Chapter 5 – Planning and Forecasting
5-11
Exercise 5-9
January
February
March
Quarter
Commission
$15,000
$29,250
$26,250
$70,500
Bad debt expense
12,000
23,400
21,000
56,400
Depreciation
10,000
10,000
10,000
30,000
Sales staff salaries
25,000
25,000
25,000
75,000
Advertising
1,000
1,000
1,000
3,000
Executive salaries
10,000
10,000
10,000
30,000
Miscellaneous
500
500
500
1,500
Total budgeted expenses
$73,500
$99,150
$93,750
$266,400
Less: non-cash expenses
Depreciation
10,000
10,000
10,000
30,000
Bad debt expense
12,000
23,400
21,000
56,400
Total cash costs
$51,500
$65,750
$62,750
$180,000
Exercise 5-10
April
May
June
Quarter
Budgeted unit sales
10,000
12,000
8,000
30,000
+
Budgeted ending inventory
6,000
4,000
4,500
4,500
=
Total units required
16,000
16,000
12,500
34,500
–
Beginning inventory
5,000
6,000
4,000
5,000
=
Budgeted production
11,000
10,000
8,500
29,500
Exercise 5-11
January
February
March
Quarter
Budgeted unit salesa
20,000
39,000
35,000
94,000
+
Budgeted ending inventoryb
7,800
7,000
5,800
5,800
=
Total units required
27,800
46,000
40,800
99,800
–
Beginning inventory
5,600
7,800
7,000
5,600
=
Budgeted production
22,200
38,200
33,800
94,200
a See exercise 5-8
5-12
Exercise 5-12
a.
January
February
March
Quarter
Budgeted unit sales
20,000
35,000
30,000
85,000
+
Budgeted ending inventorya
8,750
7,500
3,000
3,000
=
Total units required
28,750
42,500
33,000
88,000
–
Beginning inventory
2,000
8,750
7,500
2,000
=
Budgeted production
26,750
33,750
25,500
86,000
Chapter 5 – Planning and Forecasting
5-13
Exercise 5-13
January
February
March
Quarter
April
Budgeted production
10,000
8,000
9,000
27,000
12,000
×
Standard pounds per unit
× 3
× 3
× 3
× 3
× 3
=
Production needs
30,000
24,000
27,000
81,000
36,000
+
Budgeted ending inventorya
29,300
32,900
43,700
43,700
=
Total DM required (lbs.)
59,300
56,900
70,700
124,700
–
Beginning inventorya
36,500
29,300
32,900
36,500
=
Budgeted purchases (lbs.)
22,800
27,600
37,800
88,200
5-14
Exercise 5-14
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Annual
1st Quarter
next year
Budgeted production
5,000
7,500
9,000
12,000
33,500
6,000
×
Standard ounces per gallon
× 100
× 100
× 100
× 100
× 100
× 100
=
Production needs
500,000
750,000
900,000
1,200,000
3,350,000
600,000
+
Budgeted ending inventorya
150,000
180,000
240,000
120,000
120,000
=
Total DM required (lbs.)
650,000
930,000
1,140,000
1,320,000
3,470,000
–
Beginning inventory
80,000
150,000
180,000
240,000
80,000
=
Budgeted purchases (lbs.)
570,000
780,000
960,000
1,080,000
3,390,000
×
Standard price per ounce
× $0.15
× $0.15
× $0.15
× $0.15
× $0.15
=
Budgeted purchases cost
$85,500
$117,000
$144,000
$162,000
$508,500
ounces × 0.20 = 150,000 ounces.
Chapter 5 – Planning and Forecasting
5-15
Exercise 5-15
January
February
March
Quarter
April
Budgeted productiona
22,200
38,200
33,800
94,200
27,800
×
Standard pounds per unit
× 5
× 5
× 5
× 5
× 5
=
Production needs
111,000
191,000
169,000
471,000
139,000
+
Budgeted ending inventoryb
19,100
16,900
13,900
13,900
=
Total DM required (lbs.)
130,100
207,900
182,900
484,900
–
Beginning inventory
18,900
19,100
16,900
18,900
=
Budgeted purchases (lbs.)
