Concept explainers
Problem 22-4B Manufacturing: Preparation of a complete
The management of Nabar Manufacturing prepared the following estimated balance sheet for June 2019.
Assets Liabilities and Equity
Cash.............................. $ 40,000 Accounts payable................... $ 51,400
Raw materials inventory.............. 35,000 Short-term notes payable ............ 24,000
Finished goods inventory............. 241,080 Total current liabilities ............... 85,400
Total current assets.................. 565,980 Long-term note payable.............. 300,000
Equipment......................... 720,000 Total liabilities...................... 385,400
Equipment.net...................... 430,000
Total
Total assets......................... $1,045,980 Total liabilities and equity ............ $1,045,980
To prepare a master budget for July, August, and September of 2019. Management gathers the following information:
3. Sales were 20,000 units in June.
b. Company policy calls for a given month's ending finished goods inventory to equal 70% of the next month's expected unit sales. The June 30 finished goods inventory is 16,800 units, which does not comply with the policy.
C. Company policy calls for a given month's ending raw materials inventory to equal 20% of the next month's materials requirements. The June 30 raw materials inventory is 4,375 units (which also fails to meet the policy). The budgeted September 30 raw materials inventory is 1,980 units. Raw materials cost $8 per unit. Each finished unit requires 0.50 units of raw materials.
d. Each finished unit requires 0.50 hours of direct labor at a rate of $16 per hour. e.
$20,000 per month is treated as fixed factory overhead. f. Monthly general and administrative expenses include $9,000 administrative salaries and 0.9% monthly interest on the long-term note payable. g. Sales representatives commissions are 10% of sales and are paid in the month of the sales. The sales manager's monthly salary is $3,500.
h. The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none are collected in the month of the sale).
i. All raw materials purchases are on credit, and no payables arise from any other transactions. One month's raw materials purchases are fully paid in the next month.
j. Dividends of $20,000 are to be declared and paid in August.
k. Income taxes payable at June 30 will be paid in July. Income tax expense will be assessed at 35% in the quarter and paid in October.
l. Equipment purchases of $100,000 are budgeted for the last day of September.
m. The minimum ending cash balance for all months is $40,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance.
Concept Introduction:
Master Budget-
Master budget is a sum of all lower level budgets which are produced at different functional areas of the company. It helps in providing good coordination among all level managers. It also helps the manager in evaluating the actual performance and comparing it with the standards set by them.
A sales budget is a budget which is used to estimate the expected units of sales in dollars and also helps to determine the estimated earnings during a period.
Requirement 1-
To prepare:
Monthly sales budget
Answer to Problem 4BPSB
NABAR Manufacturing | ||||
Monthly sales budget | ||||
July | August | September | Total | |
Sales in units | 21,000 | 19,000 | 20,000 | 60,000 |
Selling price per unit | $17 | $17 | $17 | $17 |
Dollar sales value($) | 357,000 | 323,000 | 340,000 | 1,020,000 |
Explanation of Solution
Given,
- Sales units for July = 21,000
- Sales units for August = 19,000
- Sales units for September = 20,000
- Selling price per unit = $17
Dollar sales value for each month is calculated as follows-
Conclusion:
Thus, the monthly sales budget has been prepared.
Concept Introduction:
Master Budget-
Master budget is a sum of all lower level budgets which are produced at different functional areas of the company. It helps in providing good coordination among all level managers. It also helps the manager in evaluating the actual performance and comparing it with the standards set by them.
Requirement 2-
To prepare:
Production budget
Answer to Problem 4BPSB
NABAR Manufacturing | ||||
Production budgets | ||||
July | August | September | Total | |
Budgeted Sales for the month | 21,000 | 19,000 | 20,000 | |
Ending inventory in units | 13,300 | 14,000 | 16,800 | |
Total Needs | 34,300 | 33,000 | 36,800 | |
Less: Beginning inventory | (16,800) | (13,300) | (14,000) | |
Units to be produced | 17,500 | 19,700 | 22,800 | 60,000 |
Explanation of Solution
First, ending inventory in units is required to be calculated-
Calculation of ending inventory in units is as under-
Now, Merchandise purchases required is to be calculated-
Given, Expected sales of the month-
- July − 21,000 units
- August − 19,000 units
- September − 20,000 units Ending inventory −
- July − 13,300 units
- August − 14,000 units
- September − 16,800 units
- Ending inventory of the previous month shall be beginning inventory of current month.
