The Bottled Water Company Sales Budget For the Year Ending December 31
Quarter
1234Year
Sales in Units40,00030,00050,00055,000175,000
X Selling Price Per Unit$ 1$ 1$ 1$ 1$ 1
Total Sales40,00030,00050,00055,000175,000
Table #1 (Sales Budget)
1. Calculate the Bottled Water Company’s Income for the new product in the coming year by completing the operating budgets and budgeted income statement that follows.
The Bottled Water Company Productivity Budget For the Year Ending December 31
Quarter
1234Year
Sales in Units40,00030,00050,00055,000175,000
Plus Desired Units of Ending Finished Goods Inventory*
3,0005,000.05,500.06,0006,000
Desired Total Units43,00035,000.055,500.061,000.0181,000.0
Less Desired Units of Beginning Finished goods Inventory+
4,0003,0005,000.05,500.04,000
Total Production Units39,00032,000.050,500.055,500.0177,000.0
Table #2 (Product Budget)
*Desired Units of Ending finished goods Inverntory = 10% of next quarter’s budgeted sales. + Desired Units of beginning finished goods inventory = 10% of current quarter’s budgeted sales.
The Bottled Water Company Direct Materials Purchase Budget For the Year Ending December 31
Quarter
1234Year
Total Productin Units39,00032,00050,50055,500177,000
X 20 Ounces Per Unit$ 20$ 20$ 20$ 20$ 20
Total Production Needs in Ounces780,000640,0001,010,0001,110,0003,540,000
Plus Desired Ounces of Ending direct Materials Inventory*128,000202,000222,000240,000240,000
908,000842,0001,232,0001,350,0003,780,000
Less Desired Ounces of Beginning Direct Materials Inventory+156,000128,000202,000222,000156,000
Total Ounces of Direct Materials to be Purchased752,000714,0001,030,0001,128,0003,624,000
X Cost per Ounce$ 0.01$ 0.01$ 0.01$ 0.01$ 0.01
Total Cost of Direct Materials Purchases$ 752,000$ 7,140.00$ 10,300.00$ 11,280.00$ 36,240.00
Table #3 (Sales Budget)
*Desired Ounces of Ending Direct Materials Inventory = 20% OF NEXT QUARTER’S BUDGETED Production Needs in Ounces. + Desired Ounces of Beginning Direct Materials Inventory = 20% of Current Quarter’s Budgeted Production Needs in Ounces
The Bottled Water Company Direct Labor Budget For the Year Ending December 31
Quarter
1234Year
Total Productin Units39,00032,00050,50055,500177,000
X Direct Labor Hours Per Unit0.0010.0010.0010.0010.001
Total Direct Labor Hours39315156176
X Direct Labor Cost Per Hour$ 8$ 8$ 8$ 8$ 8
Total Direct Labor Cost3122484044441,408
Table #4 (Direct Labor Budget)
The Bottled Water Company Overhead Budget For the Year Ending December 31
Quarter
1234Year
Variable Overhead Costs
Factory Supplies ($0.1)$ 390.00$ 320.00$ 505.00$ 555.00$ 1,770.00
Employee Benefits ($0.5)$ 1,950.00$ 1,600.00$ 2,525.00$ 2,775.00$ 8,850.00
Inspection ($0.1)$ 390.00$ 320.00$ 505.00$ 555.00$ 1,770.00
Maintenance & Repair ($0.02)$ 780.00$ 640.00$ 1,010.00$ 1,110.00$ 3,540.00
Utilities ($0.01)$ 390.00$ 320.00$ 505.00$ 555.00$ 1,770.00
Total Variable Overhead Costs$ 3,900.00$ 3,200.00$ 5,050.00$ 5,550.00$ 17,700.00
Total Fixed Overhead Costs$ 1,500.00$ 1,280.00$ 2,020.00$ 2,220.00$ 7,080.00
Total Overhead Costs$ 5,400.00$ 4,480.00$ 7,070.00$ 7,770.00$ 24,780.00
Table #5 (Overhead Budget)
Note: The figures in Parentheses are Variable Costs Per Unit
The Bottled Water Company Selling and Administrative Expense Budget For the Year Ending December 31
Quarter
1234Year
Variable Selling and Administrative Expenses(40,000Units)(30,000Units)(50,000Units)(55,000Units)(175,000Units)
Delivery Expenses ($0.01)$ 400$ 300$ 500$ 550$ 1,750
Sales commissions ($0.02)$ 800$ 600$ 1,000$ 1,100$ 3,500
Accounting ($0.01)$ 400$ 300$ 500$ 550$ 1,750
Other Administrative Expenses ($0.01)$ 400$ 300$ 500$ 550$ 1,750
Total Variable Selling and Administrative Expenses$ 2,000$ 1,500$ 2,500$ 2,750$ 8,750
Total Fixed Selling and Administrative Expenses$ 5,000$ 3,750$ 6,250$ 6,875$ 21,875
Total Selling and Administrative Expenses$ 7,000$ 5,250$ 8,750$ 9,625$ 30,625
Table #6 (Selling & Administrative Expense Budget)
Note: The figures in Parentheses are Variable Costs Per Unit.
The Bottled Water Company Costs of Goods Manufactured Budget For the Year Ending December 31
Direct Materials Used
Direct Materials Inventory, Beginning$ 1,560
Purchases$ 36,240
Cost of Direct Materials Available for use.$ 37,800
Less Direct Materials Available for use. Ending$ (2,400)
Cost of Direct Materials used.$ 35,400
Direct Labor Costs$ 1,408
Overhead Costs$ 24,780
Total Manufacturing Costs$ 61,588
Work in Process Inventory, Beginning*$ –
Cost of Goods Manufactured$ 61,588
Manufactured Cost Per Unit = Cost of Goods$ 0.35
Manufactured / Units Produced
Table #7 (Cost of Goods Manufactured Budget)
*It is the Company’s Policy to have no Units in Process at the End of the Year.
The Bottled Water Company Budgeted Income Statement Budget For the Year Ending December 31
Sales175,000
Cost of Goods Sold
Finished Goods Inventory, Beginning$ 4,000is total profit /units
Cost of Goods Manufactured$ 61,588
Cost of Finished Goods Available for Sale$ 65,588
Less Finished Goods Inventory, Ending$ (6,000)
Cost of Goods Sold$ 59,588
Gross Margin$ 115,412.00
Selling and Administrative Expenses$ 30,625
Income From Operations$ 84,787.00
Income Taxes Expense (30%)*$ (25,436.10)
Net Income$ 59,350.90
Table #8 (Budgeted Income Statement)
*The Figure in Parenthese is the Company’s Income Tax Rate