Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
1223
Exercise 20–15 (25 minutes)
1.
MCO Leather
Direct Materials Budget
September October
Units to produce ………………………………………………
4,600
6,200
Materials required per unit ………………………………..
x 2
x 2
Materials needed for production (lbs.) ………………
9,200
12,400
Add: Desired ending materials inventory (lbs.)* …
Total materials required (lbs.) …………………………..
17,040
Materials to purchase (lbs.) ……………………………..
Materials cost per pound.. ………………………………..
2.
MCO Leather
Direct Labor Budget
September
October
4,600
6,200
3,680
4,960
3.
MCO Leather
Factory Overhead Budget
September
October
Direct labor hours needed (from part 2) …………
3,680
4,960
Variable overhead rate per direct labor hour…….
Budgeted variable overhead ………………………….
7,360
9,920
Budgeted fixed overhead ………………………………
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
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Exercise 20–16 (25 minutes)
1.
GARDEN YETI
Direct Materials Budget
March
April
Units to produce …………………………………………….
3,300
4,600
Materials required per unit ………………………………
x 8
x 8
Materials needed for production (lbs.) …………….
26,400
36,800
Add: Desired ending materials inventory (lbs.) ..
Total materials required (lbs.) …………………………
33,760
44,480
Materials to purchase (lbs.) …………………………….
28,480
37,120
Materials cost per pound. ……………………………….
2.
GARDEN YETI
Direct Labor Budget
March
April
Units to produce …………………………………………….
3,300
4,600
Direct labor hours required per unit ………………..
Direct labor hours needed ………………………………
1,650
2,300
Direct labor cost per hour ……………………………….
3.
GARDEN YETI
Factory Overhead Budget
March
April
Direct labor hours needed (from part 2) …………..
1,650
2,300
Variable overhead rate per direct labor hour………
Budgeted variable overhead …………………………...
Budgeted fixed overhead ………………………………..
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
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Exercise 20–17 (25 minutes)
KAYAK COMPANY
Cash Budget
January
February
March
Beginning cash balance …………………….
$ 30,000
$ 30,000
$ 69,294
Add: Cash receipts …………………………….
525,000
400,000
450,000
Total cash available …………………………..
555,000
430,000
519,294
Less: Cash payments for
475,000
350,000
525,000
106
350,106
525,000
$ 79,400
$ 79,894
$ (5,706)
Loan activity
Additional loan ………………………………..
$ 0
$ 0
$ 35,706
Repayment of loan …………………………..
49,400
10,600
______0
$ 30,000
$ 69,294
$ 30,000
Exercise 20-18 (15 minutes)
JASPER COMPANY
Schedule of Cash Receipts from Sales
April
May
June
Sales …………………………………………………
$525,000
$535,000
$560,000
Cash receipts from
Cash sales (30% of current sales) ……
$168,000
Collections of prior period sales (70%) .
350,000
367,500
374,500
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
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Exercise 20-19 (15 minutes)
ZISK CO.
Schedule of Cash Payments for Direct Materials
April
May
June
Materials purchases …………………………….
$80,000
$110,000
$120,000
Cash payments for
21,000
Exercise 20–20 (20 minutes)
KARIM CORP.
Cash Budget
July
August
September
Beginning cash balance ………………………
$ 8,400
$ 8,000
$ 8,000
Add: Cash receipts ………………………………
20,000
26,000
40,000
Total cash available …………………………….
28,400
34,000
48,000
22,000
$ 8,000
$14,207
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
1227
Exercise 20-21 (20 minutes)
FOYERT CORP.
Cash Budget
October
November
December
Beginning cash balance* ……………………..
$ 30,000
$ 30,000
$ 30,000
Add: Cash receipts ………………………………
110,000
80,000
100,000
Total cash available …………………………...
140,000
110,000
130,000
Less: Cash payments for
All items excluding interest ………………..
120,000
75,000
80,000
120,100
$ 49,847
Repayment of loan …………………………...
$ 34,546
Exercise 20-22 (15 minutes)
PTO COMPANY
Cash Budget
September
Beginning cash balance ………………………………………..
$ 40,000
Add: Cash receipts from sales ……………………………….
255,000
Total cash available ………………………………………………
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
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Exercise 20-23 (30 minutes)
MOTORS CORP.
Cash Budget
July
August
September
Beginning cash balance ………………………
$ 34,000
$ 30,000
$ 30,000
Add: Cash receipts ………………………………
85,000
111,000
150,000
Total cash available …………………………...
119,000
141,000
180,000
Less: Cash payments for
113,000
127,400
113,000
100,380
127,668
$ 40,620
$ 52,332
Loan activity
Additional loan ……………………………………
$ 24,000†
$ 0
$ 0
Repayment of loan ………………………………
0
10,620
13,380
$ 30,000
$ 30,000
$ 38,952
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
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Exercise 20–24 (15 minutes)
FORTUNE INC.
Budgeted Income Statement
For Quarter Ended March 31
Sales (150,000 units x $25) …………………………..…………….
$3,750,000
Cost of goods sold (150,000 units x $14) …………………….
