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Budgeted Income Statement and Supporting Budgets

The budget director of Jupiter Helmets Inc., 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 May:

Estimated sales for May

Bicycle helmet 9,000 units at $40 per unit

Motorcycle helmet 6,000 units at $200 per unit

Estimated inventories at May 1:

Direct materials: Finished products:

Plastic1,480lbs. Bicycle helmet.200 units at $15 per unit

Foam lining.520 lbs Motorcycle helmet.100 units at $90 per unit

Desired inventories at May 31:

Direct materials: Finished products:

Plastic2,000lbs. Bicycle helmet.400 units at $15 per unit

Foam lining.800 lbs Motorcycle helmet.300 units at $100 per unit

Direct materials used in productions:

In manufacture of bicycle helmet:

Plastic0.90 lb. per unit of product

Foam lining.0.20 lb. per unit of product

In manufacture of motorcycle helmet

Plastic..3.50 lbs. per unit of product

Foam lining.1.40 lbs. per unit of product

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

Plastic $4.40 per lb.

Foam Lining $0.90 per lb.

Direct labor requirements:

Bicycle helmet:

Molding Department 0.30 hr. at $15 per hr.

Assembly Department 0.10 hr. at $14 per hr.

Motorcycle helmet:

Molding Department 0.50 hr. at $15 per hr.

Assembly Department 0.40 hr. at $14 per hr.

Estimated factory overhead costs for May:

Indirect factory wages $125,000 Power and light $23,000

Depreciation of plant & equipment $45,000 Insurance & property tax $11,000

Estimated operating expenses for May:

Sales salaries expense $175,000

Advertising expense $120,000

Office salaries expense $92,000

Depreciation expenseoffice equipment $6,000

Miscellaneous expenseselling $5,000

Utilities expense---administrative $3,000

Travel expense---selling $50,000

Office supplies $2,500

Miscellaneous administrative expense $1,500

Estimated other income and expense for May:

Interest revenue $14,560

Interest expense $3,000

Estimated tax rate: 25%

Instructions:

1. Prepare a sales budget for May.

2. Prepare a production budget for May.

3. Prepare a direct materials purchases budget for May.

4. Prepare a direct labor cost budget for May.

5. Prepare a factory overhead cost budget for May.

6. Prepare a cost of goods sold budget for May. Work in process at the beginning of May is estimated to be $4,200, and work in process at the end of May is estimated to be $3,800.

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

8. Prepare a budgeted income statement for May.

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