Exercise 20-8 (20 minutes)
RAMOS CO.
Direct Materials Budget
For April, May, and June
April
May
June
Budgeted production (units) ………………….
442
570
544
Materials requirements per unit ……………..
x 5
x 5
x 5
Materials needed for production (lbs.) ……
2,210
2,850
2,720
Add budgeted ending inventory* ……………
855
816
810
Total materials requirements (lbs.) …………
3,065
3,666
3,530
Exercise 20-9 (15 minutes)
1.
RAMOS CO.
Direct Labor Budget
For April, May, and June
April
May
June
Budgeted production (units) ………………….
442
570
544
Direct labor hours per unit ……………………..
x 0.50
x 0.50
x 0.50
Total labor hours needed ……………………….
221
285
272
Direct labor rate (per hour) …………………….
x $16
x $16
x $16
Budgeted direct labor cost …………………….
$3,536
$4,560
$4,352
2.
RAMOS CO.
Factory Overhead Budget
For April, May, and June
April
May
June
Exercise 20-10 (20 minutes)
Blue Wave Co.
Production Budget
September, October, and November
Sept.
Oct.
Nov.
Next month’s budgeted sales ……………
5,000
7,000
Ratio of inventory to future sales ………
x 60%
x 60%
Budgeted ending inventory ………………
3,000
4,200
Add budgeted sales ………………………….
4,000
5,000
Required units of avail. production ……
7,000
9,200
Deduct beginning inventory ……………..
(2,400)
(3,000)
(4,200)
Units to be produced ………………………..
4,600
6,200
Exercise 20-11 (20 minutes)
Tyler Co.
Production Budget
April, May, and June
April
May
June
Next month’s budgeted sales ……………
4,000
6,000
2,000
Ratio of inventory to future sales ………
Budgeted ending inventory ………………
Add budgeted sales ………………………….
Required units of avail. production ……
Deduct beginning inventory ……………..
Exercise 20–12 (15 minutes)
ELECTRO COMPANY
Production Budget
Second and Third Quarters
Second
Third
Quarter
Quarter
Budgeted ending inventories
Second quarter (20% x 525,000) …………………………………….
105,000
Third quarter (20% x 475,000) ………………………………………..
95,000
Add budgeted sales ……………………………………………………….
450,000
525,000
Required units of available production …………………………..
555,000
620,000
Less actual or budgeted beginning inventories ……………….
(90,000)
(105,000)
Units to be produced ………………………………………………………
465,000
515,000
Exercise 20–13 (15 minutes)
ELECTRO COMPANY
Direct Materials Budget
Second Quarter
Units to be produced ………………………………………………………
450,000
Materials requirement per unit ………………………………………..
x 0.80
Materials needed for production (pounds) ……………………….
360,000
Add budgeted ending inventory (pounds)* ………………………
Total materials requirements (pounds) …………………………..
Exercise 20–14 (10 minutes)
BRANSON BELTS
Direct Labor Budget
Second Quarter
Units to be produced ………………………………………………………
4,500
Labor requirements per unit (hours) …………………………..
x 4
Total labor hours needed ………………………………………………..
18,000
Direct labor rate (per hour) ……………………………………………..
Exercise 20–15 (25 minutes)
1.
MCO Leather
Direct Materials Budget
For the Months of September and October
September
October
Budgeted production (units)
4,600
6,200
Materials requirements per unit
2.00
2.00
Materials needed for production (lbs.)
9,200
12,400
Budgeted ending inventory (lbs.)*
4,960
4,640
Total materials requirements (lbs.)
14,160
17,040
Budgeted beginning inventory (lbs.)
(3,680)
(4,960)
Materials to be purchased (lbs.)
10,480
12,080
Direct material cost per lb.
$4.00
$4.00
Total budgeted direct materials
$41,920
$48,320
* September: 40% x 12,400 = 4,960 lbs.
October: 40% x 11,600 = 4,640 lbs.
2.
MCO Leather
Direct Labor Budget
For the Months of September and October
4,600
3,680
3.
MCO Leather
Factory Overhead Budget
For the Months of September and October
September
October
3,680
Exercise 20–16 (25 minutes)
1.