2,100,000
Gross profit …………………………………………………………..
1,650,000
Selling, general and administrative expenses
Sales commissions expense (8% of sales) ………………
Rent expense ………………………………………………………
Advertising expense ……………………………………………
Depreciation expense ………………………………………….
119,213
* Rounded to the nearest dollar.
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
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Exercise 20-25A (30 minutes)
WALKER COMPANY
Merchandise Purchases Budget
July
August
September
Budgeted sales units …………………………
180,000
315,000
270,000
Add: Desired ending inventory
Next period budgeted sales units ……
315,000
270,000
200,000
227,250
355,500
300,000
200,250
308,250
259,500
Cost per unit ……………………………………..
Exercise 20–26A (15 minutes)
Computing budgeted merchandise purchases from accounts payable
June
July
August
Ending accounts payable ……………………
$ 200,000
$ 235,000
$ 195,000
Less: Beginning accounts payable …….
Budgeted merchandise purchases …….
$1,540,000
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
1231
Exercise 20–27A (25 minutes)
ACCO CO.
Cash Budget
July
Beginning cash balance …………………………………………………..
$ 50,000
Add: Cash receipts from sales (note 1)……………………………….
1,364,000
Total cash available …………………………………………………………
$1,414,000
6,600
(1) Cash receipts in July from sales
From May sales ($1,720,000 x 20%) ………………………
$ 344,000
From June sales ($1,200,000 x 50%) …………………….
From July sales ($1,400,000 x 30%)………………………
(2) Cash payments in July for merchandise purchases
For June purchases ($700,000 x 40%) ………………….
$ 280,000
For July purchases ($750,000 x 60%) ……………………
Exercise 20-28A (10 minutes)
LAMONTE CO.
Budgeted Income Statement
For Year Ended December 31
Sales ……………………………………………………….………….
$520,000
Cost of goods sold ………………………………………………
360,000
Gross profit …………………………………………………………
160,000
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
1232
Exercise 20-29A (15 minutes)
LAMONTE CO.
Budgeted Balance Sheet
December 31
ASSETS
Cash ……………………………………………….
$ 50,000
Accounts receivable ……………………….
120,000
Merchandise inventory ……………………
Total assets …………………………………….
LIABILITIES AND EQUITY
Liabilities
Accounts payable …………………………
$ 34,000
Loan payable ………………………………..
Retained earnings …………………………
Exercise 20–30A (15 minutes)
HARDY COMPANY
Schedule of Cash Payments for Merchandise Purchases
September
October
Merchandise purchases
$183,600
$157,200
Cash payments for
$ 73,440
$ 62,880
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
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Exercise 20-31A (25 minutes)
a.
CASTOR INC.
Schedule of Cash Receipts from Sales
April
May
June
Sales ……………………………………………………….
$32,000
$40,000
$24,000
Cash receipts from
Cash sales (50% of current sales) …………..
$16,000
$20,000
$12,000
Collections of prior period sales (50%) ……
20,000
b.
CASTOR INC.
Cash Budget
April
May
June
Beginning cash balance* ……………………..
$12,000
$12,000
$12,279
Add: Cash receipts from sales** …………..
28,000
36,000
32,000
Total cash available …………………………….
40,000
48,000
44,279
Merchandise purchases …………………….
20,200
16,800
17,200
Sales commissions (10% of sales) ……..
Shipping (2% of sales) ……………………….
Interest on loan
April ($2,000 x 1%) …………………………..
May ($6,060 x 1%) …………………………...
20
_______
61
_______
Total cash payments ………………………….
32,060
29,661
28,080
Preliminary cash balance …………………….
$ 7,940
$18,339
$16,199
_______
6,060
_______
Ending cash balance …………………………...
$12,000
$12,279
$16,199
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
1234
Exercise 20-32A (30 minutes)
1.
KELSEY
Schedule of Cash Receipts from Sales
July
August
September
Sales ……………………………………………………..
$64,000
$80,000
$48,000
Cash receipts from
Cash sales (20% of current sales) ………….
$12,800
$16,000
Collections of prior period sales (80%) …..
2.
KELSEY
Cash Budget
July
August
September
Beginning cash balance* ……………………
$15,000
$15,000
$25,504
Add: Cash receipts from sales (part 1) …
57,800
67,200
73,600
Total cash available …………………………..
72,800
82,200
99,104
Merchandise purchases …………………..
40,400
33,600
34,400
Sales commissions (10% of sales) ……
Office salaries ………………………………….
4,000
4,000
4,000
Rent ………………………………………………..
6,500
6,500
6,500
Interest on bank loan**
July ($5,000 x 1%) ………………………….
August ($4,550 x 1%) …………………….
50
_______
46
_______
Total cash payments ………………………..
57,350
52,146
49,700
Preliminary cash balance …………………..
$15,450
$30,054
$49,404
450
4,550
Ending cash balance ………………………….
$15,000
$25,504
$49,404
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
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Exercise 20-33A (15 minutes)
ZIMMER COMPANY
Budgeted Balance Sheet
March 31
ASSETS
Cash ………………………………………………………………..
