6-21
4. Scarborough Corporation
Direct Materials Purchases Budget (in dollars) for 2012
Budgeted
Expected
Purchases
Purchase
(Units)
Price per unit
Total
Direct material A
469,000
$12
$5,628,000
Direct material B
256,000
5
1,280,000
Direct material C
42,000
3
126,000
Budgeted purchases
$7,034,000
5. Scarborough Corporation
Direct Manufacturing Labor Budget (in dollars) for 2012
Direct
Budgeted
Manufacturing
Production
Labor-Hours
Total
(Units)
per Unit
Hours
Total
Thingone
65,000
2
130,000
$1,560,000
Thingtwo
41,000
3
123,000
1,968,000
Total
$3,528,000
6. Scarborough Corporation
Budgeted Finished Goods Inventory
at December 31, 2012
Thingone:
Direct materials costs:
6-22
6-31 (30 min.) Budgeted income statement.
Easecom Company
Budgeted Income Statement for 2012
(in thousands)
Revenues
6-32 (15 min.) Responsibility of purchasing agent.
The cost of the biscuits is usually the responsibility of the purchasing agent, and usually
controllable by the Central Warehouse. However, in this scenario, Janet the cook has taken the
responsibility for the cost of the replacement biscuits from the purchasing agent by making a
1.
Revenue Budget
For the Month of April
Units
Selling Price
Total Revenues
Cat-allac
580
$190
$ 110,200
Dog-eriffic
240
275
66,000
Total
$176,200
2.
Production Budget
For the Month of April
Product
Cat-allac
Dog-eriffic
Budgeted unit sales
580
240
Add target ending finished goods inventory
45
25
Total required units
625
265
Deduct beginning finished goods inventory
25
40
Units of finished goods to be produced
600
225
Total
Direct materials required for
Cat-allac (600 units × 3 lbs. and 0.5 lb.)
Dog-errific (225 units × 5 lbs. and 1 lb.)
Available from beginning direct materials inventory
(under a FIFO cost-flow assumption)
Plastic: 230 lbs. × $3.80 per lb.
Metal: 70 lbs. × $3.20 per lb.
To be purchased this period
Plastic: (2,925 – 230) lbs.
Metal: (525 – 70) lbs.
6-24
Direct Material Purchases Budget
For the Month of April
Material
Plastic
Metal
Total
Physical Units Budget
To be used in production (requirement 3)
2,925 lbs.
525 lbs.
Add target ending inventory
400 lbs.
65 lbs.
Total requirements
3,325 lbs.
590 lbs.
Deduct beginning inventory
230 lbs.
70 lbs.
Purchases to be made
3,095 lbs.
520 lbs.
Cost Budget
Plastic: 3,095 lbs.
$4
$12,380
Metal: 520 lbs.
$3
______
$ 1,560
Purchases
$12,380
$ 1,560
$ 13,940
4.
Direct Manufacturing Labor Costs Budget
For the Month of April
Output Units
Produced
DMLH
Total
Hourly
Wage
(requirement 2)
per Unit
Hours
Rate
Total
Cat-allac
600
3
1,800
$14
$25,200
Dog-errific
225
5
1,125
14
15,750
Total
$40,950
5. Machine Setup Overhead
Cat-allac
Dog-errific
Total
Units to be produced
600
225
Units per batch
÷ 25
÷13
Number of batches
24
18
Setup time per batch
1.25
hrs.
2.00
hrs.
Total setup time
30
hrs.
36
hrs.
66 hrs.
6-25
Manufacturing Overhead Budget
For the Month of April
Machine setup costs
$ 8,580
Processing costs
61,500
Inspection costs
456
Total costs
$70,536
6.
Unit Costs of Ending Finished Goods Inventory
April 30, 20xx
Product
Cat-allac
Dog-errific
Cost per
Input per
Input per
Unit of
Input
Unit of
Output
Total
Unit of
Output
Total
Plastic
$ 4
3 lbs.
$ 12.00
5 lbs.
$ 20.00
Metal
3
0.5 lbs.
1.50
1 lb.
3.00
Direct manufacturing labor
14
3 hrs.
42.00
5 hrs.
