Exercise 8-5 (15 minutes)
1.
Yuvwell Corporation
Manufacturing Overhead Budget
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
Budgeted direct labor-hours …………………………..
8,000
8,200
8,500
7,800
32,500
Variable manufacturing overhead rate ……………..
× $3.25
× $3.25
× $3.25
× $3.25
× $3.25
Variable manufacturing overhead ……………………
$26,000
$26,650
$27,625
$25,350
$105,625
Fixed manufacturing overhead ……………………….
48,000
48,000
48,000
48,000
192,000
Total manufacturing overhead ……………………….
74,000
74,650
75,625
73,350
297,625
Less depreciation ………………………………………..
16,000
16,000
16,000
16,000
64,000
Cash disbursements for manufacturing overhead .
$58,000
$58,650
$59,625
$57,350
$233,625
2.
$297,625
32,500
$9.16
Exercise 8-7 (15 minutes)
Garden Depot
Cash Budget
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
Beginning cash balance .
$ 20,000
$ 10,000
$ 35,800
$ 25,800
$ 20,000
Total cash receipts ……..
180,000
330,000
210,000
230,000
950,000
Total cash available ……
200,000
340,000
245,800
255,800
970,000
Less total cash
disbursements …………
260,000
230,000
220,000
240,000
950,000
Excess (deficiency) of
cash available over
disbursements …………
(60,000)
110,000
25,800
15,800
20,000
Financing:
Borrowings (at
beginnings of
quarters)* ……………
70,000
70,000
Repayments (at ends
of quarters) ………….
(70,000)
(70,000)
Interest§ ………………..
(4,200)
(4,200)
Total financing …………..
70,000
(74,200)
(4,200)
Ending cash balance …..
$ 10,000
$ 35,800
$ 25,800
$ 15,800
$ 15,800
* Since the deficiency of cash available over disbursements is $60,000,
Exercise 8-8 (10 minutes)
Gig Harbor Boating
Budgeted Income Statement
Sales (460 units × $1,950 per unit) ………………….
$897,000
Cost of goods sold (460 units × $1,575 per unit) …
724,500
Gross margin ……………………………………………….
172,500
Selling and administrative expenses* ………………..
139,500
Net operating income …………………………………….
33,000
Interest expense …………………………………………..
14,000
Net income ………………………………………………….
$ 19,000
*(460 units × $75 per unit) + $105,000 = $139,500.
Exercise 8-9 (15 minutes)
Mecca Copy
Budgeted Balance Sheet
Assets
Current assets:
Cash* …………………………………………
$12,200
Accounts receivable ……………………….
8,100
Supplies inventory …………………………
3,200
Total current assets …………………………
$23,500
Plant and equipment:
Equipment …………………………………..
34,000
Accumulated depreciation ……………….
(16,000)
Plant and equipment, net ………………….
18,000
Total assets ……………………………………
$41,500
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable ………………………….
$ 1,800
Stockholders’ equity:
Common stock ……………………………..
$ 5,000
Retained earnings# ……………………….
34,700
Total stockholders’ equity ………………….
39,700
Total liabilities and stockholders’ equity ..
$41,500
*Plug figure.
#
Retained earnings, beginning balance ..
$28,000
Add net income …………………………….
11,500
39,500
Deduct dividends …………………………..
4,800
Retained earnings, ending balance ……
$34,700
Exercise 8-10 (45 minutes)
1. Production budget:
July
August
Septem-
ber
October
Budgeted unit sales ……………
35,000
40,000
50,000
30,000
Add desired units of ending
finished goods inventory …..
11,000
13,000
9,000
7,000
Total needs ………………………
46,000
53,000
59,000
37,000
Less units of beginning
finished goods inventory ….
10,000
11,000
13,000
9,000
Required production in units ..
36,000
42,000
46,000
28,000
2. During July and August the company is building inventories in
anticipation of peak sales in September. Therefore, production exceeds
Exercise 8-10 (continued)
3. Direct materials budget:
July
August
Septem-
ber
Third
Quarter
Required production in units of finished goods …….
36,000
42,000
46,000
124,000
Units of raw materials needed per unit of finished
goods ………………………………………………………
× 3 cc
× 3 cc
× 3 cc
× 3 cc
Units of raw materials needed to meet production ..
108,000
126,000
138,000
372,000
Add desired units of ending raw materials
inventory …………………………………………………..
63,000
69,000
42,000
*
42,000
Total units of raw materials needed …………………..
171,000
195,000
180,000
414,000
Less units of beginning raw materials inventory …..
54,000
63,000
69,000
54,000
Units of raw materials to be purchased ………………
117,000
132,000
111,000
360,000
* 28,000 units (October production) × 3 cc per unit = 84,000 cc;
84,000 cc × 1/2 = 42,000 cc.
As shown in part (1), production is greatest in September; however, as shown in the raw material
purchases budget, purchases of materials are greatest a month earlier—in August. The reason for the
large purchases of materials in August is that the materials must be on hand to support the heavy
production scheduled for September.
Exercise 8-11 (20 minutes)
Quarter (000 omitted)
1
2
3
4
Year
Beginning cash balance ………………………….
$ 6
*
$ 5
$ 5
$ 5
$ 6
Add collections from customers ……………….
65
70
96
*
92
323
*
Total cash available ……………………………….
71
*
75
101
97
329
Less cash disbursements:
Purchase of inventory ………………………….
35
*
45
*
48
35
*
163
Selling and administrative expenses ……….
28
30
*
30
*
25
113
*
Equipment purchases ………………………….
8
*
8
*
10
*
10
36
*
Dividends …………………………………………
2
*
2
*
2
*
2
*
8
Total cash disbursements ……………………….
73
85
*
90
72
320
Excess (deficiency) of cash available over
disbursements …………………………………..
(2)
*
(10)
11
*
25
9
Financing:
Borrowings ……………………………………….
7
15
*
0
0
22
Repayments (including interest) …………….
0
0
(6)
(17)
*
(23)
Total financing ……………………………………..
7
15
(6)
(17)
(1)
Ending cash balance ……………………………..
$ 5
$ 5
$ 5
$ 8
$ 8
Exercise 8-12 (30 minutes)
1. Schedule of expected cash collections:
Month
July
August
Sept.
Quarter
From accounts receivable .
$136,000
$136,000
From July sales:
35% × 210,000 …………
73,500
73,500
65% × 210,000 …………
$136,500
136,500
From August sales:
35% × 230,000 …………
80,500
80,500
65% × 230,000 …………
$149,500
149,500
From September sales:
35% × 220,000 …………
77,000
77,000
Total cash collections …….
$209,500
$217,000
$226,500
$653,000
2. a. Merchandise purchases budget:
July
August
Sept.
Total
Budgeted cost of goods sold
(60% of sales)………………….
$126,000
$138,000
$132,000
$396,000
Add desired ending
merchandise inventory* ……..
41,400
39,600
43,200
43,200
Total needs ………………………..
167,400
177,600
175,200
439,200
Less beginning merchandise
inventory …………………………
62,000
41,400
39,600
62,000
Required purchases ……………..
$105,400
$136,200
$135,600
$377,200
*At July 31: $138,000 × 30% = $41,400.
b. Schedule of cash disbursements for purchases:
July
August
Sept.
Total
From accounts payable ……….
$ 71,100
$ 71,100
For July purchases ……………..
42,160
$ 63,240
105,400
For August purchases …………
54,480
$ 81,720
136,200
For September purchases ……
54,240
54,240
Total cash disbursements …….
$113,260
$117,720
$135,960
$366,940