Ornamental Sculptures Mfg.
Direct Materials Budget
For the Months of March and April
March
April
Budgeted production (units)
3,300
4,600
Materials requirements per unit
x 8
x 8
Materials needed for production (lbs.)
26,400
36,800
Budgeted ending inventory (lbs.)
7,360
7,680
Total materials requirements (lbs.)
33,760
44,480
Budgeted beginning inventory (lbs.)*
(5,280)
(7,360)
Materials to be purchased (lbs.)
28,480
37,120
Direct material cost per lb.
x $3.00
x $3.00
Total budgeted direct materials
$85,440
$111,360
*April: 20% x 36,800 = 7,360 lbs.
May: 20% x 38,400 = 7,680 lbs.
2.
Ornamental Sculptures Mfg.
Direct Labor Budget
For the Months of March and April
Budgeted production (units)
4,600
Total direct labor hours needed
2,300
Total budgeted direct labor
3.
Ornamental Sculptures Mfg.
Factory Overhead Budget
For the Months of March and April
Total direct labor hours needed
VOH rate per DL hour
Budgeted variable overhead
Budgeted fixed overhead
Total budgeted factory overhead
Exercise 20–17 (25 minutes)
KAYAK COMPANY
Cash Budget
For January, February, and March
January
February
March
Beginning cash balance …………………………
$ 30,000
$ 30 ,000
$ 69,294
Cash receipts ………………………………………..
525,000
400,000
450,000
Total cash available ……………………………….
555,000
430,000
519,294
Cash payments ……………………………………..
475,000
350,000
525,000
Interest expense
January ($60,000 x 1%) ………………………..
600
February ($10,600 x 1%) ……………………….
________
106
________
Preliminary cash balance ……………………….
79,400
79,894
(5,706)
Exercise 20-18 (15 minutes)
JASPER COMPANY
Schedule of Cash Receipts
For April, May, and June
April
May
June
Sales ……………………………………………………..
$525,000
$535,000
$560,000
Less ending accts. receivable (70%) ………
367,500
374,500
392,000
Cash receipts from
Cash sales (30% of sales) ……………………..
157,500
160,500
168,000
Collections of prior month’s receivables ……
400,000
367,500
374,500
Total budgeted cash receipts ………………..
$557,500
$528,000
$542,500
Exercise 20-19 (15 minutes)
ZISK CO.
Schedule of Cash Payments
For April, May, and June
April
May
June
Purchases ……………………………………………..
24,000
33,000
Budgeted cash payments for materials …..
$101,000
Exercise 20–20 (20 minutes)
KARIM CORP.
Cash Budget
For July, August, and September
July
August
Sept.
Beginning cash balance …………………………
$ 8,400
$ 8,000
$ 8,000
Cash receipts ………………………………………..
20,000
26,000
40,000
Total cash available ………………………………
28,400
34,000
48,000
Cash payments ……………………………………..
28,000
30,000
22,000
Interest on bank loan
$25,883
Repayment of loan to bank …………………….
$ 8,000
$14,207
Exercise 20-21 (20 minutes)
FOYERT CORP.
Cash Budget
For October, November, and December
Oct.
Nov.
Dec.
Beginning cash balance* ……………………….
$ 30,000
$ 30,000
$ 30,000
Cash receipts ………………………………………..
110,000
80,000
100,000
Total cash available ………………………………
140,000
110,000
130,000
Cash payments ……………………………………..
120,000
75,000
80,000
Interest on bank loan
October ($10,000 x 1%) ……………………….
November ($20,100 x 1%) …………………….
$ 30,000
100
201
Exercise 20-22 (15 minutes)
PTO MANUFACTURING COMPANY
Cash Budget
For Month Ended September 30
Beginning cash balance …………………………………………
$ 40,000
Cash receipts from sales ……………………………………….
255,000
Total cash available ……………………………………………….
$295,000
Cash payments for:
Direct materials* ………………………………………………….
99,500
Direct labor ……………………………………………………….
40,000
Exercise 20-23 (30 minutes)
MIKE’S MOTORS CORP.
