CHAPTER 21 Budgeting
Ex. 21–19 (FIN MAN); Ex 6–19 (MAN)
October November December
Receipts from cash sales:
Cash sales (25% × current month’s sales) $14,500 $16,250 $18,000
September sales on account:
Collected in October (Accounts Receivable
OFFICEMART INC.
Schedule of Collections from Sales
For the Three Months Ending December 31, 2016
21-21
CHAPTER 21 Budgeting
Ex. 21–20 (FIN MAN); Ex 6–20 (MAN)
March April May
March expenses:
1
Paid in March ($43,400 × 70%) $30,380
Paid in April ($43,400 × 30%) $13,020
April expenses:
2
HORIZON FINANCIAL INC.
Schedule of Cash Payments for Selling and Administrative Expenses
For the Three Months Ending May 31, 2016
21-22
CHAPTER 21 Budgeting
Ex. 21–21 (FIN MAN); Ex 6–21 (MAN)
January February March
Payments of prior month’s expense
1
$15,000 $ 26,430 $ 32,610
1
$15,000, given as Accrued Expenses Payable, January 1
$26,430 = ($91,600 – $3,000 – $500) × 30%
$32,610 = ($112,200 – $3,000 – $500) × 30%
Note: Insurance and depreciation are expenses that do not result in cash payments
in January, February, or March.
Ex. 21–22 (FIN MAN); Ex 6–22 (MAN)
2016 2017 2018 2019
Building $4,000,000 $6,000,000 $3,500,000
Capital Expenditures Budget
For the Four Years Ending December 31, 2016–2019
EASTGATE PHYSICAL THERAPY INC.
Schedule of Cash Payments for Operations
For the Three Months Ending March 31, 2017
OMICRON INC.
1
21-23
CHAPTER 21 Budgeting
Prob. 21–1A (FIN MAN); Prob 6–1A (MAN)
1.
Budget Actual Sales Amount Percent
8″ × 10″ Frame:
East 8,500 8,755 255 3%
Central 6,200 6,510 310 5%
2.
2017
2016 Percentage Budgeted
Actual Increase/ Units
Units (Decrease) (rounded)
8″ × 10″ Frame:
East 8,755 3% 9,018
PROBLEMS
Increase/(Decrease)
A
ctual Over BudgetUnit Sales, Year Ended 2016
21-24
CHAPTER 21 Budgeting
Prob. 21–1A (FIN MAN); Prob 6–1A (MAN) (Concluded)
3.
Unit Sales Unit Selling
Volume Price Total Sales
8″ × 10″ Frame:
East 9,018 $17 $153,306
Product and Area
RAPHAEL FRAME COMPANY
For the Year Ending December 31, 2017
Sales Budget
21-25
CHAPTER 21 Budgeting
Prob. 21–2A (FIN MAN); Prob 6–2A (MAN)
1.
Unit Sales Unit Selling
Volume Price Total Sales
Backyard Chef:
Maine 310 $ 700 $ 217,000
Vermont 240 750 180,000
2.
Backyard Master
Chef Chef
Expected units to be sold 910 440
Plus desired inventory, July 31, 2016 40 22
For the Month Ending July 31, 2016
Units
Product and Area
GOURMET GRILL COMPANY
Sales Budget
For the Month Ending July 31, 2016
GOURMET GRILL COMPANY
Production Budget
21-26
CHAPTER 21 Budgeting
Prob. 21–2A (FIN MAN); Prob 6–2A (MAN) (Continued)
3.
Stainless Burner Sub-
Grates Steel assemblies Shelves
(units) (lbs.) (units) (units) Total
Required units for
Less estimated
inventory, July 1, 2016 290 1,500 170 340
Total units to be
purchased 5,390 40,440 3,545 5,805
Unit price $15.00 $6.00 $110.00 $10.00
GOURMET GRILL COMPANY
Direct Materials Purchases Budget
For the Month Ending July 31, 2016
××× ×
21-27
CHAPTER 21 Budgeting
Prob. 21–2A (FIN MAN); Prob 6–2A (MAN) (Concluded)
4.
Stamping Forming Assembly
Department Department Department Total
Hours required for production:
Backyard Chef
1
460 552 920
Master Chef
2
258 344 645
GOURMET GRILL COMPANY
Direct Labor Cost Budget
For the Month Ending July 31, 2016
21-28
CHAPTER 21 Budgeting
Prob. 21–3A (FIN MAN); Prob 6–3A (MAN)
1.
Unit Sales Unit Selling
Volume Price Total Sales
2.
Bird Bird
House Feeder
Expected units to be sold 3,200 3,000
For the Month Ending December 31, 2016
Units
FEATHERED FRIENDS INC.
Sales Budget
For the Month Ending December 31, 2016
FEATHERED FRIENDS INC.
Production Budget
21-29
CHAPTER 21 Budgeting
Prob. 21–3A (FIN MAN); Prob 6–3A (MAN) (Continued)
3.
Wood Plastic Total
Required units for production:
Bird house 2,536 1,585
Bird feeder 3,576 2,235
Plus desired units of inventory,
December 31, 2016 220 200
FEATHERED FRIENDS INC.
Direct Materials Purchases Budget
For the Month Ending December 31, 2016
12
34
21-30
CHAPTER 21 Budgeting
Prob. 21–3A (FIN MAN); Prob 6–3A (MAN) (Continued)
4.
Fabrication Assembly
Department Department Total
Hours required for production:
Bird house 634 951
5.
Indirect factory wages $ 75,000
Depreciation of plant and equipment 23,000
Factory Overhead Cost Budget
For the Month Ending December 31, 2016
FEATHERED FRIENDS INC.
Direct Labor Cost Budget
For the Month Ending December 31, 2016
FEATHERED FRIENDS INC.
