Exercise 20-9 (15 minutes)
1.
RAD CO.
Direct Labor Budget
For April, May, and June
April May June
Budgeted production (units)….….………...... 442 570 544
Direct labor hours per unit….….………......... x 0.50 x 0.50 x 0.50
Total labor hours needed……………….…….… 221 285 272
2.
RAD CO.
Factory Overhead Budget
For April, May, and June
April May June
Total labor hours needed……………….…….… 221 285 272
Budgeted fixed overhead…………………....…. 8,000 8,000 8,000
Total factory overhead…….…….……….……...$12,420 $13,700 $13,440
Exercise 20-10 (20 minutes)
Blue Wave Co.
Production Budget
September, October, and November
Sept. Oct. Nov.
Next month’s budgeted sales…….……... 5,000 7,000 7,600
Ratio of inventory to future sales......... x 60% x 60% x 60%
Budgeted ending inventory………..…….. 3,000 4,200 4,560
Exercise 20-11 (20 minutes)
Tyler Co.
Production Budget
April, May, and June
April May June
Next month’s budgeted sales…….……... 4,000 6,000 2,000
Ratio of inventory to future sales......... x 30% x 30% x 30%
Budgeted ending inventory………..…….. 1,200 1,800 600
Add budgeted sales………..………..……... 3,000 4,000 6,000
Exercise 20-12 (15 minutes)
ELECTRO COMPANY
Production Budget
Second and Third Quarters
Second Third
Quarter Quarter
Budgeted ending inventories
Second quarter (20% x 525,000)………………………………..…..105,000
Third quarter (20% x 475,000)……………………………………….. 95,000
Add budgeted sales………………….…………………………………….450,000 525,000
Exercise 20-13 (15 minutes)
ELECTRO COMPANY
Direct Materials Budget
Second Quarter
Units to be produced…………..…………………………….……….….. 450,000
Materials requirement per unit………………..….….…….………... x 0.80
Materials needed for production (pounds)………..………….…. 360,000
Material price per pound……………..……………..……….……….…
Total cost of direct materials purchases………….…….………..
x $1.70
$631,040
* (520,000 x 0.80) x 20%
Exercise 20-14 (10 minutes)
BRANSON BELTS
Direct Labor Budget
Second Quarter
Units to be produced…………..…………………………….……….….. 4,500
Labor requirements per unit (hours)…………….…………………. x 4
Total labor hours needed………………………..…….……….………. 18,000
Financial and Managerial Accounting, 6th Edition
Exercise 20-15 (25 minutes)
1.
MCO Leather Goods
Direct Materials Budget
For the Months of September and October
September October
Budgeted production (units) 4,600 6,200
Materials requirements per unit 2.00 2.00
Materials needed for production (lbs.) 9,200 12,400
Budgeted ending inventory (lbs.)* 4,960 4,640
Total materials requirements (lbs.) 14,160 17,040
* September: 40% x 12,400 = 4,960 lbs.
October: 40% x 11,600 = 4,640 lbs.
2.
MCO Leather Goods
Direct Labor Budget
For the Months of September and October
September October
Budgeted production (units) 4,600 6,200
DL hours required per unit x 0.8 x 0.8
3.
MCO Leather Goods
Factory Overhead Budget
For the Months of September and October
September October
Total direct labor hours needed 3,680 4,960
VOH rate per DL hour x $2.00 x $2.00
1.
Ornamental Sculptures Mfg.
Direct Materials Budget
For the Months of March and April
March April
Budgeted production (units) 3,300 4,600
Materials requirements per unit x 8 x 8
Materials needed for production (lbs.) 26,400 36,800
Budgeted ending inventory (lbs.) 7,360 7,680
Total budgeted direct materials $85,440 $111,360
*April: 20% x 36,800 = 7,360 lbs.
May: 20% x 38,400 = 7,680 lbs.
2.
Ornamental Sculptures Mfg.
Direct Labor Budget
For the Months of March and April
March April
Budgeted production (units) 3,300 4,600
DL hours required per unit x 0.50 x 0.50
3.
Ornamental Sculptures Mfg.
Factory Overhead Budget
For the Months of March and April
March April
Total direct labor hours needed 1,650 2,300
VOH rate per DL hour x $3 x $3
Budgeted variable overhead $4,950 $6,900
Financial and Managerial Accounting, 6th Edition
Exercise 20-17 (25 minutes)
KAYAK COMPANY
Cash Budget
For January, February, and March
January February March
Beginning cash balance….…….……….…......$ 30,000 $ 30 ,000 $ 69,294
Cash receipts………………………..….…….….…. 525,000 400,000 450,000
Additional loan from bank….…….…….……… 35,706
Repayment of loan to bank………………….…. (49,400 ) (10,600 ) ________
Ending cash balance…………………...…….…..$ 30,000 $ 69,294 $ 30,000
Ending loan balance*…………..……….………..$ 10,600 $ 0 $ 35,706
*Loan balance is $60,000 at the beginning of January. January’s ending loan balance is
computed as $60,000 – 49,400.
Exercise 20-18 (15 minutes)
JASPER COMPANY
Cash Receipts Budget
For April, May, and June
April May June
Sales……………..…………………….……..………...$525,000 $535,000 $560,000
Less ending accts. receivable (70%).......... 367,500 374,500 392,000
Cash receipts from
Exercise 20-19 (20 minutes)
KARIM CORP.
Cash Budget
For July, August, and September
July August Sept.
Beginning cash balance….…….……….…...... $ 8,400 $ 8,000 $ 8,000
Cash receipts………………………..….…….….…. 20,000 26,000 40,000
Total cash available ………………………..….…. 28,400 34,000 48,000
Cash disbursements…………………….…….…. 28,000 30,000 22,000
Interest on bank loan
August ($7,600 x 1%)…………….……………..
September ($11,676 x 1%)*……….….……...
______
76
______
117
* Rounded to nearest whole dollar.
Financial and Managerial Accounting, 6th Edition
Exercise 20-20 (20 minutes)
FOYERT CORP.
Cash Budget
For October, November, and December
Oct. Nov. Dec.
Beginning cash balance*…………….…….……$ 30,000 $ 30,000 $ 30,000
Cash receipts………………………..….…….….…. 110,000 80,000 100,000
Total cash available ………………………..….…. 140,000 110,000 130,000
Cash disbursements…………………….…….…. 120,000 75,000 80,000
Interest on bank loan
Repayment of loan to bank………………….….
_______ 4,799 15,301
Ending cash balance…………………...…….…..$ 30,000 $ 30,000 $ 34,546
Loan balance, end of month……………….…..$ 20,100 $ 15,301 $ 0
*October’s beginning cash balance includes an outstanding loan balance of $10,000.
Exercise 20-21 (15 minutes)
PTO MANUFACTURING COMPANY
Cash Budget
For Month Ended September 30
Beginning cash balance………………….………….….………$ 40,000
Cash receipts from sales…………..…………………………… 255,000
Total cash available………………………..….…….……….….. $295,000
Cash disbursements
Total cash disbursements………………………..……….…… 210,500
Ending cash balance…………………..…….….…….…….….. $ 84,500
*($80,000 x 35%) + ($110,000 x 65%)
Financial and Managerial Accounting, 6th Edition