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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.
Indirect labor
$1.00
Indirect materials