PROBLEM 9-2B (Continued)
(e) URBINA INC.
Budgeted Income Statement
For the Year Ending December 31, 2014
LN 35
LN 40
Total
Sales ………………………………..
Cost of goods sold…………….
Gross profit ………………………
Operating expenses
Selling expenses ……………
Administrative
expenses ……………………
Total operating
expenses …………….
Income before income
taxes ……………………………..
Income tax expense
(30%) …………………………….
Net income ……………………….
$10,000,000
4,800,000
5,200,000
750,000
420,000
1,170,000
$ 4,030,000
(1)
$8,400,000
5,280,000
3,120,000
580,000
380,000
960,000
$2,160,000
(2)
$18,400,000
10,080,000
8,320,000
1,330,000
800,000
2,130,000
6,190,000
1,857,000
$ 4,333,000
(1)400,000 X $12.
(2)240,000 X $22.
(a) OGLEBY INDUSTRIES
Sales Budget
For the Year Ending December 31, 2014
Plan A
Plan B
Expected unit sales …………………………….
Unit selling price …………………………………
Total sales ………………………………………….
760,000
X $7.60
$5,776,000
(1)
950,000
X $6.65
$6,317,500
(2)
(3)
(1)800,000 X 95% = 760,000.
(2)800,000 + 150,000 = 950,000.
(3)$7.00 X 95% = $6.65.
(b) OGLEBY INDUSTRIES
Production Budget
For the Year Ending December 31, 2014
Plan A
Plan B
Expected unit sales ……………………………………….
Add: Desired ending finished goods units ……
Total required units ……………………………………….
Less: Beginning finished goods units ……………
Required production units …………………………….
760,000
90,000
850,000
70,000
780,000
950,000
100,000
1,050,000
70,000
980,000
Plan A
Plan B
Total variable costs
Total fixed costs
Total costs (a)
Total units (b)
Unit cost (a) ÷ (b)
$3,120,000
980,000
$4,100,000
780,000
$5.26
(780,000 X $4.00)
$3,920,000
980,000
$4,900,000
980,000
$5.00
(980,000 X $4.00)
number of units (200,000) in Plan B.
PROBLEM 9-3B (Continued)
(d) Gross Profit
Plan A
Plan B
Sales
Cost of goods sold
Gross profit
$5,776,000
3,997,600
$1,778,400
(760,000 X $5.26)
$6,317,500
4,750,000
$1,567,500
(950,000 X $5.00)
than Plan B.
(a) 1. Expected Collections from Customers
January
February
November ($200,000) …………………………….
December ($290,000) …………………………….
January ($350,000) ………………………………..
February ($400,000) ………………………………
Total collections …………………………..
$ 30,000
72,500
210,000
$312,500
$ 0
43,500
87,500
240,000
$371,000
2. Expected Payments for Direct Materials
January
February
December ($90,000) ………………………………
January ($110,000) ………………………………..
February ($120,000) ………………………………
Total payments …………………………….
$63,000
33,000
$96,000
$ 0
77,000
36,000
$113,000
PROBLEM 9-4B (Continued)
(b) DERBY COMPANY
Cash Budget
For the Two Months Ending February 28, 2014
January
February
Beginning cash balance ……………………………..
Add: Receipts
Collections from customers ………………
[See Schedule (1)]
Interest receivable …………………………….
Sale of securities ………………………………
Total receipts …………………………….
Total available cash ……………………………………
$ 50,000
312,500
3,000
315,500
365,500
$ 49,500
371,000
5,000
376,000
425,500
Less: Disbursements
Direct materials ……………………………….
[See Schedule 2]
Direct labor …………………………………
Manufacturing overhead ………………
Selling and administrative
expenses …………………………………
Purchase of land …………………………
Total disbursements …………….
Excess (deficiency) of available cash
over cash disbursements ………………………..
Financing
Add: Borrowings ………………………………………
Less: Repayments ……………………………………..
Ending cash balance ………………………………….
96,000
85,000
60,000
75,000
316,000
49,500
0
0
$ 49,500
113,000
115,000
75,000
80,000
20,000
403,000
22,500
17,500
0
$ 40,000
(a) WIDNER COMPANY
Westwood Store
Merchandise Purchases Budget
For the Months of July and August, 2014
July
August
Budgeted cost of goods sold ………………………..
Add: Desired ending merchandise inventory …
Total ……………………………………………………………
Less: Beginning merchandise
inventory …………………………………………..
