Chapter 13 – Planning and Budgeting
13–11
13–28. (15 min.) Estimate Cash Collections: Duluth Company.
Duluth Company
Schedule of Cash Collections
Collections in December for sales prior to November …….
December sales ……………………………………………………….
13–29. (20 min.) Estimate Cash Collections: Nassau Products.
Nassau Products
Schedule of Cash Collections
For the Month Ended April 30
April
January sales ……………………………………………..
$ 11,400a
February sales ……………………………….…………..
16,800b
March sales ………………………………………………..
167,400c
April sales ……………………………………..…………..
Total cash collections …………………………..
$270,600
a$11,400 = $285,000 x 4%
b$16,800 = $240,000 x 7%
c$167,400 = $270,000 x 62%
d$75,000 = $300,000 x 25%
Chapter 13 – Planning and Budgeting
13–12
13–30. (30 min.) Estimate Cash Receipts: Scare-2-B-U.
a. Revenues are as follows:
April …………..………………
$18,000
=
75 occasions
x
$240
May …………………………..
$10,800
=
45 occasions
x
$240
June …………..………………
$7,200
=
30 occasions
x
$240
July …………………………..
$14,400
=
60 occasions
x
$240
August ……….………………….
$18,000
=
75 occasions
x
$240
September ….……………………….
$39,600
=
165 occasions
x
$240
b. Cash receipts are as follows:
Scare-2-B-U
Multiperiod Schedule of Cash Receipts
Cash Receipts in Month of:
Total Cash
Receipts for
April
May
June
July
Period
April sales ………………….……….
$ 5,400a
$ 5,400
May sales…………………..………
5,400b
$3,240
8,640
June sales………………….……….
1,440c
3,600
$ 2,160
7,200
July sales …………………..………
2,880
7,200
$ 4,320
14,400
August sales …………………………..
3,600
9,000
12,600
September sales …………………………..
_______
_____
_____
7,920
7,920
Total cash collections
$12,240
$9,720
$12,960
$21,240
$56,160
a $5,400 = 18,000 x 30%
Chapter 13 – Planning and Budgeting
13–13
13–31. (30 min.) Estimate Cash Receipts: Varmit-B-Gone.
Revenues are as follows:
March …..
$28,800
=
0.6 calls
x
600 subscribers
x
$80
April …….
50,400
=
0.9 calls
x
700 subscribers
x
$80
May ……..
168,000
=
1.5 calls
x
1,400 subscribers
x
$80
June …….
320,000
=
2.5 calls
x
1,600 subscribers
x
$80
July ……..
384,000
=
3.0 calls
x
1,600 subscribers
x
$80
August …
288,000
=
2.4 calls
x
1,500 subscribers
x
$80
Collections of these revenues are expected according to the following schedule:
Varmit-B-Gone
Multiperiod Schedule of Cash Receipts
Cash Receipts in Month of:
Total Cash
Receipts
May
June
July
August
for Period
March sales ……………….………….
$ 2,304a
$2,304
April sales ………………….……….
30,240b
$ 4,032
34,272
May sales…………………..………
50,400c
100,800
$13,440
164,640
June sales………………….……….
96,000
192,000
$ 25,600
313,600
July sales …………………..………
115,200
230,400
345,600
August sales …………………………..
_______
_______
______
86,400
86,400
Total cash collections .………………………….
$82,944
$200,832
$320,640
$342,400
$946,816
a $2,304 = 8% x $28,800
Chapter 13 – Planning and Budgeting
13–14
13–32. (30 min.) Prepare Budgeted Financial Statements: Varmit-B-Gone.
Varmit-B-Gone
Budgeted Income Statement
For the Month of September
Calculations
Sales revenue …………………………………..………..
$207,360
(90% x 1,500) x (80% x 2.4) x $80
Less manufacturing costs:
Variable costs ………………………………..………..
$ 17,280
(.72a x $24,000)
Maintenance and repair …………………..………
22,220
(1.01 x $22,000)
Depreciation ………………………………….………..
42,000
(no change)
Total service costs …………………………….………..
$ 81,500
Marketing and administrative:
Marketing (variable) ……………………….….
$ 10,440
(.72a x $14,500)
Administrative (fixed) ……………………..……
57,750
(1.05 x $55,000)
Total marketing and administrative costs ………..