70.00
Machine setup
130
0.05 hrs. 1
6.50
0.16 hr1
20.80
Processing
5
13 MH
65.00
20 MH
100.00
Inspection
20
0.02 hr2
0.40
0.048 hr.2
0.96
Total
$127.40
$214.76
1 30 setup-hours ÷ 600 units = 0.05 hours per unit; 36 setup-hours ÷ 225 units = 0.16 hours per unit
2 12 inspection hours ÷ 600 units = 0.02 hours per unit; 10.8 inspection hours ÷ 225 units = 0.048 hours per unit
Ending Inventories Budget
April 30, 20xx
Quantity
Cost per unit
Total
Direct Materials
Plastic
400
$4
$1,600
Metals
65
3
195
$1,795
Finished goods
Cat-allac
45
$127.40
$5,733
Dog-errific
25
214.76
5,369
11,102
Total ending inventory
$12,897
6-26
7.
Cost of Goods Sold Budget
For the Month of April, 20xx
Beginning finished goods inventory, April, 1 ($2,500 + $7,440)
$ 9,940
Direct materials used (requirement 3)
$13,243
Direct manufacturing labor (requirement 4)
40,950
Manufacturing overhead (requirement 5)
70,536
Cost of goods manufactured
124,729
Cost of goods available for sale
134,669
Deduct: Ending finished goods inventory, April 30 (reqmt. 6)
11,102
Cost of goods sold
$123,567
8.
Nonmanufacturing Costs Budget
For the Month of April, 20xx
Salaries ($32,000 ÷ 2
1.05)
$16,800
Other fixed costs ($32,000 ÷ 2)
16,000
Sales commissions ($176,200
1%)
1,762
Total nonmanufacturing costs
$34,562
9.
Budgeted Income Statement
For the Month of April, 20xx
Revenues
$176,200
Cost of goods sold
123,567
Gross margin
52,633
Operating (nonmanufacturing) costs
34,562
Operating income
$ 18,071
6-27
6-34 (25 min.) (Continuation of 6-33) Cash budget (Appendix)
Cash Budget
April 30, 20xx
Cash balance, April 1, 20xx
$ 5,200
Add receipts
Cash sales ($176,200 × 10%)
17,620
Credit card sales ($176,200 × 90% × 98%)
155,408
Total cash available for needs (x)
$178,228
Deduct cash disbursements
Direct materials ($8,400 + $13,940 × 50%)
$ 15,370
Direct manufacturing labor
40,950
Manufacturing overhead ($70,536 ─ $22,500 depreciation)
48,036
Nonmanufacturing salaries
16,800
Sales commissions
1,762
Other nonmanufacturing fixed costs ($16,000 ─ $12,500 deprn)
3,500
Machinery purchase
13,800
Income taxes
5,400
Total disbursements (y)
$145,618
Financing
Repayment of loan
$ 2,600
Interest at 24% ($2,600
24%
1
12
)
52
Total effects of financing (z)
$ 2,652
Ending cash balance, April 30 (x) ─ (y) ─ (z)
$ 29,958
6-28
1. Schedule 1: Revenues Budget for the Year Ended December 31, 2012
2. Schedule 2: Production Budget (in Units) for the Year Ended December 31, 2012
Snowboards
3. Schedule 3A: Direct Materials Usage Budget for the Year Ended December 31, 2012
Wood Fiberglass Total
Physical Units Budget
Wood: 1,100 × 5.00 b.f. 5,500
Fiberglass: 1,100 × 6.00 yards 6,600
6-29
4. Schedule 4: Direct Manufacturing Labor Budget for the Year Ended December 31, 2012
Labor Category
Cost Driver
Units
DML Hours per
Driver Unit
Total
Hours
Wage
Rate
Total
Manufacturing labor
1,100
5.00
5,500
$25.00
$137,500
5. Schedule 5: Manufacturing Overhead Budget for the Year Ended December 31, 2012
At Budgeted Level of 5,500
5,500
7. Budgeted manufacturing overhead cost per output unit:
1,100
$104,500
= $95.00 per output unit
8. Schedule 6A: Computation of Unit Costs of Manufacturing Finished Goods in 2012
Cost per
Unit of
9. Schedule 6B: Ending Inventories Budget, December 31, 2012
Cost per
Units Unit Total
6-30
10. Schedule 7: Cost of Goods Sold Budget for the Year Ended December 31, 2012
From
Schedule Total
Beginning finished goods inventory
11. Budgeted Income Statement for Slopes for the Year Ended December 31, 2012
Revenues Schedule 1 $450,000
12. Budgeted Balance Sheet for Slopes as of December 31, 2012
Cash $ 10,000
Inventory Schedule 6B 135,000