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Budgeted Income Statement and Supporting Budgets

The budget director of Gold Medal 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 March:

1. Estimated sales for March:

   Batting helmet	1,200 units at $40 per unit
   Football helmet	6,500 units at $160 per unit

2. Estimated inventories at March 1:

   Direct materials:
   Plastic	90 lb.
   Foam lining	80 lb.
   Finished products:
   Batting helmet	40 units at $25 per unit
   Football helmet	240 units at $77 per unit

3. Desired inventories at March 31:

   Direct materials:
   Plastic	50 lb.
   Foam lining	65 lb.
   Finished products:
   Batting helmet	50 units at $25 per unit
   Football helmet	220 units at $78 per unit

4. Direct materials used in production:

   In manufacture of batting helmet:
   Plastic	1.20 lb. per unit of product
   Foam lining	0.50 lb. per unit of product
   In manufacture of football helmet:
   Plastic	3.50 lb. per unit of product
   Foam lining	1.50 lb. per unit of product

5. Anticipated cost of purchases and beginning and ending inventory of direct materials:

   Plastic	$6.00 per lb.
   Foam lining	$4.00 per lb.

6. Direct labor requirements:

   Batting helmet:
   Molding Department	0.20 hr. at $20 per hr.
   Assembly Department	0.50 hr. at $14 per hr.
   Football helmet:
   Molding Department	0.50 hr. at $20 per hr.
   Assembly Department	1.80 hrs. at $14 per hr.

7. Estimated factory overhead costs for March:

   Indirect factory wages	$86,000
   Depreciation of plant and equipment	12,000
   Power and light	4,000
   Insurance and property tax	2,300

8. Estimated operating expenses for March:

   Sales salaries expense	$184,300
   Advertising expense	87,200
   Office salaries expense	32,400
   Depreciation expenseoffice equipment	3,800
   Telephone expenseselling	5,800
   Telephone expenseadministrative	1,200
   Travel expenseselling	9,000
   Office supplies expense	1,100
   Miscellaneous administrative expense	1,000

9. Estimated other income and expense for March:

   Interest revenue	$940
   Interest expense	872

10. Estimated tax rate: 30%

Required:

1. Prepare a sales budget for March.

Gold Medal Athletic Co. Sales Budget For the Month Ending March 31
	Unit Sales Volume	Unit Selling Price			Total Sales
Batting helmet	fill in the blank 1	$fill in the blank 2			$fill in the blank 3
Football helmet	fill in the blank 4	fill in the blank 5			fill in the blank 6
Total revenue from sales					$fill in the blank 7

2. Prepare a production budget for March. Enter all amounts as positive numbers.

Gold Medal Athletic Co. Production Budget For the Month Ending March 31
	Units
	Batting helmet	Football helmet
Expected units to be sold	fill in the blank 8	fill in the blank 9
Plus desired inventory, March 31	fill in the blank 10	fill in the blank 11
Total units required	fill in the blank 12	fill in the blank 13
Less estimated inventory, March 1	fill in the blank 14	fill in the blank 15
Total units to be produced	fill in the blank 16	fill in the blank 17

3. Prepare a direct materials purchases budget for March. Enter all amounts as positive numbers.

Gold Medal Athletic Co. Direct Materials Purchases Budget For the Month Ending March 31
		Plastic		Foam Lining		Total
Units required for production:
Batting helmet	fill in the blank 18		fill in the blank 19
Football helmet	fill in the blank 20		fill in the blank 21
Plus desired units of inventory, March 31	fill in the blank 22		fill in the blank 23
Total units required	fill in the blank 24		fill in the blank 25
Less estimated units of inventory, March 1	fill in the blank 26		fill in the blank 27
Total units to be purchased	fill in the blank 28		fill in the blank 29
Unit price	$fill in the blank 30		$fill in the blank 31
Total direct materials to be purchased	$fill in the blank 32		$fill in the blank 33		$fill in the blank 34

4. Prepare a direct labor cost budget for March.

Gold Medal Athletic Co. Direct Labor Cost Budget For the Month Ending March 31
		Molding Department		Assembly Department		Total
Hours required for production:
Batting helmet	fill in the blank 35		fill in the blank 36
Football helmet	fill in the blank 37		fill in the blank 38
Total hours required	fill in the blank 39		fill in the blank 40
Hourly rate	$fill in the blank 41		$fill in the blank 42
Total direct labor cost	$fill in the blank 43		$fill in the blank 44		$fill in the blank 45

5. Prepare a factory overhead cost budget for March.

Gold Medal Athletic Co. Factory Overhead Cost Budget For the Month Ending March 31
Indirect factory wages	$fill in the blank 46
Depreciation of plant and equipment	fill in the blank 47
Power and light	fill in the blank 48
Insurance and property tax	fill in the blank 49
Total	$fill in the blank 50

6. Prepare a cost of goods sold budget for March. Work in process at the beginning of March is estimated to be $15,300, and work in process at the end of March is desired to be $14,800. Enter all amounts as positive numbers.

Gold Medal Athletic Co. Cost of Goods Sold Budget For the Month Ending March 31
			fill in the blank 52
		fill in the blank 54
Direct materials:
	fill in the blank 56
	fill in the blank 58
Cost of direct materials available for use	fill in the blank 59
	fill in the blank 61
Cost of direct materials placed in production	fill in the blank 62
	fill in the blank 64
	fill in the blank 66
Total manufacturing costs		fill in the blank 67
Total work in process during the period		fill in the blank 68
		fill in the blank 70
Cost of goods manufactured			fill in the blank 71
Cost of finished goods available for sale			fill in the blank 72
			fill in the blank 74
Cost of goods sold			$fill in the blank 75

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

Gold Medal Athletic Co. Selling and Administrative Expenses Budget For the Month Ending March 31
Selling expenses:
Sales salaries expense		fill in the blank 76
Advertising expense		fill in the blank 77
Telephone expenseselling		fill in the blank 78
Travel expenseselling		fill in the blank 79
Total selling expenses			fill in the blank 80
Administrative expenses:
Office salaries expense		fill in the blank 81
Depreciation expenseoffice equipment		fill in the blank 82
Telephone expenseadministrative		fill in the blank 83
Office supplies expense		fill in the blank 84
Miscellaneous administrative expense		fill in the blank 85
Total administrative expenses			fill in the blank 86
Total operating expenses			$fill in the blank 87

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