Complete a Sales Budget, Inventory, Purchases, and Cost of Goods Sold Budget Ope

Question

Complete a Sales Budget,
Inventory, Purchases, and Cost of Goods Sold Budget
Operating Expenses Budget and
Budgeted Income Statement using the followign information for April, May, and June:
Sales Data: The lighters are forecast to sell for $8 each. Recent forecast and/or actual sale in units are:
January(actual) 20,000
February(actual) 24,000
March(actual) 28,000
April 35,000
May 45,000
June 60,000
July 40,000
August 36,000
September 32,000
All sales are on credit (no cash sales). When preparing the Sales Budget, instead of showing the cash sales, credit sales and total sales, you will be creating a sales budget illustrating the budgeted units, the price per unit and the total credit sales estimated. Just a reminder, you are only doing three months and then the total for the quarter.
Inventory, Purchases and Cost of Goods Sold:
The large buildup in sales before and during the month of June is due to Father's Day. The lighters cost the company $5 each. Ending inventories are supposed to equal 90% of the next month's sales in units. Remeber, the desired ending inventory values is always expressed in terms of the cost ($5) of the lighters.
Operating Expenses:
The company's monthly operating expenses are given below:
Variable:
Sales Commissions $1 per lighter
Fixed:
Wages and salaries 22,000
Utilities 14,000
Insurance expired 1,200
Depreciation 1,500
Misc. 3,000
Income Statement:
Interest expense for the quarter is $3,018

Explanation / Answer

                                         Sales Budget                 
                                    April       May        June          Total
Budgeted units             35,000   45,000      60,000       140,00
Selling price per unit       $8          $8            $8            $8        
Total credit sales      $280,000 $360,000 $480,000  $1,120,000  

                                 Inventory Budget
                                                  April         May             June
Inventory for prodcution           $175,000    $225,000   $300,000
Add: Ending Inventory              $202,500    $270,000   $180,000
Total inventory required           $377,500   $495,000   $480,000
Less: Beginning inventory       ($157,500) ($202,500) ($150,000)
Required inventory purchase $220,000    $292,500     $330,000

                              Cost of Goods Sold Budget
Direct materials                     $175,000    $225,000     $300,000
Wages & Salaries                     $22,000     $22,000       $22,000
Utilities                                   $14,000     $14,000       $14,000
Total                                     $211,000   $261,000      $336,000

                    Operating Expenses Budget
Sales commission                  $35,000      $45,000        $60,000
Insurance                               $1,200        $1,200          $1,200
Depreciation                          $1,500        $1,500          $1,500
Misc. expenses                      $3,000        $3,000          $3,000
Total                                  $40,700      $50,700        $65,700

                          Income Statement
Sales Revenue                   $280,000   $360,000   $480,000   
Less : Cost of goods sold   $211,000   $261,000    $336,000
Gross profit / (loss)            $69,000    $99,000     $144,000  
Less:Operating expenses    $40,700    $50,700     $65,700
Operating Income              $28,300    $48,300      $78,300
Less: Interest expense                                           $3,018
Net Income                                                          $75,282  

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