Cash Budget
For July, August, and September
July
August
September
Beginning cash balance
$34,000
$30,000
$30,000
Cash receipts
85,000
111,000
150,000
Total cash available
119,000
141,000
180,000
Cash payments
(113,000)
(99,900)
(127,400)
Interest expense (2% per month)
0
(480)
(268)
Preliminary cash balance
6,000
40,620
52,332
Additional loan (loan repayment)
24,000
(10,620)
(13,380)
Ending cash balance
$30,000
$30,000
$38,952
$24,000
$13,380
Additional loan (loan repayment)
24,000
(10,620)
(13,380)
Exercise 20-24 (30 minutes)
1. Merchandise Purchases Budget
Note: Shaded numbers represent known information provided in the exercise.
WALKER COMPANY
Merchandise Purchases Budget
For July, August, and September
July
August
September
Next month’s budgeted sales (units) ..
315,000
270,000
200,000
Ratio of inventory to next month sales .
x 15%
x 15%
x 15%
Budgeted ending inventory (units) …..
47,250
(6)
40,500
(3)
30,000
Add budgeted sales for month …………
180,000
315,000
270,000
Required units available inventory …..
227,250
(7)
355,500
(4)
300,000
(1)
Less beginning inventory (units) ……..
27,000
(8)
47,250
(5)
40,500
(2)
Budgeted units to be purchased ………
200,250
308,250
259,500
The following notes (1) through (8) provide supporting calculations and explanations.
Exercise 20-24 (concluded)
Notes: concluded
(5) August beginning inventory
Total required (4 above)
Less budgeted purchases
August beginning inventory
47,250
(6) August beginning inventory = July ending inventory
(7) July required units
Ending inventory
47,250
Add budgeted sales
180,000
Total required in July
227,250
(8) July beginning inventory
Total required (7 above)
227,250
Less budgeted purchases
(200,250)
July beginning inventory
27,000
Exercise 20-25 (25 minutes)
ACCO CO.
Cash Budget
For Month Ended July 31
Beginning cash balance …………………………………………
$ 50,000
Cash receipts from sales (note 1) …………………………..
1,364,000
Total cash available ……………………………………………….
$1,414,000
Cash payments for:
Merchandise (note 2) ……………………………………………..
730,000
Salaries ……………………………………………………………….
275,000
Other expenses ……………………………………………………
200,000
Accrued taxes ……………………………………………………..
80,000
Interest on bank loan …………………………………………..
6,600
Total cash payments ……………………………………………..
1,291,600
Ending cash balance ……………………………………………..
$ 122,400
Supporting calculations
Exercise 20-26 (45 minutes)
ACCO CO.
Budgeted Income Statement
For Month Ended July 31
Sales (from Exercise 20-25) ………………………………………….
$1,400,000
Cost of goods sold (note 1) ………………………………………
770,000
Gross profit ……………………………………………………………
630,000
Operating expenses:
Salaries expense (note 2) ……………………………………….
$285,000
Total expenses ……………………………………………………….
527,600
Income before taxes ……………………………………………….
102,400
Income tax expense (note 3) ……………………………………..
30,720
Net income ……………………………………………………………..
$ 71,680
Supporting calculations
(1) Cost of goods sold
Sales ……………………………………………………….
$1,400,000
Cost percent …………………………………………….
55%
Cost of goods sold …………………………………..
$ 770,000
(2) Salaries expense
Cash paid …………………………………………………
Less beginning payable …………………………..
Plus ending payable …………………………………
Salaries expense ………………………………………
$ 285,000
(3) Income tax expense
Pre-tax income …………………………………………
Tax rate ……………………………………………………
30%
Exercise 20-26 (Continued)
ACCO CO.
Budgeted Balance Sheet
As of July 31
ASSETS
Cash (from Exercise 20-25) …………………………………………
$ 122,400
Accounts receivable (note 1) ……………………………………
1,220,000
Inventory (given) …………………………..…………………………
60,000
Total current assets ……………………………………………….
1,402,400
Equipment …………………………………………………………….
$1,600,000
Less accumulated depreciation (note 2) …………………..
316,000
1,284,000
Total assets ……………………………………………………….
