Wood: (5,900 – 800) × $7.50 per b. f.
38,250
Direct materials to be used this period
$37,922
$44,310
$82,232
Direct Materials Purchases Budget
For the Month of June, 2015
Material
Cloth
Wood
Total
Physical Units Budget
To be used in production
7,220 yds.
5,900 ft
Add: Target ending direct material inventory
386 yds.
295 ft
Total requirements
7,606 yds.
6,195 ft
Deduct: beginning direct material inventory
610 yds.
800 ft
Purchases to be made
6,996 yds.
5,395 ft
Cost Budget
Cloth: (6,996 yds. × $5.25 per yd.)
$36,729
Wood: (5,395 ft × $7.50 per b.f.)
______
$40,463
Total
$36,729
$40,463
$77,192
d.
Direct Manufacturing Labor Costs Budget
For the Month of June, 2015
Output Units
Direct Manufacturing
Total
Hourly Wage
Total
Produced
Labor-Hours per Unit
Hours
Rate
Regular
2,150
5
10,750
$15
$161,250
Deluxe
2,950
7
20,650
15
309,750
Total
31,400
$471,000
e.
Manufacturing Overhead Costs Budget
For the Month of June 2015
Total
Machine setup
(Regular 43 batches1
2 hrs./batch + Deluxe 59 batches2
3 hrs./batch)
$18/hour
$ 4,734
Processing (31,400 DMLH
$1.80)
56,520
Inspection (5,100 pairs
$1.35 per pair)
6,885
Total
$68,139
1Regular: 2,150 pairs ÷ 50 pairs per batch = 43; 2Deluxe: 2,950 pairs ÷ 50 pairs per batch = 59
f.
Unit Costs of Ending Finished Goods Inventory
For the Month of June, 2015
Regular
Deluxe
Cost per
Unit of Input
Input per
Unit of Output
Total
Input per
Unit of Output
Total
Cloth
$ 5.25
1.3 yd
$ 6.83
1.5 yd
$ 7.88
Wood
7.50
0 b.f.
0.00
2 b.f.
15.00
Direct manufacturing labor
15.00
5 hr.
75.00
7 hrs.
105.00
Machine setup
18.00
0.04 hr. 1
0.72
0.06 hr1
1.08
Processing
1.80
5 hrs
9.00
7 hrs
12.60
Inspection
1.35
1 pair
1.35
1 pair
1.35
Total
$92.90
$142.91
1 2 hours per setup ÷ 50 pairs per batch = 0.04 hr. per unit;
3 hours per setup ÷ 50 pairs per batch = 0.06 hr. per unit.
Ending Inventories Budget
June, 2015
Quantity
Cost per unit
Total
Direct Materials
Cloth
386 yards
$5.25
$2,026.50
Wood
295 b.f.
7.50
2,212.50
$ 4,239
Finished goods
Regular
400
$ 92.90
$37,160
Deluxe
600
142.91
85,746
122,906
Total ending inventory
$127,145
g.
Cost of Goods Sold Budget
For the Month of June, 2015
Beginning finished goods inventory, June 1 ($23,250 + $92,625)
$115,875
Direct materials used (requirement c)
$ 82,232
Direct manufacturing labor (requirement d)
471,000
Manufacturing overhead (requirement e)
68,139
Cost of goods manufactured
621,371
Cost of goods available for sale
737,246
Deduct ending finished goods inventory, June 30 (requirement f)
122,906
Cost of goods sold
$614,340
h.
Nonmanufacturing Costs Budget
For the Month of June, 2015
Total
Marketing and general administration
8%
$825,000
$66,000
Shipping
(5,000 pairs ÷ 40 pairs per shipment)
$15
1,875
Total
$67,875
2.
Cash Budget
June 30, 2015
Cash balance, June 1 (from Balance Sheet)
$ 9,435
Add receipts
Collections from May accounts receivable
307,800
Collections from June accounts receivable
($825,000
60%)
495,000
Total collection from customers
802,800
Total cash available for needs (x)
$812,235
Deduct cash disbursements
Direct material purchases in May
$ 15,600
Direct material purchases in June
($77,192
80%)
61,754
Direct manufacturing labor
471,000
Manufacturing overhead
($68,139
70% because 30% is depreciation)
47,697
Nonmanufacturing costs
($67,875
90% because 10% is depreciation)
61,088
Taxes
Dividends
10,800
15,000
Total disbursements (y)
$682,939
Financing
Interest at 6% ($150,000
6%
1 ÷ 12) (z)
$ 750
Ending cash balance, June 30 (x) – (y) – (z)
$128,546
3.
Budgeted Income Statement
For the Month of June, 2015
Revenues
$825,000
Bad debt expense ($825,000
2%)
16,500
Net revenues
$808,500
Cost of goods sold
614,340
Gross margin
194,160
Operating (nonmanufacturing) costs
$67,875
Interest expense (for June)
750
68,625
Net income
$125,535
Budgeted Balance Sheet
June 30, 2015
Assets
Cash
$ 128,546
Accounts receivable ($825,000
40%)
$330,000
Less: allowance for doubtful accounts
16,500
313,500
Inventories
Direct materials
$ 4,239
Finished goods
122,906
127,145
Fixed assets
$870,000
Less: accumulated depreciation
($136,335 + $68,139
30% + $67,875
10%))
163,564
706,436
Total assets
$1,275,627
Liabilities and Equity
Accounts payable ($77,192
20%)
$ 15,438
Interest payable
750
Long-term debt
150,000
Common stock
300,000
Retained earnings ($698,904 + $125,535–$15,000))
809,439
Total liabilities and equity
$1,275,627