Bathworks produces hair and bath products. The owner would like to have an estimate of the company’s net income for the coming year. Uploaded is an EXCEL DOC that I started but am having trouble compl

Bathworks produces hair and bath products. The owner would like to have an estimate of the company’s net income for the coming year. Uploaded is an EXCEL DOC that I started but am having trouble completing it.

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P 06-02
Name :
Section :
Enter the appropriate amount or item in the shaded cel s. Use the drop-down lists when available.
An asterisk (*) wil appear next to an incorrect entry in the outlined cel s.
Preparing a Comprehensive Budget.
1
Bathworks
Sales Budget
For the Year Ended December 31
Quarter
1
2
3
4
Year
Sales in Units
4,000
3,000
5,000
5,000
17,000
Sel ing Price per unit
$ 6
$ 6
$ 6
$ 6
$ 6
Total Sales
$ 24,000
$ 18,000
$ 30,000
$ 30,000
$ 102,000
2
Bathworks
Production Budget
For the Year Ended December 31
Quarter
1
2
3
4
Year
Sales in units
4,000
3,000
5,000
5,000
17,000
Plus desired units of ending
finished goods inventory(a)
300
500
500
600
600
Desired total units
4,300
3,500
5,500
5,600
17,600
Less desired units of beginning
finished goods inventory(b)
400
300
500
500
400
Total production units
3,900
3,200
5,000
5,100
17,200
(a) Desired units of ending finished goods Inventory = 10% of next quarter’s budgeted sales.
(b) Desired units of beginning finished goods Inventory = 10 % of current quarter’s budgeted sales.
3
Bathworks
Direct Material Purchase Budget
For the Year Ended December 31
Quarter
1
2
3
4
Year
Total production units (Budget 2)
3,900
3,200
5,000
5,100
17,200
Ounces per unit
4
4
4
4
4
Total production needs in ounces
15,600
12,800
20,000
20,400
68,800
Plus desired ounces of ending
direct materials inventory(a)
2,560
3,600
3,600
18,160
Less desired ounces of beginning
direct materials inventory(b)
3,120
3,120
Total ounces of direct materials
to be purchased
15,040
Cost per ounce
$ 0.10
Total cost of direct materials
purchases
$ 1,504
(a) Desired ounces of Ending direct materials inventory = 20% of next quarter’s budgeted production needs in ounces
(b) Desired ounces of beginning direct materials inventory = 20% of current quarter’s budgeted production needs in ounces
4
Bathworks
Direct Labor Budget
For the Year Ended December 31
Quarter
1
2
3
4
Year
Total production units (Budget 2)
3,900
Direct labor hours per unit
0.10
Total direct labor hours
390
Direct labor cost per hour
$ 20
Total direct labor cost
$ 7,800
5
Bathworks
Overhead Budget
For the Year Ended December 31
Quarter
1
2
3
4
Year
Units
Variable overhead costs:
Factory supplies ($0.05)
$195
Employee benefits ($0.25)
975
Inspection ($0.10)
390
Maintenance and repairs ($0.15)
585
Utilities ($0.05)
195
Total variable overhead costs
$2,340
Total fixed overhead costs
4,300
Total overhead costs
$ 6,640
6
Bathworks
Sel ing and Administrative Expenses Budget
For the Year Ended December 31
Quarter
1
2
3
4
Year
Units
Variable overhead costs:
expenses:
Delivery expenses ($0.10)
$400
Sales commissions ($0.15)
600
Accounting ($0.05)
200
Other administrative expenses
($0.20)
800
Total variable sel ing and
administrative expenses
$2,000
Total fixed sel ing and
administrative expenses
5,000
Total sel ing and administrative
expenses
$ 7,000
7
Leave no cel s blank. Ensure to enter “0” wherever applicable.
Bathworks
Cost of Goods Manufactured Budget
For the Year Ended December 31
Direct materials used:
Direct materials inventory, beginning
Purchases during the year
Cost of direct materials available for use
Less direct materials inventory, ending
Cost of direct materials used
Direct labor costs
Overhead costs
Total manufacturing costs
Work in process inventory, beginning
Less work in process inventory, ending*
Cost of goods manufactured
Manufactured cost per unit =
units
=
*It is a company policy to have no units in process at year end.
8
Bathworks
Budgeted Income Statement
For the Year Ended December 31
Sales
Cost of goods sold:
Finished goods inventory, beginning*
Cost of goods manufactured
Cost of goods available for sale
Less finished goods inventory, ending*
Cost of goods sold
Gross margin
Sel ing and administrative expenses
Income from operations
Income taxes expense (30%)
Net income
*
Assumes a constant product unit cost during the year.
Units
Rate
Finished goods inventory
Beginning
Ending

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