense€”selling ....... 5,200
Telephone expense€”administrative .... 1,700
Travel expense€”selling ........ 39,200
Office supplies expense ........ 3,500
Miscellaneous administrative expense ... 5,000
i. Estimated other income and expense for December:
Interest revenue $16,900
Interest expense 10,600
j. Estimated tax rate: 35%

Instructions
1. Prepare a sales budget for December.
2. Prepare a production budget for December.
3. Prepare a direct materials purchases budget for December.
4. Prepare a direct labor cost budget for December.
5. Prepare a factory overhead cost budget for December.
6. Prepare a cost of goods sold budget for December. Work in process at the beginning of December is estimated to be $27,000, and work in process at the end of December is estimated to be $32,400.
7. Prepare a selling and administrative expenses budget for December.
8. Prepare a budgeted income statement forDecember.

Transcribed Image Text:

Direct materials Finished products: Wood 2,600 ft. Plastic. 3,200 lbs. Bird House4,900 units at $25 per unit Bird Feeder 2,500 units at $35 per unit Direct materials Finished products: Wood 3,500 ft. .2,800 lbs Bird House .. ..5,300 units at $24 per unit Bird Feeder 2,100 units at $36 per unit In manufacture of Bird House: In manufacture of Bird Feeder: Wood...0.80 ft. per unit of product Plastic.. 0.50 lb. per unit of product Wood...20 ft. per unit of product Plastic 0.75 lb. per unit of product