BUDGET PROBLEM
The Budget Director of Dave, Inc. with the assistance of the Controller, Production Manager and the Sales Manager has gathered the following data for use in developing the Budgeted Income Statement for 2012. The Company produces and sells two products: Batting Helmets and Football Helmets. Both products use two types of materials: Plastic and Foam Lining and they both go through a Molding Department and then through an Assembly Department before they are ready for sale.
Assume that there is no Work-Process-Inventory.
1. Estimated Sales : 25,800 Batting Helmets at $ 40 each and 54,100 Football Helmets at $ 75 each
2. Raw materials inventories at January 1st: Plastic – 9,500 pounds and Foam lining - 4,700 pounds
3. Finished Goods inventories at January 1st:
Batting Helmets – 2,450 at $ 21 each and Football Helmets – 3,900 at $ 40 each
4. Desired raw material inventory at December 31st: Plastic – 11,400 pounds and Foam lining -
4,500 pounds
5. Desired inventory at December 31st:
Batting Helmets – 2,400 at $ 21 each and Football Helmets - 3,500 at $ 40 each
6. Direct materials used in production:
Batting Helmet – Plastic – 1.40 pounds per unit and Foam lining - .60 pounds per unit
Football Helmet – Plastic – 3.20 pounds per unit and Foam lining – 1.20 pounds per unit
7. Cost of direct materials: Plastics - $ 6.50 per pound and Foam lining - $ 3.00 per pound
8. Direct labor used in production:
Batting Helmets - .16 hour in Molding at $14 per hour and .40 hour in Assembly at $12 per hour Football Helmets - .25 hour in Molding and .60 hour in Assembly (same rates)
9. Budgeted Factory Labor Overhead:
Indirect factory wages - $ 250,000 Depreciation on plant and equipment - $ 63,000 Utilities - $ 24,000 Insurance and property taxes - $ 9,700
10. Budgeted Operating Expenses:
Sales salaries expense - $ 505,700; Advertising Expense - $ 350,800; Office Salaries Expense – $ 145,800; Depreciation Expense Office Equipment - $ 6,200; Telephone Expense Selling - $ 4,700;Telephone Expense Administrative - $ 900; Travel Expense Selling - $ 42,100; Office Supplies Expense - $ 4,000; and Miscellaneous Administrative Expenses - $ 5,000.
11. Budgeted Other income and expenses:
Interest Revenue - $ 12,500 Interest Expense - $ 15,700
12. Budgeted income tax rate – 40%
REQUIRED:
Prepare a Budgeted Income Statement for 2012 with supporting schedules. Please refer to Exhibits 8 to 15 in your text on pages 986 to 994. Project is due by May 13, 2013