$ 50,000
$84,000
Less: Accumulated depreciation ………………………
$206,000
LIABILITIES AND EQUITY
Liabilities
Accounts payable …………………………………………
$89,000
Income taxes payable …………………………………….
26,000
Common stock ………………………………………………
Retained earnings ………………………………………….
Exercise 20-34 (15 minutes)
RENDER CPA
Direct Labor Budget
For Year Ending December 31
Direct Labor
Hours
Direct Labor
Cost per hour
Direct
Labor Cost
Data-entry …………………………….
2,200
$15
$ 33,000
Auditing ……………………………….
4,800
Consulting …………………………..
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
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PROBLEM SET A
Problem 20-1A (40 minutes)
Part 1
BLACK DIAMOND COMPANY
Production Budget (in units)
Third Quarter
Budgeted sales units …………………………………………………………….
150,000
Add: Desired ending inventory units (given) ………………………….
Total required units ……………………………………………………………….
153,500
Part 2
BLACK DIAMOND COMPANY
Direct Materials Budget
Third Quarter
Units to produce ……………………………………………………………………
148,500
Materials required per unit (lbs.) …………………………………………….
x 2
Materials needed for production (lbs.) ……………………………………
297,000
4,000
Total materials required (lbs.) ………………………………………………..
301,000
Materials cost per pound ……………………………………………………….
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
1237
Problem 20-1A (concluded)
Part 3
BLACK DIAMOND COMPANY
Direct Labor Budget
Third Quarter
Units to produce ………………………………………………………
148,500
Direct labor hours needed ………………………………………..
Part 4
BLACK DIAMOND COMPANY
Factory Overhead Budget
Third Quarter
Direct labor hours needed ………………………………………..
74,250
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
1238
Problem 20–2A (30 minutes)
Part 1
BUILT-TIGHT
Schedule of Cash Receipts from Sales
July
August
Sept.
Sales ……………………………………………………..
$64,000
$80,000
$48,000
Cash receipts from
$12,800
$16,000
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
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Problem 20–2A (continued)
Part 2
BUILT-TIGHT
Cash Budget
July
August
Sept.
Beginning cash balance* ……………………
$15,000
$15,000
$25,504
Add: Cash receipts (from part 1) ………..
57,800
67,200
73,600
Total cash available ………………………….
72,800
82,200
99,104
Less: Cash payments for
Direct materials ……………………………….
16,160
13,440
13,760
Direct labor ……………………………………..
4,040
3,360
3,440
Overhead …………………………………………
20,200
16,800
17,200
Sales commissions (10% of sales) ……
6,400
4,800
Total cash payments ………………………..
57,350
52,146
49,700
$15,450
$30,054
$49,404
Additional loan ………………………………….
Repayment of loan …………………………….
450
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
1240
Problem 20-3A (50 minutes)
Part 1
MERLINE MANUFACTURING
Budgeted Income Statement
January
February
March
Sales* ……………………………………………
$2,062,500
$2,268,750
$2,495,625
Cost of goods sold* ………………………
1,237,500
1,361,250
1,497,375
Gross profit …………………………………..
825,000
907,500
998,250
Selling, general, and admin. expenses
206,250
226,875
249,563
287,500
287,500
287,500
10,000
10,000
10,000
*Sales units, Sales, and Cost of goods sold for the next three months:
Sales
Cost of Goods
Units
($125/unit)
Sold ($75/unit)
January ………………………………….
16,500
$2,062,500
$1,237,500
February ………………………………..
March …………………………………….
Part 2: Analysis Component
No. March income is budgeted to be lower under the proposed plan.
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
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Problem 20-4A (130 minutes)
Part 1
ZIGBY MANUFACTURING
Sales Budgets
April
May
June
Budgeted sales units ……………………….
20,500
19,500
20,000
Part 2
ZIGBY MANUFACTURING
Production Budget
April
May
June
Total
Budgeted sales units ……………………….
20,500
19,500
20,000
Add: Desired ending inventory
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
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Problem 20-4A (continued)
Part 3
ZIGBY MANUFACTURING
Direct Materials Budget
April
May
June
Total
Units to produce………………………………….
19,700
19,900
20,400
Materials required per unit (lbs) …………..
x 0.50
x 0.50
x 0.50
4,975
5,100
Total materials required (lbs) ……………….
14,825
15,050
14,200
Materials to purchase (lbs) ……………….
9,900
10,075
9,100
$ 20
$ 20
Part 4
ZIGBY MANUFACTURING
Direct Labor Budget
April
May
June
Total
Units to produce………………………………
19,700
19,900
20,400
Direct labor hours required per unit ….
x 0.50
x 0.50
x 0.50
9,850
9,950
10,200
Direct labor cost per hour ………………..
Part 5
ZIGBY MANUFACTURING
Factory Overhead Budget
April
May
June
Total
Direct labor hours needed …………………….
9,850
9,950
10,200
Variable overhead rate per direct labor hour ……
x $2.70
x $2.70
x $2.70
Budgeted variable overhead ………………….
26,595
27,540