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:

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

Desired ounces of ending direct materials inventory 5 20% of next quarter's budgeted production needs in ounces.
Desired ounces of beginning direct materials inventory 5 20% of current quarter's budgeted production needs in ounces.
4. Direct labor budget:

5. Overhead budget:

6. Selling and administrative expenses budget:

7. Cost of goods manufactured budget:

8. Budgeted income statement:

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Bathworks Sales Budget For the Year Ended December 31 Quarter 2 4 Year Sales in units Selling price per unit Total sales 4,000 3,000 5,000 5,000 17,000 $24,000 Bathworks Production Budget For the Year Ended December 31 Quarter 2 4 Year Sales in units 4,000 Plus desired units of ending ?600 finished goods inventory Desired total units 300 600 4,300 Less desired units of beginning finished goods inventoryb Total production units 400 400 3,900 _ Bathworks Direct Materials Purchases Budget For the Year Ended December 31 Quarter 2 Year 5,000 5,100 7,200 ×4 × 4 4 Total production units Ounces per unit Total production needs in ounces Plus desired ounces of ending direct 3,900 3,200 15,600 2,560 18,160 materials inventory 3,600 3,600 Less desired ounces of beginning Total ounces of direct materials to be Cost per ounce direct materials inventoryb 3,120 3,120 15,040 $0.10 Total cost of direct materials purchases 1,504 purchasecd Bathworks Direct Labor Budget For the Year Ended December 31 Quarter 3 4 Year Total production units Direct labor hours per unit Total direct labor hours Direct labor cost per hour Total direct labor cost 3,900 $7,800 Bathworks Overhead Budget For the Year Ended December 31 Quarter 2 3 Year Variable overhead costs: s 19 ?s7 5? Factory supplies ($0.05) Employee benefits (S0.25) Inspection ($0.10) Maintenance and repairs($0.15) Utilities ($0.05) Total variable overhead costs 975 585 195 2,340 $? $?? Total fixed overhead costs Total overhead costs 4,300 6,640 $?S?$? Bathworks Selling and Administrative Expenses Budget For the Year Ended December 31 Quarter 2 Year Variable selling and administrative expenses: Delivery expenses (S0.10) Sales commissions (S0.15) Accounting ($0.05) Other administrative expenses ($0.20) Total variable selling and 600 200 800 administrative expenses 2,000 $?$?$?$? Total fixed selling and administrative expenses 5,000 Total selling and administrative expenses $7,000 ?$?$?S? Bathworks Cost of Goods Manufactured Budget For the Year Ended December 31 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 Bathworks Budgeted Income Statement For the Year Ended December 31 Sales Cost of goods sold: Finished goods inventory, beginning Cost of goods manufactured Cost of goods available for sale Less finished goods inventory, ending Gross margin Seling and administrative expenses Income from operations Income taxes expense (30% tax rate) Net income