Ginnie Springs Company has been bottling and selling water since 1940. The company’s current owner would like to know how a new product would affect the company’s net income in the coming year.

Required

Calculate Ginnie Springs’ net income for the new product in the coming year by completing the operating budgets and budgeted income statement that follow. Assume that the selling price will remain constant.

1. Sales budget:

2. Production budget:

3. Direct materials purchases budget:
Ginnie Springs Company
Direct Materials Purchases Budget
For the Year Ended December 31

4. Direct labor budget:

5. Overhead budget:

6. Selling and administrative expenses budget:

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

8. Budgeted incomestatement:

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Ginnie Springs Company Sales Budget For the Year Ended December 31 Quarter 2 4 Year Sales in units Selling price per unit Total sales 40,000 30,000 50,000 55,000 175,000 $40,000 77$ 7? Ginnie Springs Company Production Budget For the Year Ended December 31 Quarter Year Sales in units Plus desired units of ending 40,000 finished goods inventory Desired total units Less desired units of beginning 3,000 43,000 6,000 9,0006,000 finished goods inventoryb Total production units 4,000 39,000 4,000 Ginnie Springs Company Direct Materials Purchases Budget For the Year Ended December 31 Quarter 2 3 Year Total production units Ounces per unit To 39,000 32,000 50,500 55,500 × 20 × 20 × 780,000 X 20 × 20 × 20 tal production needs in ounces Plus desired ounces of ending direct materials inventory 128,000 908,000 ? 240,000 240,000 Less desired ounces of beginning 156,000 ? 156,000 direct materials inventory Total ounces of direct materials to be purchased Cost per ounce Total cost of direct 752,000 materials purchases 7,520 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 Ginnie Springs Company Direct Labor Budget For the Year Ended December 31 Quarter 2 Year 39,000 ×0.001 × ? × ? × ? × Total production units Direct labor hours per unit Total direct labor hours Direct labor cost per hour Total direct labor cost 39.0 312 $7 ?$7 ? Ginnie Springs Company Overhead Budget For the Year Ended December 31 Quarter 2 4 Year Variable overhead costs: Factory supplies (50.01) Employee benefits (50.05) Inspection (50.01) Maintenance and repairs ($0.02) Utilities ($0.01) Total variable overhead costs 390 1,950 390 780 390 $?? $3,900 ? 7? Total fixed overhead costs Total overhead costs $5,316 $? ? Ginnie Springs Company Selling and Administrative Expenses Budget For the Year Ended December 31 Quarter 4 Year Variable selling and administrative expenses: Delivery expenses ($0.01) Sales commissions ($0.02) Accounting ($0.01) Other administrative expenses ($0.01) Total variable selling and 400 ?7? 800 400 400 administrative expenses $2,000 $7? 7$ Total fixed selling and administrative expenses 5,000 Total selling and administrative expenses $7,000 7$77? 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