Beginning inventory-
- July − 16,800 units (given)
- August − 13,300 units
- September − 14,000 units Total requirement for the month of July, August and September-
Conclusion:
Thus, the Production budget has been prepared for the months of July, August and September.
Concept Introduction:
Master Budget-
Master budget is a sum of all lower level budgets which are produced at different functional areas of the company. It helps in providing good coordination among all level managers. It also helps the manager in evaluating the actual performance and comparing it with the standards set by them.
Requirement 3-
To prepare:
Raw materials Budget
Answer to Problem 4BPSB
NABAR Manufacturing | ||||
Raw Materials budgets | ||||
July | August | September | Total | |
Production Budget | 17,500 | 19,700 | 22,800 | |
Materials requirement per unit | 0.5 | 0.5 | 0.5 | |
Materials needed for production | 8,750 | 9,850 | 11,400 | |
Add: Budgeted ending raw material inventory | 1,970 | 2,280 | 1,980 | |
Total material requirements (units) | 10,720 | 12,130 | 13,380 | |
Less: Desired opening raw material inventory | (4,375) | (1,970) | (2,280) | |
Materials to be purchased | 6,345 | 10,160 | 11,100 | 27,605 |
Materials price per unit | $8 | $8 | $8 | $8 |
Total cost of direct material purchases | $50,760 | $81,280 | $88,800 | $220,840 |
Explanation of Solution
Given,
- Materials requirement per unit = 0.5
- Desired opening raw material inventory for June = 4,375 units
- Desired ending raw material inventory for September = 1,980 units
- Materials price per unit = $8
- Production Budget = Calculated in Req.2
Ending inventory is 50% of next month's Materials requirements-
Beginning raw material inventory-
- Ending raw material inventory of the previous month shall be beginning raw material inventory of current month.
- July − 4,375 units
- August −1,970units
- September − 2,280 units
Now, we need to calculate Materials to be purchased-
Total cost of direct materials purchases is calculated below-
Conclusion:
Thus, Raw materials budget has been prepared.
Concept Introduction:
Master Budget-
Master budget is a sum of all lower level budgets which are produced at different functional areas of the company. It helps in providing good coordination among all level managers. It also helps the manager in evaluating the actual performance and comparing it with the standards set by them.
Requirement 4-
To prepare:
Direct Labor Budget
Answer to Problem 4BPSB
NABAR Manufacturing | ||||
Direct Labor budgets | ||||
July | August | September | Total | |
Budgeted production (units) | 17,500 | 19,700 | 22,800 | |
Labor requirements per unit (hours) | 0.5 | 0.5 | 0.5 | |
Total labor hours needed | 8,750 | 9,850 | 11,400 | 30,000 |
Labor rate (per hour) | $16 | $16 | $16 | $16 |
Labor Dollars | $140,000 | $157,600 | $182,400 | $480,000 |
Explanation of Solution
Given,
- Production Budget = Calculated in Req.2
- Labor requirements per unit= 0.5
- Labor rate (per hour) = $16
Total labor hours needed is calculated as below-
Now, we need to calculate Labor dollars-
Conclusion:
Thus, Labor budget is prepared.
Concept Introduction:
Master Budget-
Master budget is a sum of all lower level budgets which are produced at different functional areas of the company. It helps in providing good coordination among all level managers. It also helps the manager in evaluating the actual performance and comparing it with the standards set by them.
