Operating Budget, Comprehensive Analysis Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world. Projected sales in units for the coming five months are given below. January 10,000 February 10,600 March 13,600 April 16,000 May 18,500 The following data pertain to production policies and manufacturing specifications followed by Ponderosa: Finished goods inventory on January 1 is 900 units. The desired ending inventory for each month is 20 percent of the next month’s sales. The data on materials used are as follows: Direct Material Per-Unit Usage Unit Cost Part #K298 2 $4 Part #C30 3 7 Inventory policy dictates that sufficient materials be on hand at the beginning of the month to satisfy 30 percent of the next month’s production needs. This is exactly the amount of material on hand on January 1. The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20. Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.) Fixed Cost Component Variable Cost Component Supplies $ — $1.00 Power — 0.20 Maintenance 12,600 1.10 Supervision 14,000 — Depreciation 45,000 — Taxes 4,300 — Other 86,000 1.60 Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.) Fixed Costs Variable Costs Salaries $ 88,500 — Commissions — $1.40 Depreciation 25,000 — Shipping — 3.60 Other 137,000 1.60 The unit selling price of the wiring harness assembly is $110. In February, the company plans to purchase land for future expansion. The land costs $68,000. All sales and purchases are for cash. The cash balance on January 1 equals $62,800. The firm wants to have an ending cash balance of at least $25,000. If a cash shortage develops, sufficient cash is borrowed to cover the shortage and provide the desired ending balance. Any cash borrowed must be borrowed in $1,000 increments and is repaid the following month, as is the interest due. The interest rate is 12 percent per annum. Required: 10. Cash budget Enter a negative balance as a negative amount, and if an amount is zero enter "0". January February March Total Beginning balance $fill in the blank 6fe5fafddff8fce_1 $fill in the blank 6fe5fafddff8fce_2 $fill in the blank 6fe5fafddff8fce_3 $fill in the blank 6fe5fafddff8fce_4 Cash receipts fill in the blank 6fe5fafddff8fce_5 fill in the blank 6fe5fafddff8fce_6 fill in the blank 6fe5fafddff8fce_7 fill in the blank 6fe5fafddff8fce_8 Total cash available $fill in the blank 6fe5fafddff8fce_9 $fill in the blank 6fe5fafddff8fce_10 $fill in the blank 6fe5fafddff8fce_11 $fill in the blank 6fe5fafddff8fce_12 Disbursements: Purchases $fill in the blank 6fe5fafddff8fce_13 $fill in the blank 6fe5fafddff8fce_14 $fill in the blank 6fe5fafddff8fce_15 $fill in the blank 6fe5fafddff8fce_16 DL payroll fill in the blank 6fe5fafddff8fce_17 fill in the blank 6fe5fafddff8fce_18 fill in the blank 6fe5fafddff8fce_19 fill in the blank 6fe5fafddff8fce_20 Overhead fill in the blank 6fe5fafddff8fce_21 fill in the blank 6fe5fafddff8fce_22 fill in the blank 6fe5fafddff8fce_23 fill in the blank 6fe5fafddff8fce_24 Marketing & admin fill in the blank 6fe5fafddff8fce_25 fill in the blank 6fe5fafddff8fce_26 fill in the blank 6fe5fafddff8fce_27 fill in the blank 6fe5fafddff8fce_28 Land fill in the blank 6fe5fafddff8fce_29 fill in the blank 6fe5fafddff8fce_30 Total disbursements $fill in the blank 6fe5fafddff8fce_31 $fill in the blank 6fe5fafddff8fce_32 $fill in the blank 6fe5fafddff8fce_33 $fill in the blank 6fe5fafddff8fce_34 Ending balance $fill in the blank 6fe5fafddff8fce_35 $fill in the blank 6fe5fafddff8fce_36 $fill in the blank 6fe5fafddff8fce_37 $fill in the blank 6fe5fafddff8fce_38 Financing: Borrowed/repaid fill in the blank 6fe5fafddff8fce_39 fill in the blank 6fe5fafddff8fce_40 fill in the blank 6fe5fafddff8fce_41 fill in the blank 6fe5fafddff8fce_42 Interest paid fill in the blank 6fe5fafddff8fce_43 fill in the blank 6fe5fafddff8fce_44 fill in the blank 6fe5fafddff8fce_45 fill in the blank 6fe5fafddff8fce_46 Ending cash balance $fill in the blank 6fe5fafddff8fce_47 $fill in the blank 6fe5fafddff8fce_48 $fill in the blank 6fe5fafddff8fce_49 $fill in the blank 6fe5fafddff8fce_50