Required merchandise purchases …………………
$260,000
43,875
303,875
39,000
$264,875
(1)
(2)
(4)
$292,500
48,750
341,250
43,875
$297,375
(3)
(1)$400,000 X 65% = $260,000
PROBLEM 9-5B (Continued)
(b) WIDNER COMPANY
Westwood Store
Budgeted Income Statement
For the Months of July and August, 2014
July
August
Sales ……………………………………………………….…
Cost of goods sold
Beginning inventory ……………………………..
Purchases ……………………………………………
Cost of goods available for sale ……………
Less: Ending inventory ………………………..
Cost of goods sold ……………………………….
Gross profit ………………………………………………..
$400,000
39,000
264,875
303,875
43,875
260,000
140,000
$450,000
43,875
297,375
341,250
48,750
292,500
157,500
Operating expenses
Sales salaries ………………………………………
Advertising* …………………………………………
Delivery expense** ……………………………….
Sales commissions*** …………………………..
Rent …………………………………………………….
Depreciation ………………………………………..
Utilities ………………………………………………..
Insurance …………………………………………….
Total ……………………………………………..
Income from operations ………………………………
Income tax expense (30%) …………………………..
Net income …………………………………………………
50,000
20,000
8,000
16,000
3,000
700
500
300
98,500
41,500
12,450
$ 29,050
50,000
22,500
9,000
18,000
3,000
700
500
300
104,000
53,500
16,050
$ 37,450
BYP 9-1 DECISION-MAKING AT CURRENT DESIGNS
CREATIVE DESIGNS
Production Budget
For the Year Ending December 31, 2013
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Total
Expected unit sales
1,000
1,500
750
750
4,000
Add: desired ending
finished goods units
300*
150*
150*
220**
220
Total required units
1,300
1,650
900
970
4,220
Less: Beginning finished
goods units
200***
300
150
150
200
Required production units
1,100
1,350
750
820
4,020
BYP 9-1 (Continued)
CREATIVE DESIGNS
Direct materials Budget
For the Year Ending December 31, 2013
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Total
Units to be produced
1,100
1,350
750
820
4,020
Pounds of polyethylene
powder per unit
X 54
X 54
X 54
X 54
X 54
Total pounds needed for
production
59,400
72,900
40,500
44,280
217,080
Add: desired ending
inventory of powder
18,225*
10,125*
11,070*
15,930**
15,930
Total pounds of powder
required
77,625
83,025
51,570
60,210
233,010
Less: Beginning inventory
of powder
19,400***
18,225
10,125
11,070
19,400
Pounds of Polyethylene
powder to be purchased
58,225
64,800
41,445
49,140
213,610
Cost per pound
X $1.50
X $1.50
X $1.50
X $1.50
X $1.50
Cost of polyethylene
powder to be purchased
$ 87,337.50
$ 97,200.00
$ 62,167.50
$ 73,710.00
$ 320,415.00
Cost of required finishing kits
(one kit per kayak
manufactured) @$170 each
187,000.00
229,500.00
127,500.00
139,400.00
683,400.00
Total costs for direct materials
$274,337.50
$326,700.00
$189,667.50
$213,110.00
$1,003,815.00
*25% of needs for next quarter
quarter of 2014 production.
Production for first quarter of 2014 = 1,100 + 300 – 220 = 1,180 units
***given in problem
BYP 9-1 (Continued)
CREATIVE DESIGNS
Direct labor Budget
For the Year Ending December 31, 2013
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Total
Units to be produced
1,100
1,350
750
820
4,020
Number of hours of more skilled
labor/unit
X 2
X 2
X 2
X 2
X 2
Total number of hours of more
skilled labor
2,200
2,700
1,500
1,640
8,040
Hourly rate for more skilled labor
X $15
X $15
X $15
X $15
X $15
Total cost of more skilled labor
$33,000
$40,500
$22,500
$24,600
$120,600
Units to be produced
1,100
1,350
750
820
4,020
Number of hours of less skilled
labor/unit
X 3
X 3
X 3
X 3
X 3
Total number of hours of less
skilled labor
3,300
4,050
2,250
2,460
12,060
Hourly rate for less skilled labor
X $12
X $12
X $12
X $12
X $12
Total cost of less skilled labor
39,600
48,600
27,000
29,520
144,720
Total cost for direct labor
$72,600
$89,100
$49,500
$54,120
$265,320
CREATIVE DESIGNS
Manufacturing Overhead Budget
For the Year Ending December 31, 2013
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Total
Total costs for direct
labor
$72,600
$89,100
$49,500
$54,120
$265,320
Manufacturing overhead
rate per direct labor
dollar
X 150%
X 150%
X 150%
X 150%
X 150%
Manufacturing overhead
costs
$108,900
$133,650
$74,250
$81,180
$397,980