Requirement 5-
To prepare:
Factory overhead Budget
Answer to Problem 4BPSB
NABAR Manufacturing | ||||
Factory overhead budget | ||||
July | August | September | Total | |
Labor hours needed | 17,500 | 19,700 | 22,800 | |
Variable factory overhead rate | $1.35 | $1.35 | $1.35 | |
Budgeted variable overhead | $23,625 | $26,595 | $30,780 | $81,000 |
Budgeted fixed overhead | $20,000 | $20,000 | $20,000 | $60,000 |
Budgeted total overhead | $43,625 | $46,595 | $50,780 | $141,000 |
Explanation of Solution
Given,
- Labor hours needed- Calculated in Requirement 4
- Variable factory overhead rate - $1.35
- Budgeted fixed overhead (Depreciation)- $20,000 First we need to calculate Budgeted variable overhead-
Budgeted variable overhead is calculated as under-
Budgeted total overhead-
Conclusion:
Thus, factory overhead budget is prepared.
Concept Introduction:
Master Budget-
Master budget is a sum of all lower level budgets which are produced at different functional areas of the company. It helps in providing good coordination among all level managers. It also helps the manager in evaluating the actual performance and comparing it with the standards set by them.
Requirement 6-
To prepare:
Selling expense Budget
Answer to Problem 4BPSB
NABAR Manufacturing | ||||
Selling Expense budgets | ||||
July ($) | August ($) | September ($) | Total ($) | |
Sales commissions | 35,700 | 32,300 | 34,000 | 102,000 |
Sales salaries | 3,500 | 3,500 | 3,500 | 10,500 |
Selling expenses | 39,200 | 35,800 | 37,500 | 112,500 |
Explanation of Solution
First we need to calculate Sales commissions.
Calculation of sales commission is as under-
- Sales are calculated in Requirement 1
Sales salary for each month- $3,500 (Given)
Selling expense for each month is calculated as under-
Conclusion:
Thus, the selling expense budget is prepared for the month of July, August and September.
Concept Introduction:
Master Budget-
Master budget is a sum of all lower level budgets which are produced at different functional areas of the company. It helps in providing good coordination among all level managers. It also helps the manager in evaluating the actual performance and comparing it with the standards set by them.
Requirement 7-
To prepare:
General and administrative expense Budget
Answer to Problem 4BPSB
NABAR Manufacturing | ||||
General and administrative budgets | ||||
July | August | September | Total ($) | |
Salaries | 9,000 | 9,000 | 9,000 | 27,000 |
Interest on long term note | 2,700 | 2,700 | 2,700 | 8,100 |
Total general and administrative expenses | 11,700 | 11,700 | 11,700 | 35,100 |
Explanation of Solution
Given:
- Salaries Expense = $9,000 per month
Interest on long term note-
Total General and administrative expenses for each month is calculated as under-
Conclusion:
Thus, the general and administrative expenses budget is prepared for the month of July, August and September. Expense for each month is $11,700.
Concept Introduction:
Master Budget-
Master budget is a sum of all lower level budgets which are produced at different functional areas of the company. It helps in providing good coordination among all level managers. It also helps the manager in evaluating the actual performance and comparing it with the standards set by them.
