Bathworks produces hair and bath products. Bathworks’ owner would like to have an estimate of the company’s net income in the coming year.

Required

Project Bathworks’s net income next year by completing the operating budgets and budgeted income statement that follows. Assume that the selling price will remain constant.

1. Sales budget:

2. Production budget:

aDesired units of ending finished goods inventory 5 10% of next quarter’s budgeted sales.
bDesired units of beginning finished goods inventory 5 10% of current quarter’s budgeted sales.
3. Direct materials purchases budget:

4. Direct labor budget:

5. Overhead budget:

6. Selling and administrative expenses budget:

7. Cost of goods manufactured budget:
Bathworks
Cost of Goods Manufactured Budget
For the Year Ended December 31

8. Budgeted incomestatement:

Transcribed Image Text:

Bathworks Sales Budget For the Year Ended December 31 Quarter 2 3 4 Year Sales in units Selling price per unit Total sales 4,000 3,000 $6 × ? 5,000 5,000 17,000 $24,000 Bathworks Production Budget For the Year Ended December 31 Quarter Year Sales in units 4,000 Plus desired units of ending 300 4,300 ? 600 600 finished goods inventory Desired total units Less desired units of beginning 7400 finished goods inventoryb Total production units 400 3,900 Bathworks Direct Materials Purchases Budget For the Year Ended December 31 Quarter Total production units Ounces per unit Total production needs in ounces Plus desired ounces of ending direct 3,900 3,200 5,000 5,100 17,200 X 4 ×4 ×4 × 4 15,600 materials inventory 2,560 18,160 3,600 3,600 Less desired ounces of beginning direct materials inventory 3,120 ? 3,120 Total ounces of direct materials to be 15,040 x $0.10 Total cost of direct materials purchases 1,504 purchased Cost per ounce Desired ounces of ending direct materials inventory 20% of next quarter's budgeted production needs in ounces. "Desired ounces of beginning direct materials inventory 20% of current quarter's budgeted production needs in ounces. Bathworks Direct Labor Budget For the Year Ended December 31 Quarter Year Total production units Direct labor hours per unit Total direct labor hours Direct labor cost per hour Total direct labor cost 3,900 ×0.10 × 7 X ? 390X ×$20 $7,800 × ? × ? × ? × ? Bathworks Overhead Budget For the Year Ended December 31 Quarter 2 3 Year Variable overhead costs: 195 ? 7 $ 7 Factory supplies ($0.05) Employee benefits (50.25) Inspection ($0.10) Maintenance and repairs ($0.15) 585 Utilities ($0.05) Total variable overhead costs $2,340 $ ? ? 975 390 195 4,300 Total fixed overhead costs Total overhead costs $6,640 $7 7 ? Bathworks Selling and Administrative Expenses Budget For the Year Ended December 31 Quarter 3 2 Year Variable selling and administrative expenses: Delivery expenses (S0.10) Sales commissions (50.15) Accounting ($0.05) Other administrative expenses ($0.20) Total variable selling and 400 $77 $ 600 200 800 administrative expenses $2,000 $7$7 Total fixed selling and administrative expenses 5,000 Total selling and administrative expenses $7,000 7?? Direct materials used: Direct materials inventory, beginning Purchases 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 Units produced Manufactured cost per unit