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Exercise 7-5 (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 .................
× $2.00
× $2.00
× $2.00
× $2.00
× $2.00
Variable manufacturing overhead ........................
$16,000
$16,400
$17,000
$15,600
$65,000
Fixed manufacturing overhead ............................
48,000
48,000
48,000
48,000
192,000
Total manufacturing overhead ............................
64,000
64,400
65,000
63,600
257,000
Less depreciation ...............................................
16,000
16,000
16,000
16,000
64,000
Cash disbursements for manufacturing overhead .
$48,000
$48,400
$49,000
$47,600
$193,000
2.
Total budgeted manufacturing overhead for the year (a) ...
$257,000
Budgeted direct labor-hours for the year (b) .....................
32,500
Predetermined overhead rate for the year (a) ÷ (b) ..........
$7.91
Exercise 7-7 (15 minutes)
Garden Depot
Cash Budget
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
Beginning cash balance .
$ 20,000
$ 15,000
$ 35,500
$ 25,500
$ 20,000
Total cash receipts ........
180,000
330,000
210,000
230,000
950,000
Total cash available ......
200,000
345,000
245,500
255,500
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)
115,000
25,500
15,500
20,000
Financing:
Borrowings (at
beginnings of
quarters)* ...............
75,000
75,000
Repayments (at ends
of quarters) .............
(75,000)
(75,000)
Interest§ ....................
(4,500)
(4,500)
Total financing ..............
75,000
(79,500)
(4,500)
Ending cash balance .....
$ 15,000
$ 35,500
$ 25,500
$ 15,500
$ 15,500
* Since the deficiency of cash available over disbursements is $60,000,
the company must borrow $75,000 to maintain the desired ending cash
balance of $15,000.
§ $75,000 × 3% × 2 = $4,500.
Exercise 7-8 (10 minutes)
Gig Harbor Boating
Budgeted Income Statement
Sales (400 units × $1,950 per unit) ......................
$780,000
Cost of goods sold (400 units × $1,575 per unit) ...
630,000
Gross margin .......................................................
150,000
Selling and administrative expenses* ....................
135,000
Net operating income ...........................................
15,000
Interest expense ..................................................
14,000
Net income ..........................................................
$ 1,000
*(400 units × $75 per unit) + $105,000 = $135,000.
Exercise 7-9 (15 minutes)
Mecca Copy
Budgeted Balance Sheet
Assets
Current assets:
Cash* ................................................
$10,700
Accounts receivable ............................
8,100
Supplies inventory ..............................
3,200
Total current assets ..............................
$22,000
Plant and equipment:
Equipment .........................................
34,000
Accumulated depreciation ...................
(16,000)
Plant and equipment, net ......................
18,000
Total assets ..........................................
$40,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable ...............................
$ 1,800
Stockholders' equity:
Common stock ...................................
$ 5,000
Retained earnings# ............................
33,200
Total stockholders' equity ......................
38,200
Total liabilities and stockholders' equity ..
$40,000
*Plug figure.
#
Retained earnings, beginning balance ..
$28,000
Add net income ..................................
10,000
38,000
Deduct dividends ................................
4,800
Retained earnings, ending balance ......
$33,200
Exercise 7-12 (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% × 240,000 ............
84,000
84,000
Total cash collections .......
$209,500
$217,000
$233,500
$660,000
2. a. Merchandise purchases budget:
July
August
Sept.
Total
Budgeted cost of goods sold
(60% of sales)......................
$126,000
$138,000
$144,000
$408,000
Add desired ending
merchandise inventory* ........
41,400
43,200
43,200
43,200
Total needs .............................
167,400
181,200
187,200
451,200
Less beginning merchandise
inventory ..............................
62,000
41,400
43,200
62,000
Required purchases .................
$105,400
$139,800
$144,000
$389,200
July
August
Sept.
Total
From accounts payable ..........
$ 71,100
$ 71,100
For July purchases .................
42,160
$ 63,240
105,400
For August purchases ............
55,920
$ 83,880
139,800
For September purchases ......
57,600
57,600
Total cash disbursements .......
$113,260
$119,160
$141,480
$373,900
Exercise 7-12 (continued)
3.