$ 68,190
Total costs ………………………………………..………..
$149,690
Operating profit …………………………………………..
$ 57,670
a Ratio of September to August volume:
September: (90% x 1,500) x (80% x 2.4) = 2,592
August: 1,500 x 2.4 = 3,600
Ratio = .72 = 2,592 ÷ 3,600
or
Ratio = .80 x .90 = .72
Chapter 13 – Planning and Budgeting
13–15
13–33. (15 min.) Prepare Budgeted Financial Statements: Rhodes, Inc.
Rhodes, Inc.
Budgeted Income Statement
August
Calculations
Sales revenue (240 units @ $450/unit) …..……..
$108,000
($100,000 x 1.20 x .90)
Less
Manufacturing costs:
Variable ………………………………………..……..
$ 17,996
($14,560 x 1.20 x 1.03)
Depreciation (fixed) ……………………….….
15,300
(unchanged)
Total manufacturing costs ……………………..……
$ 33,296
Gross profit margin ……………………………….……..
$ 74,704
Less:
Marketing and Administrative
Fixed costs (cash) …………………………..
$41,316
($37,560 x 1.10)
Depreciation (fixed) ……………………….….
12,700
(unchanged)
Total marketing and administrative costs ………..
$54,016
Operating profits …………………………………..……..
$20,688
Chapter 13 – Planning and Budgeting
13–16
13–34. (15 min.) Prepare Budgeted Financial Statements: Carreras Café.
Carreras Café
Budgeted Income Statement
June
Calculations
Sales revenue
(2,520 meals @ $18.75/meal) ……………….……..
$47,250
($15 x 4,200 x 0.60 x 1.25)
Less
Service costs:
Food …………………………………………….……..
$ 7,623
($11,550 x 0.60 x 1.10)
Labor ………………………………………………..……..
10,080
($16,800 x 0.60)
Other variable costs …………………………...……..
3,450
($5,750 x 0.60)
Fixed service costs ……………………….….
9,600
(unchanged)
Total manufacturing costs ……………………..……
$ 30,753
Gross profit margin ……………………………….……..
$16,497
Less:
Marketing and Administrative
Marketing (variable) …………………………..
$ 3,780
($6,300 x 0.60)
Administrative ……………………………………..
5,000
(unchanged)
Total marketing and administrative costs ………..
$8,780
Operating profits …………………………………..……..
$7,717
Chapter 13 – Planning and Budgeting
13–17
13–35. (15 min.) Budgeting in a Service Organization: BK Consulting.
BK Consulting
Budgeted Income Statement
May and June
May
June
Revenues:
Managers (@ $800) …………………………..
$640,000
$400,000
Staff (@ $400) ……………………………………
1,920,000
1,200,000
Total revenue ……………………………..…
$2,560,000
$1,600,000
Expenses:
Manager compensation (@ $200) …………
$320,000
$320,000
Staff compensation (@ $100) ………………
640,000
640,000
Total compensation ……………………..…
$960,000
$960,000
SG&A …………………………………………….…
500,000
500,000
Depreciation ………………………………………
200,000
200,000
Marketing …………………………..…………..…
300,000
300,000
Total expenses ………………………………
$1,960,000
$1,960,000
Income ……………………………………………….…
$600,000
$(360,000)
13–36. (15 min.) Incentives and Sales Forecasts—Ethical Issues: Northwest
Hardware.
a. One explanation is that Lloyd has better (more specific) local knowledge about
Chapter 13 – Planning and Budgeting
13–18
c. Answers will vary. Gaming the system is common and, given that firms use targets to
assess performance, is expected. The answer to this question depends, in part, on what
13–37. (15 min.) Budget Revisions—Ethical Issues: Galaxy Electronics.
a. Elizabeth is probably hoping that because the company is committed to the aircraft
guidance program, it will not cut funding for that program and she can protect the other
projects, including her favorite.
Chapter 13 – Planning and Budgeting
13–19
13–38. (15 min.) Sensitivity Analysis: Sanjana’s Sweet Shoppe.
The following is an Excel screenshot of the spreadsheet. In typing the formulas, shown
Chapter 13 – Planning and Budgeting
13–20
13–39. (15 min.) Sensitivity Analysis: Bay Area Limos.
The following is an Excel screenshot of the spreadsheet. In typing the formulas, shown