gapeach2012 Posts: 1, Reputation: 1 New Member   #1 Feb 20, 2012, 07:17 PM

Can someone please help me with this problem. The budget director of Dollie Inc. with the help of the finance department, has compiled the following information for use in creating the budgeted income statement for January 20xx: a. Estimated sales for January Luxury dollhouse: 2,000 units at $200 per unit Standard dollhouse: 3,500 units at $150 per unit b. Estimated inventories at January 1 Direct materials Finished products Plastic: 400 pounds Luxury dollhouse: 200 units at $98 per unit Wood: 1,000 pounds Standard dollhouse: 300 units at $70 per unit c. Desired inventories at January 31 Direct materials Finished products Plastic: 740 pounds Luxury dollhouse: 170 units at $100 per unit Wood: 980 pounds Standard dollhouse: 260 units at $73 per unit d. Direct materials used in production To manufacture Luxury dollhouse: Plastic: 0.8 pounds per unit of product Wood: 2 pounds per unit of product To manufacture Standard dollhouse: Plastic: 0.6 pounds per unit of product Wood: 1.5 pounds per unit of product e. Anticipated cost of purchases and beginning and ending inventory of direct materials Plastic: $5 per pound Wood: $7 per pound f. Direct labor requirements Luxury dollhouse Molding Department: 0.3 hours at $12 per hour Assembly Department: 0.5 hours at $10 per hour Standard dollhouse Molding Department: 0.2 hours at $12 per hour Assembly Department: 0.4 hours at $10 per hour g. Estimated factory overhead costs for January • Indirect factory wages: $95,000 • Depreciation of plant and equipment: $20,000 • Utilities: $14,000 • Insurance and property tax: $4,000 h. Estimated operating expenses for January • Sales salaries expense: $223,600 • Advertising expense: $127,000 • Office salaries expense: $63,800 • Depreciation expense – office equipment: $7,200 • Telephone expense – selling: $2,100 • Telephone expense – administrative: $550 • Travel expense – selling: $40,900 • Office supplies expense: $3,500 • Miscellaneous administrative expense: $4,600 I. Estimated tax rate: 30% Refer to the Course Schedule within the Syllabus for specific project deliverables and due dates. 1. Prepare a sales budget for January. 2. Prepare a production budget for January. 3. Prepare a direct material budget for January. 4. Prepare a direct labor budget for January. 5. Prepare a factory overhead budget for January. 6. Prepare a cost of goods sold (COGS) budget for January. WIP at the beginning of January is estimated to be $25,300 and WIP at the end of January is desired to be $26,800. 7. Prepare a selling and administrative expenses budget for January. 8. Prepare a budgeted income statement for January. Analysis: Provide a substantive analysis of Dollie’s January budgeted income statement. • What do the results indicate? • Is this budgeted amount a feasible goal? • In what areas could Dollie Inc. cut back on costs? • How will management use this budget? • Endorse the effective use of budgeting techniques in relation to solvent business practices.

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