Beech Corporation
Income Statement
For the Quarter Ended September 30
Sales ($210,000 + $230,000 + $240,000) ..
$680,000
Cost of goods sold (Part 2a) .....................
408,000
Gross margin ............................................
272,000
Selling and administrative expenses
($60,000 × 3 months) ...........................
180,000
Net operating income................................
92,000
Interest expense ......................................
0
Net income ..............................................
$ 92,000
4.
Beech Corporation
Balance Sheet
September 30
Assets
Cash ($90,000 + $660,000 – $373,900 – ($55,000 ×
3)) .....................................................................
$211,100
Accounts receivable ($240,000 × 65%) .....................
156,000
Inventory (Part 2a) ...................................................
43,200
Plant and equipment, net ($210,000 – ($5,000 ×3)) ...
195,000
Total assets ..............................................................
$605,300
Exercise 7-14 (30 minutes)
1.
Jessi Corporation
Sales Budget
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
Budgeted unit sales .................
11,000
16,000
14,000
13,000
54,000
Selling price per unit ................
× $25.00
× $25.00
× $25.00
× $25.00
× $25.00
Total sales ..............................
$275,000
$400,000
$350,000
$325,000
$1,350,000
Schedule of Expected Cash Collections
Beginning accounts receivable .
$ 70,200
$ 70,200
1st Quarter sales ......................
178,750
$ 82,500
261,250
2nd Quarter sales .....................
260,000
$120,000
380,000
3rd Quarter sales .....................
227,500
$105,000
332,500
4th Quarter sales ......................
211,250
211,250
Total cash collections ...............
$248,950
$342,500
$347,500
$316,250
$1,255,200
Exercise 7-14 (continued)
2.
Jessi Corporation
Production Budget
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
Budgeted unit sales .................
11,000
16,000
14,000
13,000
54,000
Add desired units of ending
finished goods inventory .......
2,400
2,100
1,950
1,850
1,850
Total needs .............................
13,400
18,100
15,950
14,850
55,850
Less units of beginning
finished goods inventory .......
1,650
2,400
2,100
1,950
1,650
Required production in units ....
11,750
15,700
13,850
12,900
54,200
Exercise 7-16 (30 minutes)
1.
Zan Corporation
Direct Materials Budget
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Year
Required production in units of
finished goods ..................................
5,000
7,500
7,000
6,000
25,500
Units of raw materials needed per unit
of finished goods ..............................
× 8
× 8
× 8
× 8
× 8
Units of raw materials needed to meet
production ........................................
40,000
60,000
56,000
48,000
204,000
Add desired units of ending raw
materials inventory ...........................
15,000
14,000
12,000
8,000
8,000
Total units of raw materials needed ......
55,000
74,000
68,000
56,000
212,000
Less units of beginning raw materials
inventory ..........................................
6,000
15,000
14,000
12,000
6,000
Units of raw materials to be
purchased ........................................
49,000
59,000
54,000
44,000
206,000
Unit cost of raw materials ....................
× $1.20
× $1.20
× $1.20
× $1.20
× $1.20
Cost of raw materials to be
purchased ........................................
$58,800
$70,800
$64,800
$52,800
$247,200
Exercise 7-16 (continued)
Schedule of Expected Cash Disbursements for Materials
Beginning accounts payable .........
$ 2,880
$ 2,880
1st Quarter purchases .................
35,280
$23,520
58,800
2nd Quarter purchases ................
42,480
$28,320
70,800
3rd Quarter purchases .................
38,880
$25,920
64,800
4th Quarter purchases .................
31,680
31,680
Total cash disbursements for
materials ..................................
$38,160
$66,000
$67,200
$57,600
$228,960
2.
Zan Corporation
Direct Labor Budget
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Year
Required production in units ........
5,000
7,500
7,000
6,000
25,500
Direct labor-hours per unit ...........
× 0.20
× 0.20
× 0.20
× 0.20
× 0.20
Total direct labor-hours needed....
1,000
1,500
1,400
1,200
5,100
Direct labor cost per hour ............
× $11.50
× $11.50
× $11.50
× $11.50
× $11.50
Total direct labor cost ..................
$ 11,500
$ 17,250
$ 16,100
$ 13,800
$ 58,650
