Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1171
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
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1172
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
2.
RAMOS CO.
Factory Overhead Budget
For April, May, and June
April
May
June
Total labor hours needed ……………………….
221
272
Variable factory overhead rate ……………….
Budgeted fixed overhead ……………………….
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1173
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%
Add budgeted sales ………………………….
Deduct beginning inventory ……………..
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 ………
x 30%
x 30%
x 30%
Deduct beginning inventory ……………..
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1174
Exercise 20–12 (15 minutes)
ELECTRO COMPANY
Production Budget
Second and Third Quarters
Second
Third
Quarter
Quarter
Budgeted ending inventories
Add budgeted sales ……………………………………………………….
Required units of available production …………………………..
Less actual or budgeted beginning inventories ……………….
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) …………………………..
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1175
Exercise 20–14 (10 minutes)
BRANSON BELTS
Direct Labor Budget
Second Quarter
Units to be produced ………………………………………………………
4,500
Direct labor rate (per hour) ……………………………………………..
1176
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
Budgeted ending inventory (lbs.)*
4,960
4,640
Total materials requirements (lbs.)
14,160
Budgeted beginning inventory (lbs.)
Materials to be purchased (lbs.)
10,480
Direct material cost per lb.
$4.00
$4.00
2.
MCO Leather
Direct Labor Budget
For the Months of September and October
September
October
Budgeted production (units)
4,600
6,200
x 0.8
Total direct labor hours needed
3,680
4,960
3.
MCO Leather
Factory Overhead Budget
For the Months of September and October
September
October
Total direct labor hours needed
3,680
4,960
VOH rate per DL hour
x $2.00
x $2.00
Budgeted fixed ovhd.
Total budgeted factory overhead
1177
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.)
Budgeted ending inventory (lbs.)
7,360
7,680
Total materials requirements (lbs.)
Budgeted beginning inventory (lbs.)*
Materials to be purchased (lbs.)
Direct material cost per lb.
x $3.00
Total budgeted direct materials
$111,360
2.
Ornamental Sculptures Mfg.
Direct Labor Budget
For the Months of March and April
March
April
Budgeted production (units)
3,300
4,600
DL hours required per unit
x 0.50
x 0.50
Total direct labor hours needed
1,650
2,300
Direct labor rate per hour
x $18
x $18
Total budgeted direct labor
$29,700
3.
Ornamental Sculptures Mfg.
Factory Overhead Budget
For the Months of March and April
March
April
Total direct labor hours needed
1,650
2,300
VOH rate per DL hour
x $3
x $3
Budgeted variable overhead
Budgeted fixed overhead
4,000
4,000
Total budgeted factory overhead
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1178
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
Interest expense
January ($60,000 x 1%) ………………………..
600
February ($10,600 x 1%) ……………………….
________
106
________
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1179
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 sales (30% of sales) ……………………..
157,500
160,500
Total budgeted cash receipts ………………..
Exercise 20-19 (15 minutes)
ZISK CO.
Schedule of Cash Payments
For April, May, and June
April
May
June
Purchases ……………………………………………..
$80,000
$110,000
$120,000
24,000
Budgeted cash payments for materials …..
$117,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1180
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
$25,883
Repayment of loan to bank …………………….
$ 8,000
$14,207
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1181
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 ……………………………………..
$ 30,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1182
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
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1183
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
111,000
150,000
Total cash available
119,000
141,000
180,000
Cash payments
Additional loan (loan repayment)
Loan balance
Loan balance, Beg. of month
$0
$24,000
$13,380
Additional loan (loan repayment)
1184
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%
180,000
315,000
270,000
The following notes (1) through (8) provide supporting calculations and explanations.
Notes: (1) September required units
Ending inventory
30,000
Add budgeted sales
270,000
Total required in September
300,000
(2) September beginning inventory
Total required (1 above)
Less budgeted purchases
(3) September beginning inventory = August ending inventory
(4) August required units
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
Exercise 20-24 (concluded)
Notes: concluded
(5) August beginning inventory
Total required (4 above)
Less budgeted purchases
(6) August beginning inventory = July ending inventory
(7) July required units
Ending inventory
Add budgeted sales
(8) July beginning inventory
Total required (7 above)
227,250
Less budgeted purchases
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
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
Supporting calculations
(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
For June purchases ($700,000 x 40%) ……….
$ 280,000
For July purchases ($750,000 x 60%) ………..
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
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
527,600
Income tax expense (note 3) ……………………………………..
30,720
Supporting calculations
(1) Cost of goods sold
Sales ……………………………………………………….
Cost percent …………………………………………….
(2) Salaries expense
Cash paid …………………………………………………
$ 275,000
Less beginning payable …………………………..
Plus ending payable …………………………………
60,000
(3) Income tax expense
Pre-tax income …………………………………………
$ 102,400
Tax rate ……………………………………………………
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
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
Equipment …………………………………………………………….
$1,600,000
Less accumulated depreciation (note 2) …………………..
LIABILITIES AND EQUITY
Liabilities
Accounts payable (note 3) ……………………………………..
$ 300,000
Salaries payable ………………………………………………….
60,000
Total current liabilities …………………………………………
Bank loan payable ……………………………………………….
Common stock …………………………………………………….
Retained earnings (note 4) …………………………..………..
Supporting calculations
(1) Accounts receivable
June sales (20% x $1,200,000) …………………………..
July sales (70% x $1,400,000)…………………………..
Total ……………………………………………………….
(2) Accumulated depreciation
Beginning ……………………………………………………….
$ 280,000
Expense ……………………………………………………….
36,000
Ending ……………………………………………………….
$ 316,000
(3) Accounts payable
Purchases ……………………………………………………….
Percent unpaid…………………………………………………….
Payable ……………………………………………………….
(4) Retained earnings
Beginning ……………………………………………………….
$ 964,000
Net income ……………………………………………………….
Ending ……………………………………………………….
$1,035,680
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1189
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 …………………………..
Cost of goods sold ……………………………….
195,000
150,000
Beginning inventory percent …………………
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 …………………..
Less beginning inventory (*) ………………………
Cash payments for purchases (on accounts) in October
Dollars
Percent
Paid
For purchases from August ………………………
$194,400
$ 29,160
For purchases from September …………………
For purchases from October ……………………..
Total cash payments for purchases …………..
$172,020
Exercise 20-28 (25 minutes)
1. Budgeted merchandise purchases
June
July
August
Ending accounts payable …………………….
$ 200,000
$ 235,000
$ 195,000
2. Budgeted cost of goods sold
June
July
August
Beginning inventory …………………………..
$ 250,000
$ 400,000
$ 300,000
Plus budgeted purchases …………………….
1,540,000
1,460,000
1,455,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
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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
Budgeted inventory percent ……….
x 20%
x 20%
x 20%
x 20%
x 20%
Budgeted merchandise purchases
July
August
September
October
Budgeted ending inventory ……………..
$ 40,600
$ 44,800
$ 38,500
$ 37,100
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 ……………..
For purchases from July ………………….
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 ……….
For purchases from August ……………..
3.
Budgeted balance of accounts payable at the end of September
Purchases
Percent Unpaid
Dollars Unpaid
From purchases in September …………
$217,700
75%
$163,275
Budgeted balance of accounts payable at the end of October
Purchases
Percent Unpaid
Dollars Unpaid
From purchases in October ……………..
$191,100
75%
$143,325
From purchases in September …………