Problem 22-8A (Continued)
Part 4
DIMSDALE SPORTS CO.
General and Administrative Expense Budgets
January, February, and March 2016
January February March Total
Salaries………………………………………………$12,000 $12,000 $12,000 $36,000
* Depreciation expense calculations
Annual
Amount January February March Total
Equipment owned
on 12/31/2015…………………. $67,500 $5,625 $5,625 $5,625 $16,875
Part 5
DIMSDALE SPORTS CO.
Capital Expenditures Budgets
January, February, and March 2016
January February March
Equipment purchases………………………………….$36,000 $96,000 $ 28,800
Problem 22-8A (Continued)
Part 6
DIMSDALE SPORTS CO.
Cash Budgets
January, February, and March 2016
January February March
Beginning cash balance……………………………….$ 36,000 $ 30,100 $210,300
Cash receipts from customers (note A)……………. 221,250 697,000 489,500
Total cash available……………………………………..257,250 727,100 699,800
Cash disbursements
Supporting calculations January February March Total
Note A: Cash receipts from customers
Total sales………………………………………………..$385,000 $495,000 $605,000 $1,485,000
Cash sales (25%)……………………………………… 96,250 123,750 151,250 371,250
Credit sales (75%)…………………………………….. 288,750 371,250 453,750 1,113,750
Cash collections
Problem 22-8A (Continued)
Part 7
DIMSDALE SPORTS CO.
Budgeted Income Statement
For Three Months Ended March 31, 2016
Sales…………………………………………………………………… $1,485,000
Cost of goods sold (27,000 units @ $30)……………….. 810,000
Gross profit…………………………………………………………. 675,000
Operating expenses
Part 8
DIMSDALE SPORTS CO.
Budgeted Balance Sheet
March 31, 2016
ASSETS
Cash………………………………………………….. $ 143,400 Cash budget
Accounts receivable…………………………… 602,250 Note C
Inventory……………………………………………. 60,000 Note D
Total current assets……………………………. 805,650
Problem 22-8A (Concluded)
Supporting Footnotes
Note C
Beginning receivables…………………………………………………$ 525,000
Note D
*Also equals 2,000 units @ $30 = $60,000
Note E
Beginning equipment………………………………………………….$ 540,000
Purchased in January………………………………………………… 36,000
Note F
Beginning accumulated depreciation………………………….$ 67,500
Note G
Beginning accounts payable……………………………………….$ 360,000
Note H
Beginning retained earnings……………………………………….$ 246,000
PROBLEM SET B
Problem 22-1B (30 minutes)
Part 1
NSA COMPANY
Production Budget (in units)
Second Quarter
Budgeted ending inventory (bats)………………………………………………. 6,000
Add budgeted sales…………………………………………………………………… 250,000
Part 2
NSA COMPANY
Direct Materials Budget (in lbs, except where noted)
Second Quarter
Materials (aluminum) needed for production (248,000 x 3)………… 744,000
Add budgeted ending inventory (aluminum)…………………………….. 12,000
Problem 22-1B (concluded)
Part 3
NSA COMPANY
Direct Labor Budget
Second Quarter
Units to be produced……………………………………………………. 248,000
Labor requirements per unit (hours)………………………………. x 0.50
Part 4
NSA COMPANY
Factory Overhead Budget
Second Quarter
Total labor hours needed………………………………………………. 124,000
Variable overhead rate per direct labor hour…………………… x $12
Problem 22-2B (30 minutes)
(1)
A1 MANUFACTURING
Cash Receipts Budget
For July, August, and September
July August Sept.
Sales……………………………………………………. $63,400 $80,600 $48,600
Problem 22-2B (continued)
(2)
A1 MANUFACTURING
Cash Budget
For July, August, and September
July August Sept.
Beginning cash balance*………………………. $12,900 $12,600 $24,371
Cash receipts (from part 1)……………………. 59,680 66,840 74,200
*July’s beginning cash balance includes a loan payable of $2,600.
** Rounded to the nearest dollar. Answers vary slightly if rounded to the nearest cent.
Problem 22-3B (50 minutes)
Part 1
HCS MFG.
Budgeted Income Statement
For Months of July, August, and September, 2015
July August September
Sales*………………………………………………..$1,265,000 $1,391,500 $1,530,650
Cost of goods sold*…………………………… 660,000 726,000 798,600
Gross profit………………………………………. 605,000 665,500 732,050
Expenses
* Volume for the next three months increases by 10% per month
Sales Cost of Goods
Units (@ $115) Sold (@ $60)
June ($1,300,000/$130)…………………………..10,000
Part 2: Analysis Component
The plan for increasing sales volume by reducing the price and increasing
advertising would cause the company to generate less net income in each of the
three months of the next quarter than was earned in June. The expected results