111,200
188,800
166,000
466,000
×
Standard cost per pound
$0.40
$0.40
$0.40
$0.40
=
Budgeted purchases cost
$ 44,480
$ 75,520
$ 66,400
$186,400
a See exercise 5–11
April
Budgeted unit sales
29,000
Budgeted ending inventory
4,600
Total units required
33,600
Beginning inventory
5,800
Budgeted production
27,800
5-16
Exercise 5-16
Machining
July
August
September
3rd Quarter
Budgeted production
20,000
16,000
18,000
54,000
×
Standard DLH per unit
× 2
× 2
× 2
× 2
=
Total DLH required
40,000
32,000
36,000
108,000
×
Standard wage rate
× $6.75
× $6.75
× $6.75
× $6.75
=
Budgeted DL cost
$270,000
$216,000
$243,000
$729,000
Assembly
July
August
September
3rd Quarter
Budgeted production
20,000
16,000
18,000
54,000
×
Standard DLH per unit
× .5
× .5
× .5
× .5
=
Total DLH required
10,000
8,000
9,000
27,000
×
Standard wage rate
× $12
× $12
× $12
× $12
=
Budgeted DL cost
$120,000
$96,000
$108,000
$324,000
Total DL cost
$390,000
$312,000
$351,000
$1,053,000
Exercise 5-17
January
February
March
Quarter
Budgeted productiona
22,200
38,200
33,800
94,200
×
Standard DLH per unit
× .25
× .25
× .25
× .25
=
Total DLH required
5,550
9,550
8,450
23,550
×
Standard wage rate
× $20
× $20
× $20
× $20
=
Budgeted DL cost
$111,000
$191,000
$169,000
$471,000
Chapter 5 – Planning and Forecasting
5-17
Exercise 5-18
4th Quarter
Budgeted production
28,000
Variable overhead
Indirect materials ($5.75 per hammock)
$161,000
Indirect labor ($12.50 per hammock
350,000
Other ($2.25 per hammock)
63,000
Total variable overhead costs
574,000
Fixed overhead
Salaries
78,000
Insurance
5,000
Depreciation
35,000
Total fixed overhead
118,000
Total manufacturing overhead
692,000
Less non-cash items
Depreciation
(35,000)
Total cash cost
$657,000
Exercise 5-19
January
February
March
Quarter
DLH workeda
5,550
9,550
8,450
23,550
×
VOH per DLH
$0.70
$0.70
$0.70
$0.70
=
Budgeted VOH
3,885
6,685
5,915
16,485
+
Budgeted FOH
112,500
112,500
112,500
337,500
=
Total Budgeted MOH
116,385
119,185
118,415
353,985
–
Noncash MOH items
Depreciation
30,000
30,000
30,000
90,000
=
Total Cash MOH cost
$86,385
$89,185
$88,415
$263,985
5-18
Exercise 5-20
Direct Materials
Beginning DM Inventory
$7,560
18,900 lbs. × $0.40/lb. (see 5-15)
+
DM purchases
186,400
DM purchases budget (see 5-15)
–
DM used in production
188,400
471,000 lbs. × $0.40/lb. (see 5-15)
=
Ending DM Inventory
$ 5,560
13,900 lbs. × $0.40/lb. (see 5-15)
Finished Goods Inventory
Unit Costs
Direct material
$ 2.00
5 lbs. × $0.40/lb.
+
Direct labor
5.00
.25 DLH ×$20/DLH
+
Overhead
3.175
$12.70 × .25 DLH
=
Total std. cost per unit
$10.175
×
Ending FG inventory (units)
5,800
See 5-11
=
Ending FG inventory ($)
$59,015
Cost of Goods Sold
Beginning WIP
$ 0
+
Direct materials used
188,400
See above
+
Direct labor
471,000
See 5-17
+
Overhead
353,985
See 5-19
=
Total Mfg. Cost
1,013,385
–
Ending WIP
0
=
COGM
1,013,385
+
Beginning FG inventory
49,000
See 5-11
–
Ending FG inventory
59,015
See above
=
Budgeted COGS
$1,003,370
Chapter 5 – Planning and Forecasting
5-19
Exercise 5-21
Sales Budget
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Annual
Budgeted units sold
25,000
40,000
50,000
80,000
195,000
Budgeted sales price
× $ 12
× $ 12
× $ 12
× $ 12
× $ 12
Budgeted sales revenue
$300,000
$480,000
$600,000
$960,000
$2,340,000
Cash Receipts Budget
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
Total Cash
Receipts
Bad
Debts
Accounts
Receivable
1st quarter sales
$300,000 × 70%
$210,000
$210,000
$300,000 × 25%
$ 75,000
75,000
$300,000× 5%
$15,000
2nd quarter sales
$480,000 × 70%
336,000
336,000
$480,000 × 25%
$120,000
120,000
$480,000 × 5%
24,000
3rd quarter sales
$600,000 × 70%
420,000
420,000
$600,000 × 25%
$150,000
150,000
$600,000× 5%
30,000
4th quarter sales
$960,000 × 70%
672,000
672,000
$960,000 × 25%
240,000
$960,000 × 5%
48,000
Totals
$210,000
$411,000
$540,000
$822,000
$1,983,000
$117,000
$240,000
Note: Collections in the 1st quarter do not include Accounts Receivable from a prior period because the company is just beginning operations.
5-20
Exercise 5-22
April
May
June
Total Cash
Receipts
Accounts
Receivable
Cash salesa
$ 33,600
$ 34,500
$ 37,500
$105,600
March sales
$110,000 × 70%× 25%
19,250
19,250
April sales
$112,000 × 70%× 75%
58,800
58,800
$112,000 × 70%× 25%
19,600
19,600
May sales
$115,000 × 70%× 75%
60,375
60,375
$115,000 × 70%× 25%
20,125
20,125
June sales
$125,000 × 70%× 75%
65,625
65,625
$125,000 × 70%× 25%
$21,875
Totals
$111,650
$114,475
$123,250
$349,375
$21,875