Requirement 8-
To prepare:
Cash Budget
Answer to Problem 4BPSB
NABAR Manufacturing | ||||
Cash Budget | ||||
July | August | September | ||
Beginning cash balance | 40,000 | 96,835 | 141,180 | |
Add: Cash receipts from customers | 357,000 | 346,800 | 328,100 | |
Total cash available | 397,000 | 443,635 | 469,280 | |
Less: Cash disbursements | ||||
Payment for raw materials | 51,400 | 50,760 | 81,280 | |
Payment for direct labor | 140,000 | 157,600 | 182,400 | |
Payments for variable overhead | 23,625 | 26,595 | 30,780 | |
Sales commission | 35,700 | 32,300 | 34,000 | |
Sales salaries | 3,500 | 3,500 | 3,500 | |
General and administrative salaries | 9,000 | 9,000 | 9,000 | |
Dividends | 0 | 20,000 | 0 | |
Loan interest | 240 | 0 | 0 | |
Long term note interest | 2,700 | 2,700 | 2,700 | |
Income taxes | 10,000 | 0 | 0 | |
Purchase of equipment | 0 | 0 | 100,000 | |
Total cash disbursements | 276,165 | 302,455 | 443,660 | |
Excess of cash receipts over cash disbursements | 120,835 | 141,180 | 25,620 | |
Additional loan (Loan repayment) | (24,000) | 14,380 | ||
Ending cash balance | 96,835 | 141,180 | 40,000 |
Explanation of Solution
Given-
- Beginning cash balance = $40,000
- Payment for raw materials − Calculated in Req. 3
- Payment for direct labor - Calculated in Req. 4
- Payments for variable overhead - Calculated in Req. 5
- Sales commission - Calculated in Req. 6
- Sales salaries - Calculated in Req. 6
- General and administrative salaries - Calculated in Req.7
- Long term note interest - Calculated in Req.7
- Dividends - $20,000
- Purchase of equipment - $100,000
- Income taxes - $10,000 Total cash available
Calculation of cash receipts from customers is as under-
-It is given that amount of credit sales will be collected in the month following the sale.
Calculation of cash receipts from customers- | |||
July | August | September | |
Total budgeted sales (Req.1) | 357,000 | 323,000 | 340,000 |
Cash Sales (30%) | 107,100 | 96,900 | 102,000 |
Credit sales (70%) | 249,900 | 226,100 | 238,000 |
Total cash receipts from customers | |||
Current month's cash sales | 107,100 | 96,900 | 102,000 |
Collection of receivables | 249,900 | 249,900 | 226,100 |
Total cash receipts | 357,000 | 346,800 | 328,100 |
Total cash available-
Total cash disbursementsLoan interest-
Total cash disbursements-
Excess of cash receipts over cash disbursements
- It is given that Company need to maintain minimum cash balance of $40,000. In September month they don't have sufficient cash balance so, need to borrow loan to meet minimum cash balance as $40,000.
Loan amount for June month-
Available cash balance=$25,620
-Loan is repaid in the month of July of $24,000.
Ending cash balance-
Conclusion:
Thus, cash budget is prepared with ending cash balance in the month of September $40,000.
Concept Introduction:
Master Budget-
Master budget is a sum of all lower level budgets which are produced at different functional areas of the company. It helps in providing good coordination among all level managers. It also helps the manager in evaluating the actual performance and comparing it with the standards set by them.
Requirement 9-
To prepare:
Budgeted income statement
Answer to Problem 4BPSB
NABAR Manufacturing | ||||
Income Statement | ||||
Particulars | Amount ($) | Amount ($) | ||
Sales | 1,020,000 | |||
Cost of merchandise sold | 861,000 | |||
Gross Profit | 159,000 | |||
Operating expenses: | ||||
Sales Commissions | 102,000 | |||
Sales Salaries | 10,500 | |||
Long term note interest | 8,100 | |||
General and administrative salaries | 27,000 | |||
Interest expense | 240 | 147,840 | ||
Income before tax | 11,160 | |||
Tax @ 35% | 3,906 | |||
Net operating income | 7,254 |
Explanation of Solution
Given,
- Sales = $1,020,000 Calculated in Req.1
- Sales commission - $102,000 Calculated in Req. 6
- Sales salaries - $10,500 Calculated in Req. 6
- General and administrative salaries - $27,000 Calculated in Req.7
- Long term note interest - $8,100 Calculated in Req.7
- Interest expense -$240 Calculated in Req.8
Cost of merchandise sold-
Gross profit is calculated as under-
Total operating expenses-
Income before tax-
Tax Expense-
Net Operating income is calculated as under-
Conclusion:
Thus, Income statement is prepared for the quarter.
