Bertha's Bathworks produces hair and bath products. Its biggest customer is a national retail chain that specializes in such products. Bertha Jackson, the owner of Bertha's Bathworks, would like to have an estimate of the company's net income in the coming year.

Required

Project Bertha's Bathworks' net income next 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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Bertha's Bathworks Production Budget For the Year Ended December 31 Quarter 2 4000 ? 1 2 3 Year Sales in units Plus desired units of ending finished goods inventory Desired total units 300 , 4.300 600 600 Less desired units of beginning finished goods inventoryt 400 Total production units 2 3,900 ? ? 400 "Desired units of ending finished goods inventory-10% of next quarter's budgeted sales t Desired units of beginning finished goods inventory: 10% of current quarter's budgeted sales. Bertha's Bathworks Direct Materials Purchases Budget For the Year Ended December 31 Quarter 2 3 Year Total production units x 3 ounces per unit Total production needs 3,900 3,200 5,00 5,100 17,200 11,700 in ounces Plus desired ounces of ending direct materials inventory"*,9203,600 3,600 13,620 Less desired ounces of beginning direct materials inventoryt Total ounces of direct materials to be purchased x Cost per ounce Total cost of direct materials purchases 2,340 2,340 112B0 1,128 "Desired ounces of ending direct materials inventor-20% of next quarter's budgeted production needs inounces. tOesred aunces of beginning direct materials inventory-20% of arrent quarter's budgeted production needs in ounces. Bertha's Bathworks Direct Labor Budget For the Year Ended December 31 Quarter 4 Year x ? x? ×? x? X x? x? Total production units 3,900 Direct labor hours per unit x0.10 390 x Direct labor cost per hour XS7 $2,730 Total direct labor hours Total direct labor cost Bertha's Bathworks Overhead Budget For the Year Ended December 31 2 3 Year Factory supplies (S0.05) Employee benefits (S0.25) Inspection IS0.10) Maintenance and repairs ($0.15) Total variable overhead costs Total fixed overhead costs Total overhead costs Note: The figures in parentheses are variable costs per unit. Bertha's Bathworks Selling and Administrative Expense Budget For the Year Ended December 31 Quarter 2 3 Year Variable selling and administrative expenses S 400 ? Delivery expenses (S0.10) Sales commissions (50.15) Accounting ($0.05) Other administrative expenses ($0.20) 600 ?? 200 ?? 800 Total variable seling and administrative expenses 2,000 7? Fixed selling and administrative expenses 5,000 ?? Sales salaries Depreciation, office equipment Taxes and insurance 900 ? ? 7007 Total fixed selling and administrative expenses $7,600 Total selling and administrative expenses $9,600 ? Note The figures in parentheses are variable costs per unit. Bertha'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 pracess inventory, ending* Cost of goods manufactured Manufactured Cost perUnit-Cost of Goods Manufactured Units Produced it is the company's policy to have no units in process at the end of the year Bertha's 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 Cost of goods sold Gross margin Selling and adminstrative expenses income from operations Income taxes expense (30%). Net income The figure in parentheses is the company's income tax rate.