Current Designs 9 (Part Level Submission) Diane Buswell is preparing the 2020 budget for one of Current Designs' rotomolded kayaks. Extensive meetings with members of the sales department and executive team have resulted in the following unit sales projections for 2020. Quarter 1 2,800 kayaks Quarter 2 3,300 kayaks Quarter 3 2,550 kayaks Quarter 4 2,550 kayaks Current Designs' policy is to have finished goods ending inventory in a quarter equal to 25% of the next quarter's anticipated sales. Preliminary sales projections for 2021 are 1,100 units for the first quarter and 3,300 units for the second quarter. Ending inventory of finished goods at December 31, 2019, will be 700 rotomolded kayaks. Production of each kayak requires 44 pounds of polyethylene powder and a finishing kit (rope, seat, hardware, etc.). Company policy is that the ending inventory of polyethylene powder should be 25% of the amount needed for production in the next quarter. Assume that the ending inventory of polyethylene powder on December 31, 2019, is 20,400 pounds. The finishing kits can be assembled as they are needed. As a result, Current Designs does not maintain a significant inventory of the finishing kits. The polyethylene powder used in these kayaks costs $1.20 per pound, and the finishing kits cost $150 each. Production of a single kayak requires 4 hours of time by more experienced, type I employees and 5 hours of finishing time by type II employees. The type I employees are paid $17 per hour, and the type II employees are paid $14 per hour. Selling and administrative expenses for this line are expected to be $42 per unit sold plus $7,900 per quarter. Manufacturing overhead is assigned at 150% of labor costs.
Current Designs 9 (Part Level Submission) Diane Buswell is preparing the 2020 budget for one of Current Designs' rotomolded kayaks. Extensive meetings with members of the sales department and executive team have resulted in the following unit sales projections for 2020. Quarter 1 2,800 kayaks Quarter 2 3,300 kayaks Quarter 3 2,550 kayaks Quarter 4 2,550 kayaks Current Designs' policy is to have finished goods ending inventory in a quarter equal to 25% of the next quarter's anticipated sales. Preliminary sales projections for 2021 are 1,100 units for the first quarter and 3,300 units for the second quarter. Ending inventory of finished goods at December 31, 2019, will be 700 rotomolded kayaks. Production of each kayak requires 44 pounds of polyethylene powder and a finishing kit (rope, seat, hardware, etc.). Company policy is that the ending inventory of polyethylene powder should be 25% of the amount needed for production in the next quarter. Assume that the ending inventory of polyethylene powder on December 31, 2019, is 20,400 pounds. The finishing kits can be assembled as they are needed. As a result, Current Designs does not maintain a significant inventory of the finishing kits. The polyethylene powder used in these kayaks costs $1.20 per pound, and the finishing kits cost $150 each. Production of a single kayak requires 4 hours of time by more experienced, type I employees and 5 hours of finishing time by type II employees. The type I employees are paid $17 per hour, and the type II employees are paid $14 per hour. Selling and administrative expenses for this line are expected to be $42 per unit sold plus $7,900 per quarter. Manufacturing overhead is assigned at 150% of labor costs.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Prepare the selling and administrative expenses budget for this product line by quarter and in total for 2020.
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Prepare the selling and administrative expenses budget for this product line by quarter and in total for 2020.
CURRENT DESIGNS
Selling and Administrative Expense Budget
For the Year Ending December 31, 2020
Q1
Q2
Q3
Q4
ТOTAL
Expected Unit Sales
2,800
3300
2550
2550
11,200
Variable Expenses
$
$
$
Fixed Expenses
Total Selling and Administrative Expenses
$1
$
$4
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Current Designs 9 (Part Level Submission)
Diane Buswell is preparing the 2020 budget for one of Current Designs' rotomolded kayaks. Extensive meetings with members of the sales department and executive
team have resulted in the following unit sales projections for 2020.
Quarter 1
2,800 kayaks
Quarter 2
3,300 kayaks
Quarter 3
2,550 kayaks
Quarter 4
2,550 kayaks
Current Designs' policy is to have finished goods ending inventory in a quarter equal to 25% of the next quarter's anticipated sales. Preliminary sales projections for
2021 are 1,100 units for the first quarter and 3,300 units for the second quarter. Ending inventory of finished goods at December 31, 2019, will be 700 rotomolded
kayaks.
Production of each kayak requires 44 pounds of polyethylene powder and a finishing kit (rope, seat, hardware, etc.). Company policy is that the ending inventory of
polyethylene powder should be 25% of the amount needed for production in the next quarter. Assume that the ending inventory of polyethylene powder on December
31, 2019, is 20,400 pounds. The finishing kits can be assembled as they are needed. As a result, Current Designs does not maintain a significant inventory of the
finishing kits.
The polyethylene powder used in these kayaks costs $1.20 per pound, and the finishing kits cost $150 each. Production of a single kayak requires 4 hours of time by
more experienced, type I employees and 5 hours of finishing time by type II employees. The type I employees are paid $17 per hour, and the type II employees are
paid $14 per hour.
Selling and administrative expenses for this line are expected to be $42 per unit sold plus $7,900 per quarter. Manufacturing overhead is assigned at 150% of labor
costs.
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