Operating Budget, Comprehensive Analysis Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world. Projected sales in units for the coming five months are given below. January 10,000 February 10,600 March 13,600 April 16,000 May 18,500 The following data pertain to production policies and manufacturing specifications followed by Ponderosa: Finished goods inventory on January 1 is 900 units. The desired ending inventory for each month is 20 percent of the next month’s sales. The data on materials used are as follows: Direct Material Per-Unit Usage Unit Cost Part #K298 2 $4 Part #C30 3 7 Inventory policy dictates that sufficient materials be on hand at the beginning of the month to satisfy 30 percent of the next month’s production needs. This is exactly the amount of material on hand on January 1. The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20. Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.) Fixed Cost Component Variable Cost Component Supplies $ — $1.00 Power — 0.20 Maintenance 12,600 1.10 Supervision 14,000 — Depreciation 45,000 — Taxes 4,300 — Other 86,000 1.60 Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.) Fixed Costs Variable Costs Salaries $ 88,500 — Commissions — $1.40 Depreciation 25,000 — Shipping — 3.60 Other 137,000 1.60 The unit selling price of the wiring harness assembly is $110. In February, the company plans to purchase land for future expansion. The land costs $68,000. All sales and purchases are for cash. The cash balance on January 1 equals $62,800. The firm wants to have an ending cash balance of at least $25,000. If a cash shortage develops, sufficient cash is borrowed to cover the shortage and provide the desired ending balance. Any cash borrowed must be borrowed in $1,000 increments and is repaid the following month, as is the interest due. The interest rate is 12 percent per annum. Required: 10. Cash budget Enter a negative balance as a negative amount, and if an amount is zero enter "0". January February March Total Beginning balance $fill in the blank 6fe5fafddff8fce_1 $fill in the blank 6fe5fafddff8fce_2 $fill in the blank 6fe5fafddff8fce_3 $fill in the blank 6fe5fafddff8fce_4 Cash receipts fill in the blank 6fe5fafddff8fce_5 fill in the blank 6fe5fafddff8fce_6 fill in the blank 6fe5fafddff8fce_7 fill in the blank 6fe5fafddff8fce_8 Total cash available $fill in the blank 6fe5fafddff8fce_9 $fill in the blank 6fe5fafddff8fce_10 $fill in the blank 6fe5fafddff8fce_11 $fill in the blank 6fe5fafddff8fce_12 Disbursements: Purchases $fill in the blank 6fe5fafddff8fce_13 $fill in the blank 6fe5fafddff8fce_14 $fill in the blank 6fe5fafddff8fce_15 $fill in the blank 6fe5fafddff8fce_16 DL payroll fill in the blank 6fe5fafddff8fce_17 fill in the blank 6fe5fafddff8fce_18 fill in the blank 6fe5fafddff8fce_19 fill in the blank 6fe5fafddff8fce_20 Overhead fill in the blank 6fe5fafddff8fce_21 fill in the blank 6fe5fafddff8fce_22 fill in the blank 6fe5fafddff8fce_23 fill in the blank 6fe5fafddff8fce_24 Marketing & admin fill in the blank 6fe5fafddff8fce_25 fill in the blank 6fe5fafddff8fce_26 fill in the blank 6fe5fafddff8fce_27 fill in the blank 6fe5fafddff8fce_28 Land fill in the blank 6fe5fafddff8fce_29 fill in the blank 6fe5fafddff8fce_30 Total disbursements $fill in the blank 6fe5fafddff8fce_31 $fill in the blank 6fe5fafddff8fce_32 $fill in the blank 6fe5fafddff8fce_33 $fill in the blank 6fe5fafddff8fce_34 Ending balance $fill in the blank 6fe5fafddff8fce_35 $fill in the blank 6fe5fafddff8fce_36 $fill in the blank 6fe5fafddff8fce_37 $fill in the blank 6fe5fafddff8fce_38 Financing: Borrowed/repaid fill in the blank 6fe5fafddff8fce_39 fill in the blank 6fe5fafddff8fce_40 fill in the blank 6fe5fafddff8fce_41 fill in the blank 6fe5fafddff8fce_42 Interest paid fill in the blank 6fe5fafddff8fce_43 fill in the blank 6fe5fafddff8fce_44 fill in the blank 6fe5fafddff8fce_45 fill in the blank 6fe5fafddff8fce_46 Ending cash balance $fill in the blank 6fe5fafddff8fce_47 $fill in the blank 6fe5fafddff8fce_48 $fill in the blank 6fe5fafddff8fce_49 $fill in the blank 6fe5fafddff8fce_50

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 5E: Production budget Healthy Measures Inc. produces a Bath and Gym version of its popular electronic...

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Operating Budget, Comprehensive Analysis

Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world. Projected sales in units for the coming five months are given below.