$2,686,400
LIABILITIES AND EQUITY
Liabilities
1,050,720
1,635,680
Supporting calculations
(1) Accounts receivable
June sales (20% x $1,200,000) …………………………..
$ 240,000
July sales (70% x $1,400,000)…………………………..
980,000
Total ……………………………………………………….
$ 1,220,000
(2) Accumulated depreciation
Beginning ……………………………………………………….
$ 280,000
Expense ……………………………………………………….
36,000
Ending ……………………………………………………….
$ 316,000
(3) Accounts payable
Purchases ……………………………………………………….
$ 750,000
Percent unpaid…………………………………………………….
40%
Payable ……………………………………………………….
$ 300,000
(4) Retained earnings
Beginning ……………………………………………………….
$ 964,000
Net income ……………………………………………………….
71,680
Ending ……………………………………………………….
$1,035,680
Exercise 20-27 (30 minutes)
Preliminary calculations (sales, cost of sales, beginning and ending inventory)
August
September
October
November
Sales …………………………………………………..
$325,000
$ 320,000
$250,000
$310,000
Cost to sales percent …………………………..
x 60%
x 60%
x 60%
x 60%
Cost of goods sold ……………………………….
195,000
192,000
150,000
186,000
Beginning inventory percent …………………
x 20%
x 20%
x 20%
x 20%
Beginning inventory …………………………..
$ 39,000
$ 38,400
$ 30,000
$ 37,200
Ending inventory (from next month) ………
$ 38,400
$ 30,000
$ 37,200
Merchandise purchases budgets (* denotes from preliminary calculations)
August
October
Budgeted ending inventory (*) ……………………
$ 38,400
$ 37,200
Add budgeted cost of goods sold (*) ………….
195,000
150,000
Cost of available merchandise …………………..
233,400
187,200
Less beginning inventory (*) ………………………
(39,000)
(38,400)
(30,000)
Budgeted purchases …………………………………
$194,400
$157,200
Cash payments for purchases (on accounts) in October
Dollars
Percent
Paid
For purchases from August ………………………
$194,400
$ 29,160
For purchases from September …………………
183,600
35
64,260
For purchases from October ……………………..
157,200
50
78,600
Total cash payments for purchases …………..
$172,020
Exercise 20-28 (25 minutes)
1. Budgeted merchandise purchases
June
July
August
2. Budgeted cost of goods sold
June
July
August
Exercise 20-29 (40 minutes)
1.
Preliminary calculations (sales, cost of sales, beginning inventory)
July
August
September
October
November
Budgeted sales ………………………….
$350,000
$290,000
$320,000
$275,000
$265,000
Cost to sales percent …………………
x 70%
x 70%
x 70%
x 70%
x 70%
Budgeted cost of goods sold ……..
245,000
203,000
224,000
192,500
185,500
Budgeted inventory percent ……….
x 20%
x 20%
x 20%
x 20%
x 20%
Budgeted beginning inventory ………
$ 49,000
$ 40,600
$ 44,800
$ 38,500
$ 37,100
Budgeted merchandise purchases
July
August
September
October
Budgeted ending inventory ……………..
Budgeted cost of goods sold …………..
Cost of available merchandise …………
Less beginning inventory ………………..
2.
Budgeted payments on accounts payable in September
Purchases
Percent Paid
Dollars Paid
For purchases from September ……….
$217,700
25%
$ 54,425
For purchases from August ……………..
207,200
60
124,320
For purchases from July ………………….
236,600
15
35,490
Total payments …………………………..…..
$214,235
Budgeted payments on accounts payable in October
Purchases
Percent Paid
Dollars Paid
For purchases from October ……………
$191,100
25%
$ 47,775
For purchases from September ……….
217,700
60
130,620
For purchases from August ……………..
207,200
15
31,080
Total payments …………………………..…..
$209,475
3.
Budgeted balance of accounts payable at the end of September
Purchases
Percent Unpaid
Dollars Unpaid
From purchases in September …………
From purchases in August ………………
Budgeted balance of accounts payable at the end of October
Purchases
Percent Unpaid
Dollars Unpaid
From purchases in October ……………..
From purchases in September …………