Concept Introduction:
Master Budget-
Master budget is a sum of all lower level budgets which are produced at different functional areas of the company. It helps in providing good coordination among all level managers. It also helps the manager in evaluating the actual performance and comparing it with the standards set by them.
Requirement 10-
To prepare:
Budgeted Balance sheet.
Answer to Problem 4BPSB
NABAR Manufacturing | ||||
Balance sheet as of September 30, 2019 | ||||
Amount ($) | Amount ($) | |||
Assets | ||||
Cash | 40,000 | |||
Accounts receivable | 238,000 | |||
Raw materials Inventory | 15,840 | |||
Finished goods inventory | 241,080 | |||
Total current assets | 534,920 | |||
Equipment | 820,000 | |||
Less: Accumulated depreciation | (300,000) | |||
Equipment net | 520,000 | |||
Total assets | 1,054,920 | |||
Stockholder's Equity and Liabilities | ||||
Accounts payable | 88,800 | |||
Bank loan payable | 14,380 | |||
Tax payable | 3,906 | |||
Current liabilities | 107,086 | |||
Long term note payable | 300,000 | |||
Common stock | 600,000 | |||
Retained earnings | 47,834 | |||
Total Stockholder's Equity | 647,834 | |||
Total Stockholder's Equity and Liabilities | 1,054,920 |
Explanation of Solution
Assets
Given,
- Cash = $40,000 (Req.8)
Calculation of other current assets-
Particulars | Amount ($) |
Accounts Receivables | |
Beginning receivables | 249,900 |
Credit sales | 714,000 |
Less: Collections | (725,900) |
Ending Receivables | 238,000 |
Raw material inventory | |
Beginning raw materials | 35,000 |
Purchases of raw materials | 220,840 |
Less: Materials used in production | (240,000) |
Ending raw materials inventory | 15,840 |
Finished goods inventory | |
Beginning Finished goods inventory | 241,080 |
Cost of goods completed during the period | 861,000 |
Less: Cost of goods sold during the period | (861,000) |
Ending Finished goods inventory | 241,080 |
Total current assets-
Calculation of Equipment-
Particulars | Amount ($) |
Equipment Gross | |
Beginning Equipment | 720,000 |
Purchased in June | 100,000 |
Total (A) | 820,000 |
Accumulated Depreciation | |
Beginning Accumulated Depreciation | 240,000 |
Depreciation expense | 60,000 |
Total (B) | 300,000 |
Equipment (A-B) | 520,000 |
Total Assets-
Stockholder's Equity and Liabilities
Given,
- Bank loan payable = $14,380 (Req.8)
- Taxes payable = $3,906 (Req.9)
- Long −term note payable = $300,000
- Common stock = $600,000
Accounts payable-
Particulars | Amount ($) |
Accounts Payables | |
Beginning accounts payable | 51,400 |
Purchase of raw materials | 220,840 |
Payments of raw materials | (183,440) |
Ending accounts payable | 88,800 |
Total current liabilities-
Retained Earnings-
Particulars | Amount ($) |
Retained Earnings | |
Retained Earnings, Beginning | 60,580 |
Add: Net Income | 7,254 |
67,834 | |
Less: Dividends | (20,000) |
Retained Earnings, Ending | 47,834 |
Total stockholder's equity-
Total Stockholder's Equity and Liabilities-
Conclusion:
Thus, Budgeted balance sheet is prepared with total of $1,054,920.
