PROBLEM 9-4A (Continued)
(b) COLTER COMPANY
Cash Budget
For the Two Months Ending February 28, 2014
January
February
Beginning cash balance …………………………….
Add: Receipts
Collections from customers …………
[See Schedule (1)]
Notes receivable ………………………….
Sale of securities …………………………
Total receipts ……………………….
Total available cash …………………………………..
$ 60,000
326,000
15,000
341,000
401,000
$ 51,000
372,000
6,000
378,000
429,000
Less: Disbursements
Direct materials ………………………….
[See Schedule 2]
Direct labor ………………………………..
Manufacturing overhead ……………..
Selling and administrative
expenses* ………………………………
Cash dividend …………………………….
Total disbursements ……………
Excess (deficiency) of available cash
over cash disbursements ……………………….
Financing
Add: Borrowings ……………………………………..
Less: Repayments ……………………………………
Ending cash balance …………………………………
112,000
90,000
70,000
78,000
350,000
51,000
0
0
$ 51,000
123,000
100,000
75,000
84,000
6,000
388,000
41,000
9,000
0
$ 50,000
*Selling and administrative expenses less $1,000 depreciation.
PROBLEM 9-5A
(a) LITWIN COMPANY
San Miguel Store
Merchandise Purchases Budget
For the Months of May and June, 2014
May
June
Budgeted cost of goods sold ………………………
Add: Desired ending merchandise inventory …..
Total ……………………………………………………….…
Less: Beginning merchandise inventory ……..
Required merchandise purchases ……………….
$600,000
94,500
694,500
90,000
$604,500
(2)
(4)
$630,000
99,225
729,225
94,500
$634,725
(1)
(3)
(1)$800,000 X 105% = $840,000; $840,000 X 75% = $630,000.
(2)$630,000 X 15% = $94,500.
PROBLEM 9-5A (Continued)
(b) LITWIN COMPANY
San Miguel Store
Budgeted Income Statement
For the Months of May and June, 2014
May
June
Sales …………………………………………………………
Cost of goods sold
Beginning inventory …………………………....
Purchases …………………………………………..
Cost of goods available for sale …………..
Less: Ending inventory ……………………….
Cost of goods sold ……………………….
Gross profit ……………………………………………….
$800,000
90,000
604,500
694,500
94,500
600,000
200,000
$840,000
94,500
634,725
729,225
99,225
630,000
210,000
Operating expenses
Sales salaries ……………………………………..
Advertising* ………………………………………..
Delivery** ……………………………………………
Sales commissions*** ………………………….
Rent ……………………………………………………
Depreciation ……………………………………….
Utilities ……………………………………………….
Insurance ……………………………………………
Total …………………………………………….
Income from operations ……………………………..
Income tax expense (30%) ………………………….
Net income ………………………………………………..
30,000
48,000
24,000
40,000
5,000
800
600
500
148,900
51,100
15,330
$ 35,770
30,000
50,400
25,200
42,000
5,000
800
600
500
154,500
55,500
16,650
$ 38,850
*6% of sales.
**3% of sales.
***5% of sales.
PROBLEM 9-6A
KRAUSE INDUSTRIES
Budgeted Income Statement
For the Year Ending December 31, 2014
Sales (8,000 X $32) ………………………………………….. $256,000
Cost of goods sold
Finished goods inventory, January 1 …………. $ 15,000
Cost of goods manufactured
($62,500 + $50,900 + $48,600) …………………. 162,000
Cost of goods available for sale ………………… 177,000
PROBLEM 9-6A (Continued)
KRAUSE INDUSTRIES
Budgeted Balance Sheet
December 31, 2014
Assets
Current assets
Cash ……………………………………………………………. $ 6,980
Accounts receivable ($76,800 X 40%) ……………. 30,720
Property, plant, and equipment
Equipment ($40,000 + $9,000) ……………………….. $49,000
Liabilities and Stockholders’ Equity
Liabilities
Notes payable ($25,000 – $8,000) ………………….. $17,000
Stockholders’ equity
Common stock …………………………………………….. $40,000
Retained earnings
PROBLEM 9-1B
MERCER FARM SUPPLY COMPANY
Sales Budget
For the Six Months Ending June 30, 2014
Quarter
Six
Months
1
2
Expected unit sales ……………….
Unit selling price …………………..
Total sales …………………………...