12
21-31
CHAPTER 21 Budgeting
Prob. 21–3A (FIN MAN); Prob 6–3A (MAN) (Continued)
6.
Finished goods inventory, December 1, 2016
1
$ 19,440
Work in process inventory, December 1, 2016 $ 29,000
Direct materials:
Cost of direct materials placed in
production $ 46,604
Direct labor 53,144
Factory overhead 109,000
Bird house (320 × $27)…………………………………………………………
…
$ 8,640
Bird feeder (270 × $40)…………………………………………………………
…
10,800
Finished goods inventory, December 1, 2016………………………………
…
$19,440
Direct materials inventory, December 31, 2016……………………………
…
$ 1,740
4
Bird house (290 × $27)…………………………………………………………
…
$ 7,830
…
…
FEATHERED FRIENDS INC.
Cost of Goods Sold Budget
For the Month Ending December 31, 2016
21-32
CHAPTER 21 Budgeting
Prob. 21–3A (FIN MAN); Prob 6–3A (MAN) (Concluded)
7.
Selling expenses:
Sales salaries expense $70,000
Advertising expense 18,000
Telephone expense—selling 550
Travel expense—selling 4,000
Total selling expenses $ 92,550
Administrative expenses:
8.
Revenue from sales $370,000
Cost of goods sold 203,708
Gross profit $166,292
Operating expenses:
Selling expenses $92,550
Administrative expenses 22,450
Total operating expenses 115,000
FEATHERED FRIENDS INC.
Budgeted Income Statement
For the Month Ending December 31, 2016
FEATHERED FRIENDS INC.
Selling and Administrative Expenses Budget
For the Month Ending December 31, 2016
21-33
CHAPTER 21 Budgeting
Prob. 21–4A (FIN MAN); Prob 6–4A (MAN)
1.
May June July
Estimated cash receipts from:
Cash sales $ 8,600 $ 9,000 $ 9,500
Collection of accounts receivable
a
68,400 75,780 79,920
Total cash receipts $77,000 $84,780 $ 89,420
Other purposes:
Income tax 14,000
Dividends 5,000
Total cash payments $45,400 $64,500 $146,500
Cash increase or (decrease) $31,600 $20,280 $ (57,080)
(Continued)
SONOMA HOUSEWARES INC.
For the Three Months Ending July 31, 2016
Cash Budget
21-34
CHAPTER 21 Budgeting
Prob. 21–4A (FIN MAN); Prob 6–4A (MAN) (Concluded)
Computations:
a
Collections of accounts receivable: May June July
March sales………………………………………
…
$18,000
1
$60,000 × 30% = $18,000
2
$72,000 × 70% = $50,400
3
$72,000 × 30% = $21,600
b
Payments for manufacturing costs: May June July
Payment of accounts payable, beginning
of month balance
c
………………………
…
$ 6,000 $ 6,100 $ 7,100
c
Accounts payable, May 1 balance = $6,000
($34,000 – $3,500) × 20% = $6,100
($39,000 – $3,500) × 20% = $7,100
2. The budget indicates that the minimum cash balance will not be maintained
in July. This is due to the capital expenditures requiring significant cash
1
21-35
…
CHAPTER 21 Budgeting
Prob. 21–5A (FIN MAN); Prob 6–5A (MAN)
1.
Cost of goods sold 482,000
Gross profit $ 518,000
Operating expenses:
Selling expenses:
Su
pp
lies
25,000
Miscellaneous administrative ex
p
ense
9
14,000
Total administrative expenses 135,400
Total operating expenses 391,400
1
200,000 units × $5.00
2
200,000 units × $1.10
3
200,000 units × $0.65
4
(200,000 units × $0.40) + $40,000 + $12,000
5
(200,000 units × $0.45) + $46,000
REGINA SOAP CO.
Budgeted Income Statement
For the Year Ending December 31, 2017
21-36
CHAPTER 21 Budgeting
Prob. 21–5A (FIN MAN); Prob 6–5A (MAN) (Concluded)
2.
Current assets:
Cash
1
$135,800
Accounts receivable 125,600
Materials 48,900 150,700
Prepaid expenses 2,600
Total current assets $414,700
Property, plant, and equipment:
Current liabilities:
Accounts payable $ 62,000
1
Cash balance, December 31, 2017:
Balance, January 1, 2017………………………………………………………
…
$ 85,000
Add: Cash from operations
2
$325,000 + $75,000 = $400,000
3
$156,200 + $40,000 = $196,200
4
Retained earnings balance, December 31, 2017:
Balance, January 1, 2017……………………………………………………
…
$290,700
Plus net income for 2017……………………………………………………
…
96,600
LIABILITIES
STOCKHOLDERS’ EQUITY
REGINA SOAP CO.
Budgeted Balance Sheet
December 31, 2017
ASSETS
21-37
CHAPTER 21 Budgeting
Prob. 21–1B (FIN MAN); Prob 6–1B (MAN)
1.
Budget Actual Sales Amount Percent
Home Alert System:
United States 1,700 1,734 34 2%
Europe 580 609 29 5%
2.
2017
2016 Percentage Budgeted
Actual Increase/ Units
Units (Decrease) (rounded)
Home Alert System:
United States 1,734 2% 1,769
Increase/(Decrease)
A
ctual Over BudgetUnit Sales, Year Ended 2016
21-38
CHAPTER 21 Budgeting
Prob. 21–1B (FIN MAN); Prob 6–1B (MAN) (Concluded)
3.
Unit Sales Unit Selling
Volume Price Total Sales
Home Alert System:
United States 1,769 $250 $ 442,250
Europe 639 250 159,750
Product and Area
SENTINEL SYSTEMS INC.
For the Year Ending December 31, 2017
Sales Budget