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Chapter 22 Solutions
Fundamental Accounting Principles
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The quantities and costs of the inventories at December 31, 2017, are expected to remain unchanged from the balances at The beginning of the year. Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows: Estimated Costs and Expenses Cost of goods manufactured and sold: Fixed (Total for Year) Direct materials................................................ 1.10 Direct labor.................................................... 0.65 Factory overhead: Depreciation of plant and equipment.......................... 40,000 Other factory overhead....................................... 12,000 0.40 Selling expenses: Sales salaries and commissions.................................. 46,000 0.45 Advertising.................................................... 64,000 Miscellaneous selling expense.................................. 6,000 0.25 Administrative expenses: Office and officers salaries...................................... 72,400 0.12 Supplies....................................................... 5,000 0.10 Miscellaneous administrative expense........................... 4,000 0.05 Balances, of accounts receivable, prepaid expenses, and accounts payable at the end of the year are not expected to differ significantly from the beginning balances. 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Estimated inventories at December 1: Direct materials: Finished products: Wood 200 ft Bird house....... 320 units at 27 per unit Plastic 240 lbs. Bird feeder....... 270 units at 40 per unit c. Desired inventories at December 31: Direct materials: Finished products: Wood 220 ft Bird house....... 290 units at 27 per unit Plastic 200 lbs. Bird feeder....... 250 units at 41 per unit d. Direct materials used in production: In manufacture of Bird House: In manufacture of Bird Feeder: Wood 0.80 ft. per unit of product Wood........... 1.20 ft per unit of product Plastic 050 lb. per unit of product Plastic........... 0.75 lb. per unit of product e. Anticipated cost of purchases and beginning and ending inventory of direct materials: Wood 7.00 per ft. Plastic................. 1.00 per lb. f. Direct labor requirements: Bird House: Fabrication Department 0.20 hr. at 16 per hr. Assembly Department 0.30 hr. at 12 per hr. Bird Feeder: Fabrication Department 0.40 hr. at 16 per hr. Assembly Department 0.35 hr. at 12 per hr. g. Estimated factory overhead costs for December. Indirect factory wages 75,000 Power and light 6,000 Depreciation of plant and equipment 23,000 Insurance and property tax 5,000 h. Estimated operating expenses for December: Sales salaries expense 70,000 Advertising expense 18,000 Office salaries expense 21,000 Depreciation expenseoffice equipment 600 Telephone expenseselling 550 Telephone expenseadministrative 250 Travel expenseselling 4,000 Office supplies expense 200 Miscellaneous administrative expense 400 i. Estimated other income and expense for December: Interest revenue 200 Interest expense 122 j. Estimated lax rate: 30% Instructions 1. Prepare a sales budget for December. 2. Prepare a production budget for December. 3. Prepare a direct materials purchases budget for December. 4. Prepare a direct labor cost budget for December. 5. Prepare a factory overhead cost budget for December. 6. Prepare a cost of goods sold budget for December. Work in process at the beginning of December is estimated to be 29,000 and work in process at the end of December is estimated to be 35,400. 7. Prepare a selling and administrative expenses budget for December. 8. Prepare a budgeted income statement for December.arrow_forwardExercises 1: Questions for discussion 1. Describe the items reflected in the sales budget. 2. List the items included in the production budget 3. Identify the items that comprise the operating budget Exercises 2: Word Problems Roel Trading Company presents the actual sales for the first three months of year 2019 in its own products as follows: Product B P 540,000 P 567,000 P 595,350 Product A Total Sales Janaury February March P 880,000 P 941,000 P 1,006,750 The business expects that the trends for the past three months will P 340,000 P 374,000 P 411400 continue in April and May 2019. Required: Determined the projected sales for April and May 2019 for the two products. Round the amounts to thousand pesos.arrow_forward
