The budget director of GM Athletic Equipment 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 2014:
a. Estimated sales for March:
Batting helmet - 1,200 units at $40 per unit Football helmet - 6,500 units at $160 per unit
b. Inventories at March 1: Direct materials:
Plastic - 90 lbs. Foam lining - 80 lbs.
Finished products:
Batting helmet - 40 units
Football helmet - 240 units
c. Desired inventories at March 31: Direct materials:
Plastic - 50 lbs. Foam lining - 65 lbs.
Finished products:
Batting helmet - 50 units
Football helmet - 220 units
d. Direct materials used in production:
In manufacture of batting helmet: Plastic - 1.20 lbs per unit
Foam lining - .50 lb per unit In manufacture of football helmet:
Plastic - 3.50 lbs per unit Foam lining - 1.50 lb per unit
e. Cost of plastic and foam lining: Plastic - $6 per lb
Foam lining - $4 per lb
f. Labor requirements:
Batting Helmet:
Molding Department - .20 hr at $20 per hour Assembly Department - .5 hr at $14 per hour
Football Helmet:
Molding Department - .5 hr at $20 per hour Assembly Department - 1.8 hr at $14 per hour
g. Estimated factory overhead costs for March: Indirect labor - $86,000
Depreciation of factory and equipment - $12,000 Utilities - $4,000
Insurance and property tax - $2,300
Overhead is applied to both products based on total direct labor hours per product.
h. Estimated operating expenses for March: Sales salaries expense
Advertising expense
Office salaries expense Depreciation expense -office Telephone expense
Travel expense
Office supplies expense
Misc administrative expense
i. Estimated tax rate: 30%
Instructions:
$184,300 87,200 32,400 3,800 7,000 9,000 1,100 1,000
Prepare a master budget for GM Athletic Equipment Co. for March 2014. Include the following components - sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, selling and administrative expense budget and a budgeted income statement. Round up to the nearest dollar when calculating the cost per unit for purposes of the budgeted income statement.