The budget director ofHeads Up Athletic Co., 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 January 2010:

(a) Estimated sales for January:

Batting helmet . . . . . . . 3,700 units at $70 per unit

Football helmet . . . . . . 7,200 units at $142 per unit

(b) Estimated inventories at January 1:

Direct materials: Finished products:

Plastic . . . . . . . . . 800 lbs. Batting helmet . . . . . 310 units at $33 per unit

Foam lining . . . . . 520 lbs. Football helmet . . . . 420 units at $57 per unit

(c) Desired inventories at January 31:

Direct materials: Finished products:

Plastic . . . . . . . . . 1,240 lbs. Batting helmet . . . . . 290 units at $34 per unit

Foam lining . . . . . 450 lbs. Football helmet . . . . 520 units at $58 per unit

(d) Direct materials used in production:

In manufacture of batting helmet:

Plastic . . . . . . . . . . . . . . . . . . 1.20 lbs. per unit of product

Foam lining . . . . . . . . . . . . . . 0.50 lb. per unit of product

In manufacture of football helmet:

Plastic . . . . . . . . . . . . . . . . . . 2.80 lbs. per unit of product

Foam lining . . . . . . . . . . . . . . 1.40 lbs. per unit of product

(e) Anticipated cost of purchases and beginning and ending inventory of direct materials:

Plastic . . . . . . . . . . . . $7.50 per lb.

Foam lining . . . . . . . . $5.00 per lb.

(f) Direct labor requirements:

Batting helmet:

Molding Department. . . . . . . . . . . . 0.20 hr. at $15 per hr.

Assembly Department . . . . . . . . . . . 0.50 hr. at $13 per hr.

Football helmet:

Molding Department. . . . . . . . . . . . 0.30 hr. at $15 per hr.

Assembly Department . . . . . . . . . . . 0.65 hr. at $13 per hr.

(g) Estimated factory overhead costs for January:

Indirect factory wages . . . . . . . . . . . . . . $115,000 Power and light . . . . . . . . . . . $18,000

Depreciation of plant and equipment. . . 32,000 Insurance and property tax . . . 8,700

(h) Estimated operating expenses for January:

Sales salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . . $275,300

Advertising expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139,500

Office salaries expense . . . . . . . . . . . . . . . . . . . . . .. . . . . . 83,100

Depreciation expense—office equipment . . . . . . . . . . . . . . . 5,800

Telephone expense—selling . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200

Telephone expense—administrative. . . . . . . . . . . . . . . . . . . . . . 900

Travel expense—selling. . . . . . . . . . . . . . . . . . . . . . . . . .. . . 46,200

Office supplies expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,900

Miscellaneous administrative expense . . . . . . . . . . . . . . . . . . 5,200

(i) Estimated other income and expense for January:

Interest revenue . . . . . . $14,500

Interest expense . . . . . . 17,400

(j) Estimated tax rate: 30%

Instructions

1. Prepare a sales budget for January.

2. Prepare a production budget for January.

3. Prepare a direct materials purchases budget for January.

4. Prepare a direct labor cost budget for January.

5. Prepare a factory overhead cost budget for January.

6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $12,500, and work in process at the end of January is desired to be $13,500.

7. Prepare a selling and administrative expenses budget for January.

8. Prepare a budgeted income statement for January.