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 2016:

a. Estimated sales for March:

Batting helment........................................... 1,200 units at $40 per unit

Football helment.......................................... 6,500 units at $160 per unit

b. Estimated inventories at March 1:

Direct materials: Finished products:

Plastic.................. 90 lbs. Batting helmet............... 40 units at $25 per unit

Foam lining........... 80 lbs. Football helmet.............. 240 units at $77 per unit

c. Desired inventories at March 31:

Direct materials: Finished products:

Plastic................ 50 lbs. Batting helmet.............................. 50 units at $25 per unit

Foam lining.......... 65 lbs. Football helmet............................ 220 units at $78 per unit

d. Direct materials used in production:

In manufacture of batting helmet:

Plastic...............................................................1.20 lbs. per unit of product

Foam lining........................................................ 0.50 lb. per unit of product

In manufacture of football helment:

Plastic ............................................................. 3.50 lbs. per unit of product

Foam lining....................................................... 1.50 lbs. per unit of product

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

Plastic.............................................................. $6.00 per lb.

Foam lining....................................................... $4.00 per lb.

f. Direct labor requirements:

Batting helmet:

Molding Department................................................... 0.20 hr. at $20 per hr.

Assembly Department................................................ 0.50 hr. at $14 per hr.

Football helment:

Molding Department................................................... 0.50 hr. at $20 per hr.

Assembly Department................................................ 1.80 hrs. at $14 per hr.

g. Estimated factory overhead costs for March:

Indirect factory wages $86,000 Power and light $4,000

Depreciation of plant and equipment 12,000 Insurance and property tax 2,300

h. Estimated operating expenses for March:

Sales salaries expense $184,300

Advertising expense 87,200

Office salaries expense 32,400

Depreciation expense--office equipment 3,800

Telephone expense--selling 5,800

Telephone expense--administrative 1,200

Travel expense--selling 9,000

Office supplies expense 1,100

Miscellaneous administrative expense 1,000

i. Estimated other income and expense for March:

Interest revenue $940

Interest expense 872

j. Estimated tax rate: 30%

1. GOLD MEDAL ATHLETIC CO. Sales Budget For the Month Ending March 31, 2016 Unit Sales Unit Selling Total Product Volume Price Sales

Batting helmet			1,200		$40.00		$48,000
Football helmet			6,500		$160.00		$1,040,000
Total revenue from sales							$ 1,088,000

2. GOLD MEDAL ATHLETIC CO. Production Budget For the Month Ending March 31, 2016 Units Batting Football Helmet Helmet Expected units to be sold 1,200 6,500 Plus desired inventory, March 31, 2016 50 220 Total 1,250 6,720 Less estimated inventory, March 1, 2016 40 240 Total units to be produced 1,210 6,480

3. GOLD MEDAL ATHLETIC CO. Direct Materials Purchases Budget For the Month Ending March 31, 2016 Plastic Foam Lining (lbs.) (lbs.) Total Required units for production: Batting helmet -------- -------- Football helmet -------- -------- Plus desired inventory, March 31, 2016 -------- -------- Total -------- -------- Less estimated inventory, March 1, 2016 -------- ------- Total units to be purchased -------- ------- Unit price -------- ------- Total direct materials to be purchased -------- -------- -----

4.

GOLD MEDAL ATHLETIC CO. Direct Labor Cost Budget For the Month Ending March 31, 2016 Molding Assembly Department Department Total Hours required for production: Batting helmet -------- --------- Football helmet -------- --------- Total -------- --------- Hourly rate -------- --------- Total direct labor cost -------- --------- ---------

5.

GOLD MEDAL ATHLETIC CO. Factory Overhead Cost Budget For the Month Ending March 31, 2016 Indirect Factory wages ---------- Depreciation of plant and equipment -------- Power and light -------- Insurance and property tax -------- total ---------

6.

GOLD MEDAL ATHLETIC CO. Cost of Goods Sold Budget For the Month Ending March 31, 2016 Finished goods inventory, March 1, 2016 ---------- Work in process, March 1, 2016 ---------- Direct materials: Direct materials inventory, March 1, 2016 ------------ Direct materials purchases ----------- Cost of direct materials available for use ----------- Direct materials inventory, March 31, 2016 ----------- Cost of direct materials placed in production ----------- Direct labor ----------- Factory overhead ----------- Total manufacturing costs ---------- Total work in process during period ---------- Work in process, March 31, 2016 ---------- Cost of goods manufactured ---------- Cost of finished goods available for sale ---------- Finished goods inventory, March 31, 2016 ---------- Cost of goods sold ---------- Supporting calculations: Units Cost Total Finished goods inventory, March 1, 2016: Batting helmet ------- ------- ------- Football helmet ------- ------- -------- Total --------- Finished goods inventory, March 31, 2016: Batting helmet ------- ------- -------- Football helmet ------- -------- -------- Total --------- Direct materials inventory, March 1, 2016 Plastic ------- ------- ------- Foam lining ------ ------- ------- Total -------- Direct materials inventory, March 31, 2016 Plastic ------- -------- ------- Foam lining ------- ------- ------- Total ----------

7.

GOLD MEDAL ATHLETIC CO. Selling and Administrative Expenses Budget For the Month Ending March 31, 2016 Selling expenses: Sales salaries expense ------- Advertising expense ------ Travel expense - selling ------ Telephone expense - selling ----- Total selling expenses ---- Administrative expenses: Office salaries expense ----- Depr. expense - office equip. ---- Telephone expense - administratiive ----- Office supplies expense ---- Miscellaneous admin. expense ----- Total administrative expenses ----- Total operating expenses ------

8.

GOLD MEDAL ATHLETIC CO. Budgeted Income Statement For the Month Ending March 31, 2016 Revenue from sales ------ Cost of goods sold ------- Gross profit ------ Operating expenses: Selling expenses ------ Administrative expenses ----- Total operating expenses ------- Income from operations ------- Other income Interest revenue ------ Other expense: Interest expense ------- ------- Income before income tax ------- Income tax expense ------- Net income -------