Complete the budgeted income statement, linking the numbers from the supporting budgets to the income statement. Note, you are not given the information to complete the budgeted balance sheet, so a balance sheet is not expected to be a part of the assignment package.
Prepare an executive summary to Ginnie Adams, the owner of the Bottled Water Company, with your results from the comprehensive budget for the new product and how launching the new product would affect net income. Your spreadsheet(s) will be your attachment to the executive summary.
Calculate the Bottled Water Company's net income for the new product in the coming year by completing the operating budgets and budgeted income statement that fol low.
I. Sales budget:
2. Production budget:
3. Direct materials purchases budget:
4. Direct labor budget:
The Bottled Water Company
Direct Labor Budget
For the Year Ended December 31
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Quarter
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Year
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1
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2
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3
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4
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TotaL production units
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39000
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?
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?
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?
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?
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x Direct Labor hours per unit
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X .001
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X ?
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X ?
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X ?
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X ?
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Total_ direct Labor hours
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39
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?
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?
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?
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x Direct Labor cost per hour
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x $8
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x ?
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x ?
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x ?
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x ?
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TotaL direct Labor cost
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$312
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5. Overhead budget:
The Bottled Water Company
Overhead Budget
For the Year Ended December 31
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Quarter
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1
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2
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3
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4
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Year
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Variable overhead costs
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Factory supplies ($.01)
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$ 390
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?
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?
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7
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?
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EmpLoyee benefits ($.05)
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1,950
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?
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?
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?
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?
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|
Inspection ($.01)
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390
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?
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|
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Maintenance and repair ($.02)
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780
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?
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?
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UtiLities ($.01)
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390
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Total variable overhead costs
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$3„900
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Total fixed overhead costs
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1„500
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?
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?
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?
_
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?
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Total overhead costs
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$5„400
________ =
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?
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=
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=
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?
=
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Note: The figures in parentheses are variable costs per unit.
6. Selling and administrative expense budget:
The Bottled Water Company
Selling and Administrative Expense Budget
For the Year Ended December 31
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Quarter
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2
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3
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4
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Year
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Variable selling and administrative expenses
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|
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Delivery expenses 0.01)
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$ 400
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1
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I
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I
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Sales commissions ($.02)
|
800
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1
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?
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1
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Accounting (.01)
|
400
|
1
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I
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I
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Other administrative expenses ($.01)
|
400
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?
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?
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?
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?
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TotaLvariabLe selling and administrative expenses
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$2 FOCI 0
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I
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TotaL fixed selling and administrative expe uses
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5r000
|
I
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?
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I
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I
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Total selling and administrative expenses
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$7.000
|
?
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?
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?
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?
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|
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=
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=
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=
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=
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Note: The figures in parentheses are variable costs per unit.
7. Cost of goods rnanufactu red budget:
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The Bottled Water Company
Cost of Goods Manufactured Budget
For the Year Ended December 31
Direct materials used
Direct materials inventory, beginning Purchases
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
%Nark in process inventory, beginning* 0
Less work in process inventory, ending* O
Cost of goods manufactured
Manufactured Cost per Unit = Cost of Goods
Manufactured Units Produced
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8. Budieted income statement:
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The Bottled Water Company
Budgeted Income Statement
For the Year Ended December 31
Sales
Cost of goods sold
Finished goods inventory, beginning
Cost of goods manufactured
Cost of finished goods available for sale
Less finished goods inventory, ending
Cost of goods sold
Gross margin
Selling and administrative expenses Income from operations
Income taxes expense (30%)* Net income
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