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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.
Indirect labor
$1.00
Indirect materials
0.70
Utilities