Exercise 20-9 (15 minutes)
1.
RAD CO.
Direct Labor Budget
For April, May, and June
April
May
June
Budgeted production (units)………………..…
442
544
Direct labor hours per unit …………………..…
x 0.50
x 0.50
Total labor hours needed …………………….…
221
285
272
Labor rate (per hour) …………………………..
x $16
x $16
x $16
Labor cost …………………………………………..…
$3,536
$4,560
$4,352
2.
RAD CO.
Factory Overhead Budget
For April, May, and June
April
May
June
Total labor hours needed …………………..…..
221
285
272
Variable factory overhead rate …………..…..
x $20
x $20
x $20
Budgeted variable overhead …………………..
$4,420
$5,700
$5,440
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
Add budgeted sales ………………………….
4,000
5,000
7,000
Required units to be produced ………….
7,000
9,200
11,560
Deduct beginning inventory ……………..
(2,400)
(3,000)
(4,200)
Units to be produced ………………………..
4,600
6,200
7,360
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
Required units to be produced ………….
4,200
5,800
6,600
Deduct beginning inventory ……………..
(900)
(1,200)
(1,800)
Units to be produced ………………………..
3,300
4,600
4,800
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
Required units of available production …………………………..
555,000
620,000
Less actual or budgeted beginning inventories ………….……
(75,000)
(105,000)
Units to be produced …………………………..…………………….……
480,000
515,000
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
Add budgeted ending inventory (pounds)* ………………………
83,200
Total materials requirements (pounds) …………………………..
443,200
Deduct beginning inventory (pounds) ………………………..…
Materials to be purchased (pounds) …………………………..
Material price per pound …………………………………………………
Total cost of direct materials purchases …………………….……
(72,000)
371,200
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
Labor rate (per hour) ………………………………………………………
$12
Labor dollars …………………………………………………………….……
$72,000
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
Budgeted beginning inventory (lbs.)
(3,680)
(4,960)
Materials to be purchased (lbs.)
10,480
12,080
Direct material cost per lb.
$4.00
$4.00
Total budgeted direct materials
$41,920
$48,320
* 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
Total direct labor hours needed
3,680
4,960
Direct labor rate per hour
x $16
x $16
Total budgeted direct labor
$58,880
$79,360
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
Budgeted variable ovhd.
$7,360
$9,920
Budgeted fixed ovhd.
10,000
10,000
Total budgeted factory overhead
$17,360
$19,920
Exercise 20–16 (25 minutes)
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 materials requirements (lbs.)
33,760
44,480
Budgeted beginning inventory (lbs.)*
(5,280)
(7,360)
Materials to be purchased (lbs.)
28,480
37,120
Direct material cost per lb.
x $3.00
x $3.00
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
Total direct labor hours needed
1,650
2,300
Direct labor rate per hour
x $18
x $18
Total budgeted direct labor
$29,700
$41,400
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
Budgeted fixed overhead
4,000
4,000
Total budgeted factory overhead
$8,950
$10,900
Exercise 20–17 (25 minutes)
KAYAK COMPANY
Cash Budget
For January, February, and March
January
March
Beginning cash balance …………………………
$ 30,000
$ 30 ,000
$ 69,294
Cash receipts ……………………………………..…
525,000
400,000
450,000
Total cash available …………………………….…
555,000
519,294
Cash disbursements………………………………
475,000
350,000
525,000
Interest expense
January ($60,000 x 1%) ……………………..…
600
February ($10,600 x 1%) …………………….…
________
106
________
Preliminary cash balance …………………….…
79,400
79,894
(5,706)
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
Cash sales (30% of sales) …………………..…
157,500
160,500
168,000
Collections of prior month’s receivables ……
400,000
367,500
374,500
Total cash receipts …………………………….…
$557,500
$528,000
$542,500
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%)* ……………….…
Preliminary cash balance ………………………
______
$ 400
76
______
$ 3,924
117
$25,883
Additional loan from bank………………………
7,600
4,076
Repayment of loan to bank ………………….…
______
_______
11,676
Ending cash balance …………………………..
$ 8,000
$ 8,000
$14,207
Loan balance, end of month ………………..…
$ 7,600
$11,676
$ 0
* Rounded to nearest whole dollar.
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
100,000
Total cash available ………………………………
140,000
110,000
130,000
Cash disbursements………………………………
120,000
75,000
80,000
Interest on bank loan
October ($10,000 x 1%)……………………..…
November ($20,100 x 1%) ………………….…
December ($15,300 x 1%) ………………….…
Preliminary cash balance ………………………
100
_______
$ 19,900
201
_______
$ 34,799
153
$ 49,847
Additional loan from bank………………………
10,100
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
Direct materials ……………………………………………….….
99,500
Direct labor ……………………………………………………….
40,000
Other expenses ………………………………………………..….
60,000
Accrued taxes …………………………..……………………..….
10,000
Interest on bank loan ……………………………………….….
1,000
Total cash disbursements…………………………..………….
210,500
Ending cash balance ………………………………………….….
$ 84,500
*($80,000 x 35%) + ($110,000 x 65%)