40,000
X $63
$2,520,000
50,000
X $63
$3,150,000
90,000
X $63
$5,670,000
MERCER FARM SUPPLY COMPANY
Production Budget
For the Six Months Ending June 30, 2014
Quarter
Six
Months
1
2
Expected unit sales ………………………………..……
Add: Desired ending finished goods
units …………………………………………………
Total required units ………………………………..……
Less: Beginning finished goods units …….……
Required production units ……………………..……
40,000
15,000
55,000
10,000
45,000
50,000
20,000
70,000
15,000
55,000
100,000
PROBLEM 9-1B (Continued)
MERCER FARM SUPPLY COMPANY
Direct Materials Budget—Crup
For the Six Months Ending June 30, 2014
Quarter
Six
Months
1
2
Units to be produced …………………………..
Direct materials per unit ……………………….
Total pounds needed for production …….
Add: Desired ending direct materials
(pounds) …………………………………...
Total materials required ……………………….
Less: Beginning direct materials
(pounds) …………………………………..
Direct materials purchases …………………..
Cost per pound …………………………………….
Total cost of direct materials
purchases ………………………………………..
45,000
X 5
225,000
12,000
237,000
9,000
228,000
X $3.80
$866,400
55,000
X 5
275,000
15,000
290,000
12,000
278,000
X $3.80
$1,056,400
$1,922,800
MERCER FARM SUPPLY COMPANY
Direct Labor Budget
For the Six Months Ending June 30, 2014
Quarter
Six
Months
1
2
Units to be produced …………………….
Direct labor time (hours) per unit ……
Total required direct labor hours ……
Direct labor cost per hour ……………..
Total direct labor cost ……………………
45,000
X .25
11,250
X $12
$135,000
55,000
X .25
13,750
X $12
$165,000
$300,000
PROBLEM 9-1B (Continued)
MERCER FARM SUPPLY COMPANY
Selling and Administrative Expense Budget
For the Six Months Ending June 30, 2014
Quarter
Six
Months
1
2
Budgeted sales in units …………………
Variable (.10 X sales) ……………………..
Fixed …………………………………………….
Total …………………………………………….
40,000
$252,000
150,000
$402,000
50,000
$315,000
150,000
$465,000
90,000
$567,000
300,000
$867,000
MERCER FARM SUPPLY COMPANY
Budgeted Income Statement
For the Six Months Ending June 30, 2014
Sales ……………………………………………………………………………….. $5,670,000
Cost of goods sold (90,000 X $40) ……………………………………… 3,600,000
Gross profit ……………………………………………………………………… 2,070,000
Cost Per Bag
Cost Element
Quantity
Unit Cost
Total
Direct materials
Crup ……………………………………..
Dert ………………………………………
Direct labor ………………………………
Manufacturing overhead
(100% of direct labor cost) ……..
Total …………………………………
5 pounds
10 pounds
.25 hour
$ 3.80
1.50
12.00
$19.00
15.00
3.00
3.00
$40.00
PROBLEM 9-2B
(a) URBINA INC.
Sales Budget
For the Year Ending December 31, 2014
LN 35
LN 40
Total
Expected unit sales …………..
Unit selling price ……………….
Total sales ………………………..
400,000
X $25
$10,000,000
240,000
X $35
$8,400,000
000,000,0
$18,400,000
(b) URBINA INC.
Production Budget
For the Year Ending December 31, 2014
LN 35
LN 40
Expected unit sales …………………………
Add: Desired ending finished
goods units …………………………..
Total required units …………………………
Less: Beginning finished goods
units …………………………………….
Required production units ……………….
400,000
20,000
420,000
30,000
390,000
240,000
25,000
265,000
15,000
250,000
PROBLEM 9-2B (Continued)
(c) URBINA INC.
Direct Materials Budget
For the Year Ending December 31, 2014
LN 35
LN 40
Total
Units to be produced ………………....
Direct materials per unit ……………..
Total pounds needed for
production……………………………...
Add: Desired ending direct
materials (pounds) …………...
Total materials required ……………..
Less: Beginning direct
materials (pounds) …………...
Direct materials purchases ………...
Cost per pound …………………………..
Total cost of direct materials
purchases ……………………………...
390,000
X 2
780,000
50,000
830,000
40,000
790,000
X $2
$1,580,000
250,000
X 3
750,000
10,000
760,000
20,000
740,000
X $3
$2,220,000
$3,800,000
(d) URBINA INC.
Direct Labor Budget
For the Year Ending December 31, 2014
LN 35
LN 40
Total
Units to be produced ………………….
Direct labor time (hours) per
unit …………………………………………
Total required direct labor
hours ……………………………………..
Direct labor cost per hour …………..
Total direct labor cost …………………
390,000
X .5
195,000
X $12
$2,340,000
250,000
X .75
187,500
X $12
$2,250,000
550,000
322,500
X $10
$4,590,000