- Question #2 Cash budgeting is critical to a company’s financial information needs. The following information was extracted from the records of A & B Manufacturing Company Limited. The opening cash balances on January 01, 2021 was expected to be $30,000. The budgeted sales were as follows: Budgeted Sales Month Year $November 2020 80,000December 2020 90,000January 2021 80,000February 2021 75,000March 2021 60,000April 2021 70,000 Analysis of records shows that debtors settle according to the following pattern: 70% within the month of sale 30% the following month Extracts of the purchases budget were as follows:Purchases budget Month Year $December 2020 65,000January 2021 50,000February 2021 75,000March 2021 70,000 …arrow_forwardQuestion #2 Cash budgeting is critical to a company’s financial information needs. The following information was extracted from the records of A & B Manufacturing Company Limited. The opening cash balances on January 01, 2021 was expected to be $30,000. The budgeted sales were as follows: Budgeted Sales Month Year $November 2020 80,000December 2020 90,000January 2021 80,000February 2021 75,000March 2021 60,000April 2021 70,000 Analysis of records shows that debtors settle according to the following pattern: 70% within the month of sale 30% the following month Extracts of the purchases budget were as follows:Purchases budget Month Year $December 2020 65,000January 2021 50,000February 2021 75,000March 2021 70,000 …arrow_forwardQuestion #2 Cash budgeting is critical to a company’s financial information needs. The following information was extracted from the records of A & B Manufacturing Company Limited. The opening cash balances on January 01, 2021 was expected to be $30,000. The budgeted sales were as follows: Budgeted Sales Month Year $November 2020 80,000December 2020 90,000January 2021 80,000February 2021 75,000March 2021 60,000April 2021 70,000 Analysis of records shows that debtors settle according to the following pattern: 70% within the month of sale 30% the following month Extracts of the purchases budget were as follows:Purchases budget Month Year $December 2020 65,000January 2021 50,000February 2021 75,000March 2021 70,000 …arrow_forward
- Data Year 2 Quarter Year 3 Quarter 1 2 3 4 1 2 Budgeted unit sales 40,000 60,000 100,000 50,000 70,000 80,000 • Selling price per unit • Accounts receivable, beginning balance • Sales collected in the quarter sales are made • Sales collected in the quarter after sales are made • Desired ending finished goods inventory is • Finished goods inventory, beginning • Raw materials required to produce one unit • Desired ending inventory of raw materials is • Raw materials inventory, beginning • Raw material costs • Raw materials purchases are paid and • Accounts payable for raw materials, beginning balance $12 per unit $65,000 75% 25% 30% of the budgeted unit sales of the next quarter 12,000 units 5 pounds 10% of the next quarter's production needs 23,000 pounds $0.80 per pound 60% in the quarter the purchases are made 40% in the quarter following purchase $81,500 •Direct labor cost per hour •Direct labor hour per unit $15 per hour 0.2 hour per unit $2 per hour $60,000 •Variable MOH rate…arrow_forwardAssets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets Minden Company Balance Sheet April 30 Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings Total liabilities and stockholders' equity The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $255,000 for May. Of these sales, $76,500 will be for cash; the remainder will be credit sales. One-half of a month's credit sales are collected in the month the sales are made, and the remainder is collected in the following month. All of the April 30 accounts receivable will be collected in May. b. Purchases of inventory are expected to total $189,000 during May. These purchases will all be on account. Forty percent of all purchases are paid for in the month of purchase; the remainder are paid in the following month. All of the April 30 accounts payable to suppliers will be paid during…arrow_forward189 Exercise 5-11 William Go is the owner and manager of the Kentucky Company. He is in the process of preparing a budget for the first six months of 2021, Income statement estimates for each month are given below: Jan. Feb. May March P92,000 P82,000 P102,000 P146,000 P172,000 P188,000 P50,000 P46,000 P56,000 P68,000 P88,000 April June Sales Cost of sales P96,000 28,000 Expenses Depreciation Total 16,000 8,000 P74,000 P68,000 P80,000 P18,000 P14,000 14,000 8,000 16,000 8,000 24,000 10,000 P98,000 P122,000 P134,000 22,000 8,000 10,000 Net income P22,000 P48,000 P50,000 P54,000 in certain balance sheet accounts during each month. (decreases) are given below: During the six-month period, William anticipates the following changes The increases and March Accounts receivableP(6,000) P4,000 P12,000 Jan. Feb. May P(4,000) P6,000 P(8,000) (10,000) 16,000 (4,000) (4,600) April June Inventories 8,000 (8,000) 14,000 (6,000 ) Accounts payable 2,000 2,000 The cash balance on January 1, 2021 is…arrow_forward
- Financial & Managerial AccountingAccountingISBN:9781285866307Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning