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the budget committee of Suppar Company collects the following data
for its San Miguel Store in preparing budgeted income statements for
May and June 2017.
1. Sales for May are expected to be $800,000. Sales in June and July
are expected to be 5% higher than the preceding month.
2.

Cost of goods sold is expected to be 75% of sales.

3. Company policy is to maintain ending merchandise inventory at
10% of the following month's cost of goods sold.
4.

Operating expenses are estimated to be as follows:

Question 5
Interest expense is $2,000 per month. Income taxes are estimated to be
30% of income before income taxes.
Instructions
1.
Prepare the merchandise purchases budget for each
month in columnar form.
2.
Prepare budgeted multiple-step income statements for
each month in columnar form. Show in the statements the details of
cost of goods sold.
Prepare budgeted cost of goods sold, income statement, retained
earnings, and balance sheet.
E10-3
Myers Company uses a flexible budget for manufacturing overhead
based on direct labor hours. Variable manufacturing overhead costs
per direct labor hour are as follows.