January	10,000
February	10,600
March	13,600
April	16,000
May	18,500

The following data pertain to production policies and manufacturing specifications followed by Ponderosa:

Finished goods inventory on January 1 is 900 units. The desired ending inventory for each month is 20 percent of the next month’s sales.
The data on materials used are as follows:

Direct Material Per-Unit Usage Unit Cost

Part #K298 2 $4

Part #C30 3 7

Inventory policy dictates that sufficient materials be on hand at the beginning of the month to satisfy 30 percent of the next month’s production needs. This is exactly the amount of material on hand on January 1.
The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20.

Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.)

	Fixed Cost Component	Variable Cost Component
Supplies	$ —	$1.00
Power	—	0.20
Maintenance	12,600	1.10
Supervision	14,000	—
Depreciation	45,000	—
Taxes	4,300	—
Other	86,000	1.60

Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.)

	Fixed Costs	Variable Costs
Salaries	$ 88,500	—
Commissions	—	$1.40
Depreciation	25,000	—
Shipping	—	3.60
Other	137,000	1.60

The unit selling price of the wiring harness assembly is $110.
In February, the company plans to purchase land for future expansion. The land costs $68,000.
All sales and purchases are for cash. The cash balance on January 1 equals $62,800. The firm wants to have an ending cash balance of at least $25,000. If a cash shortage develops, sufficient cash is borrowed to cover the shortage and provide the desired ending balance. Any cash borrowed must be borrowed in $1,000 increments and is repaid the following month, as is the interest due. The interest rate is 12 percent per annum.

Required:

10. Cash budget
Enter a negative balance as a negative amount, and if an amount is zero enter "0".

	January	February	March	Total
Beginning balance	$fill in the blank 6fe5fafddff8fce_1	$fill in the blank 6fe5fafddff8fce_2	$fill in the blank 6fe5fafddff8fce_3	$fill in the blank 6fe5fafddff8fce_4
Cash receipts	fill in the blank 6fe5fafddff8fce_5	fill in the blank 6fe5fafddff8fce_6	fill in the blank 6fe5fafddff8fce_7	fill in the blank 6fe5fafddff8fce_8
Total cash available	$fill in the blank 6fe5fafddff8fce_9	$fill in the blank 6fe5fafddff8fce_10	$fill in the blank 6fe5fafddff8fce_11	$fill in the blank 6fe5fafddff8fce_12
Disbursements:
Purchases	$fill in the blank 6fe5fafddff8fce_13	$fill in the blank 6fe5fafddff8fce_14	$fill in the blank 6fe5fafddff8fce_15	$fill in the blank 6fe5fafddff8fce_16
DL payroll	fill in the blank 6fe5fafddff8fce_17	fill in the blank 6fe5fafddff8fce_18	fill in the blank 6fe5fafddff8fce_19	fill in the blank 6fe5fafddff8fce_20
Overhead	fill in the blank 6fe5fafddff8fce_21	fill in the blank 6fe5fafddff8fce_22	fill in the blank 6fe5fafddff8fce_23	fill in the blank 6fe5fafddff8fce_24
Marketing & admin	fill in the blank 6fe5fafddff8fce_25	fill in the blank 6fe5fafddff8fce_26	fill in the blank 6fe5fafddff8fce_27	fill in the blank 6fe5fafddff8fce_28
Land		fill in the blank 6fe5fafddff8fce_29		fill in the blank 6fe5fafddff8fce_30
Total disbursements	$fill in the blank 6fe5fafddff8fce_31	$fill in the blank 6fe5fafddff8fce_32	$fill in the blank 6fe5fafddff8fce_33	$fill in the blank 6fe5fafddff8fce_34
Ending balance	$fill in the blank 6fe5fafddff8fce_35	$fill in the blank 6fe5fafddff8fce_36	$fill in the blank 6fe5fafddff8fce_37	$fill in the blank 6fe5fafddff8fce_38
Financing:
Borrowed/repaid	fill in the blank 6fe5fafddff8fce_39	fill in the blank 6fe5fafddff8fce_40	fill in the blank 6fe5fafddff8fce_41	fill in the blank 6fe5fafddff8fce_42
Interest paid	fill in the blank 6fe5fafddff8fce_43	fill in the blank 6fe5fafddff8fce_44	fill in the blank 6fe5fafddff8fce_45	fill in the blank 6fe5fafddff8fce_46
Ending cash balance	$fill in the blank 6fe5fafddff8fce_47	$fill in the blank 6fe5fafddff8fce_48	$fill in the blank 6fe5fafddff8fce_49	$fill in the blank 6fe5fafddff8fce_50

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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Direct Material	Per-Unit Usage	Unit Cost
Part #K298	2	$4
Part #C30	3	7