Step 5: Manufacturing Overhead Budget
Buff Company expects variable overhead costs to fluctuate withproduction volume according to the following rates:
Indirect materials: $0.90 per direct labor
Indirect labor: $1.70 per direct labor
Utilities: $0.30 per direct labor
Maintenance: $0.10 per direct labor
Buff Company also incurs fixed overhead costs. The amounts offixed overhead costs are already provided in the budget below. Usethis information to complete the manufacturing overhead budget.
Buff Company Manufacturing Overhead Sales Budget
For the year ending December 31, 2017
Variable costs Indirect materials ($0.90/hour) Q1_________Q2_________ Q3_________ Q4_________
Indirect labor ($1.70/hour) Q1_________ Q2_________ Q3_________Q4_________
Utilities ($0.30/hour) Q1_________ Q2_________ Q3_________Q4_________
Maintenance ($0.10/hour) Q1_________ Q2_________ Q3_________Q4_________
Total variable costs Q1_________ Q2_________ Q3_________Q4_________
Fixed costs
Supervisory salaries Q1 $37,600 Q2 $37,600 Q3 $37,600 Q4 $37,600Total in a year $150400
Depreciation Q1 $2,900 Q2 $2,900 Q3 $2,900 Q4 $2,900 Total in ayear $11600
Property taxes and insurance Q1 $1,600 Q2 $1,600 Q3 $1,600 Q4$1,600 Total in a year $6,400
Maintenance Q1 $3,400 Q2 $3,400 Q3 $3,400 Q4 $3,400Total in ayear $13,600
Total fixed costs Q1_________ Q2_________ Q3_________Q4_________
Total manufacturing overhead Q1_________ Q2_________ Q3_________Q4_________
Direct labor hours Q1_________ Q2_________ Q3_________Q4_________
Using the yearly amounts, what is the annual budgeted overheadrate per direct labor hour?
Step 6: Selling and Administrative Expense Budget
Buff Company expects variable selling and administrativeexpenses to fluctuate with unit sales volume according to thefollowing rates:
Sales commission $3.60 per unit sold
Freight-out: $2.80 per unit sold
Buff Company also incurs fixed selling and administrativeexpenses. The amounts of fixed selling and administrative expensesare already provided in the budget below. Use this information tocomplete the selling and admin. expense budget
Buff Company Selling and Admi Sales Budget For the year endingDecember 31, 2017
Budgeted sales in units Q1 1,800 Q2 1,700 Q3 2,300 Q4 2,800Total in a year 8,600
Variable expenses
Sales commissions ($3.60 per unit) Q1_________ Q2_________Q3_________ Q4_________
Freight-out ($2.80 per unit) Q1_________ Q2_________ Q3_________Q4_________
Total variable expenses Q1_________ Q2_________ Q3_________Q4_________
Fixed expenses Advertising Q1 $3,200 Q2 $3,200 Q3 $3,200 Q4$3,200 Total in a year $12,800
Sales salaries Q1 $13,600 Q2 $13,600 Q3 $13,600 Q4 $13,600 Totalin a year $54,400
Office salaries Q1 $7,000 Q2 $7,000 Q3 $7,000 Q4 $7,000 Total ina year $28,000
Depreciation Q1 $800 Q2 $800 Q3 $800 Q4 $800 Total in a year$3,200
Property taxes and insurance Q1 $1,000 Q2 $1,000 Q3 $1,000 Q4$1,000 Total in a year $4,000
Total fixed expenses Q1_________ Q2_________ Q3_________Q4_________
Total selling and administrative expenses Q1_________Q2_________ Q3_________ Q4_________
Step 7: Budgeted Income Statement
Complete the following schedule to determine the cost of goodssold:
Cost to produce one product
Direct materials Quantity 1.50 Unit cost $1.00
Direct labor Quantity 2.50 Unit cost $12.00
Manufacturing overhead Quantity 2.50
Total unit cost _________
Cost of goods sold
Total Unit cost × Number of units budgeted to be sold during2017 = Budgeted Cost of Goods Sold________
Additional information:
Interest expense for 2017: $1,000
Income tax expense for 2017: $16,500
Use the information above as well as data from the otheroperating budgets to complete the Budgeted Income Statement
Buff Company Budgeted Income Statement For the Year EndingDecember 31, 2017
Sales________
Cost of goods sold_______
Gross profit_______
Selling and administrative expenses______
Income from operations________
Interest expense______
Income before income taxes______
Income tax expense_______
Net income_______
