Chapter 13 – Planning and Budgeting
13–21
Solutions to Problems
13–40. (30 min.) Prepare Budgeted Financial Statements: Dancer Components.
Dancer Components
Budgeted Income Statement
For Year 2
Calculations
Sales revenue ……………………………………..……..
$6,389,700a
$5,700,000 x 1.18 x .95
Manufacturing costs:
Materials ………………………………………….……..
$ 364,762
$336,000 x .92 x 1.18
Other variable costs …………………………..……..
329,343
$284,800 x .98 x 1.18
Fixed cash costs ……………………………….……..
687,960
$655,200 x 1.05
Depreciation (fixed) …………………………..
1,998,000
unchanged
Total manufacturing costs ……………………..……
$3,380,065
Marketing and administrative costs:
Marketing (variable, cash) ………………………..
$ 996,864
$844,800 x 1.18
Marketing depreciation …………………………..
299,200
unchanged
Administrative (fixed, cash) ………………..……..
1,120,240
$1,018,400 x 1.10
Administrative depreciation ………………..……..
149,600
unchanged
Total marketing and administrative costs ………..
$2,565,904
Total costs …………………………………………..……..
$5,945,969
Operating profits …………………………………..……..
$ 443,731
a Alternatively, $6,389,700 = (1.18 x 300,000 units) x (.95 x $19.00 per unit)
Chapter 13 – Planning and Budgeting
13–22
13–41. (10 min.) Estimate Cash from Operations: Dancer Components.
Dancer Components
Cash Basis Budgeted Income Statement
For Year 2
Sales revenue …………………………………………….
$6,389,700
Manufacturing costs:
Materials …………………………………………………
$ 364,762
Other variable costs ………………………………….
329,343
Fixed cash costs ………………………………………
687,960
Total manufacturing costs …………………………….
$ 1,382,065
Marketing and administrative costs:
Marketing (variable, cash) ………………………..
$ 996,864
Administrative (fixed, cash) ……………………….
1,120,240
Total marketing and administrative costs ………..
$2,117,104
Total costs ………………………………………………….
$3,499,169
Cash operating profits ………………………………….
$2,890,531
Cash from operations would equal revenues less cash costs, which excludes
depreciation.
Chapter 13 – Planning and Budgeting
13–23
13–42. (30 min.) Prepare Budgeted Financial Statements: Cameron Parts.
Cameron Parts
Budgeted Income Statement
For Year 2
Calculations
$1,328,477
$1,119,000 x 1.12 x 1.06
$ 245,784
$199,500 x 1.12 x 1.10
291,756
$271,350 x 1.12 x .96
100,440
$108,000 x .93
139,950
$133,500 – $14,550 + $21,000
$777,930
$ 159,600
$142,500 x 1.12
33,900
unchanged
145,978
$135,165 x 1.08
12,600
unchanged
$352,078
$1,130,008
$198,469
Chapter 13 – Planning and Budgeting
13–24
13–43. (10 min.) Estimate Cash from Operations: Cameron Parts.
Cameron Parts
Cash Basis Budgeted Income Statement
For Year 2
Sales revenue …………………………………………….
$1,328,477
Manufacturing costs:
Materials …………………………………………………
$ 245,784
Variable cash costs ………………………………….
291,756
Fixed cash costs ………………………………………
100,440
Total manufacturing costs …………………………….
$637,980
Marketing and administrative costs:
Marketing (variable, cash) ………………………..
$ 159,600
Administrative (fixed, cash) ……………………….
145,978
Total marketing and administrative costs ………..
$305,578
Total costs ………………………………………………….
$943,558
Cash operating profits ………………………………….
$384,919
Cash from operations would equal revenues less cash costs, which excludes
depreciation.
Chapter 13 – Planning and Budgeting
13–44. (25 min.) Prepare A Production Budget: Chander, Inc.
Chander, Inc.
Production Budget
Coming Year
Chapter 13 – Planning and Budgeting
13–26
13–45. (25 min.) Prepare A Production Budget: Lotus Fixtures, Inc.
Lotus Fixtures, Inc.
Production Budget
Year 2
(in units)
Expected Sales ………………………………………………..
420,000
units
Add: Desired ending inventory of finished goods …..
20,000
Total needs ……………………………………………………..
440,000
Less: Beginning inventory of finished goods …………
40,000
Units to be produced …………………………………………
400,000
units
Alternative method:
First, compute the estimated production:
P
=
Sales + EB – BB
P
=
Sales + (20,000 – 40,000)
=
420,000 – 20,000
=
400,000
units
Steel 400,000 x 2 pounds x $0.40 x 0.80 ………..
$256,000
Alloy 400,000 x 0.5 pounds x $3.00 ……………….
600,000
Total direct materials ………………………………..
$856,000
Direct labor:
400,000 x 0.01 hr. x $30 x 1.10 ………………….
$132,000
Overhead:
Indirect materials …………………………..
400,000 x $0.50
$ 200,000
Indirect labor …………………………….…………………
400,000 x $0.80
320,000
Utilities …………………………………….…………………
400,000 x $0.40
160,000
Plant and equipment depreciation .…………………
500,000 x $1.00 x 1.05
525,000
Miscellaneous …………………………..…………………
500,000 x $0.70
350,000
Total overhead ………………………………………
$1,555,000
Total budgeted manufacturing costs ………………
$2,543,000
Chapter 13 – Planning and Budgeting
13–27
13–46. (25 min.) Sales Expense Budget: Capstone Corporation.
Budgeted
Item
January
Adjustments
Typical Month
Sales commissions …………………………..
$121,500
x
1.05 x 1.10
=
$140,333
Sales staff salaries …….…………………….
28,800
x
1.04
=
29,952
Telephone & mailing ….……………………….
14,580
x
1.08 x 1.10
=
17,321
Building lease payment …………………………..
18,000
(unchanged)
=
18,000
Utilities …………………….…….
3,690
x
1.15
=
4,244
Packaging & delivery ….……………………….
24,660
x
1.10
=
27,126
Depreciation ……………..……………
11,250
+
($17,100 ÷ 120 months)
=
11,393
Marketing consultants ..…………………………
–0–
+
$31,500
=
31,500
Total budgeted costs .
$279,869
Chapter 13 – Planning and Budgeting
13–47. (30 min.) Budgeted Purchases And Cash Flows: Delhi, Inc.