CHAPTER 22 Budgeting
Ex. 22–19
October November December
Receipts from cash sales:
Cash sales (25% × current month’s sales) $14,500 $16,250 $18,000
September sales on account:
OFFICEMART INC.
Schedule of Collections from Sales
For the Three Months Ending December 31, 2014
22-21
CHAPTER 22 Budgeting
Ex. 22–20
March April May
March expenses: 1
Paid in March ($37,800 × 60%) $22,680
GREEN MOUNTAIN FINANCIAL INC.
Schedule of Cash Payments for Selling and Administrative Expenses
For the Three Months Ending May 31, 2014
22-22
CHAPTER 22 Budgeting
Ex. 22–21
January February March
Payments of prior month’s expense1$15,000 $ 26,430 $ 32,610
Ex. 22–22
2014 2015 2016 2017
Building $6,000,000 $4,000,000 $3,500,000
Capital Expenditures Budget
For the Four Years Ending December 31, 2014–2017
EASTGATE PHYSICAL THERAPY INC.
Schedule of Cash Payments for Operations
For the Three Months Ending March 31, 2015
OMICRON INC.
1
22-23
CHAPTER 22 Budgeting
Prob. 22–1A
1.
Budget Actual Sales Amount Percent
8″ × 10″ Frame:
East 8,500 8,755 255 3%
2. 2015
2014 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 2014
22-24
CHAPTER 22 Budgeting
Prob. 22–1A (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, 2015
Sales Budget
22-25
CHAPTER 22 Budgeting
Prob. 22–2A
1.
Unit Sales Unit Selling
Volume Price Total Sales
Backyard Chef:
Maine 310 $ 700 $ 217,000
2.
Backyard Master
Chef Chef
For the Month Ending July 31, 2014
Units
Product and Area
GOURMET GRILL COMPANY
Sales Budget
For the Month Ending July 31, 2014
GOURMET GRILL COMPANY
Production Budget
22-26
CHAPTER 22 Budgeting
Prob. 22–2A (Continued)
3.
Stainless Burner Sub-
Grates Steel assemblies Shelves
(units) (lbs.) (units) (units) Total
Required units for
production:
Backyard Chef 2,760 22,080 1,840 3,680
Master Chef 2,580 18,060 1,720 2,150
Plus desired inventory,
GOURMET GRILL COMPANY
Direct Materials Purchases Budget
For the Month Ending July 31, 2014
12 34
56 78
22-27
CHAPTER 22 Budgeting
Prob. 22–2A (Concluded)
4.
Stamping Forming Assembly
Department Department Department Total
Hours required for production:
GOURMET GRILL COMPANY
Direct Labor Cost Budget
For the Month Ending July 31, 2014
22-28
1.
Unit Sales Unit Selling
Volume Price Total Sales
Bird house 3,200 $50.00 $160,000
2.
Bird Bird
House Feeder
Expected units to be sold 3,200 3,000
FEATHERED FRIENDS INC.
Production Budget
For the Month Ending December 31, 2014
Units
FEATHERED FRIENDS INC.
Sales Budget
For the Month Ending December 31, 2014
22-29
CHAPTER 22 Budgeting
Prob. 22–3A (Continued)
3.
Wood Plastic Total
Required units for production:
Bird house 2,536 1,585
Bird feeder 3,576 2,235
FEATHERED FRIENDS INC.
Direct Materials Purchases Budget
For the Month Ending December 31, 2014
12
34
22-30
CHAPTER 22 Budgeting
Prob. 22–3A (Continued)
4.
Fabrication Assembly
Department Department Total
Hours required for production:
5.
Indirect factory wages $ 75,000
Factory Overhead Cost Budget
For the Month Ending December 31, 2014
FEATHERED FRIENDS INC.
Direct Labor Cost Budget
For the Month Ending December 31, 2014
FEATHERED FRIENDS INC.
22-31
CHAPTER 22 Budgeting
Prob. 22–3A (Continued)
6.
Finished goods inventory, December 1, 20141$ 19,440
Work in process inventory, December 1, 2014 $ 29,000
Direct materials:
Direct materials inventory, December 1, 20142$ 1,640
Direct materials purchases 46,704
Total manufacturing costs 208,748
Total work in process during period $237,748
1
Bird house (320 × $27)…………………………………………………………… $ 8,640
Bird feeder (270 × $40)…………………………………………………………
…
10,800
Finished goods inventory, December 1, 2014………………………………
…
$19,440
…
…
FEATHERED FRIENDS INC.
Cost of Goods Sold Budget
For the Month Ending December 31, 2014
22-32
CHAPTER 22 Budgeting
Prob. 22–3A (Concluded)
7.
Selling expenses:
Sales salaries expense $70,000
Advertising expense 18,000
8.
Revenue from sales $370,000
Cost of goods sold 203,708
Gross profit $166,292
Operating expenses:
FEATHERED FRIENDS INC.
Budgeted Income Statement
For the Month Ending December 31, 2014
FEATHERED FRIENDS INC.
Selling and Administrative Expenses Budget
For the Month Ending December 31, 2014
22-33
1.
May June July
Estimated cash receipts from:
Cash sales $ 8,600 $ 9,000 $ 9,500
Collection of accounts receivablea68,400 75,780 79,920
SONOMA HOUSEWARES INC.
For the Three Months Ending July 31, 2014
Cash Budget
22-34
CHAPTER 22 Budgeting
Prob. 22–4A (Concluded)
Computations:
aCollections of accounts receivable: May June July
March sales………………………………………
…
$18,000
bPayments for manufacturing costs: May June July
Payment of accounts payable, beginning
$ 6,000 $ 6,100 $ 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
22-35
…
CHAPTER 22 Budgeting
Prob. 22–5A
1.
Sales1$1,000,000
Cost of goods sold:
Direct materials2$220,000
Operating expenses:
Selling expenses:
Sales salaries and commissions5$136,000
Administrative expenses:
Office and officers salaries7$ 96,400
1200,000 units × $5.00
2200,000 units × $1.10
REGINA SOAP CO.
Budgeted Income Statement
For the Year Ending December 31, 2015
22-36
CHAPTER 22 Budgeting
Prob. 22–5A (Concluded)
2.
Current assets:
Cash 1 $135,800
Current liabilities:
Accounts payable $ 62,000
1Cash balance, December 31, 2015:
Balance, January 1, 2015…………………………………………………………
…
$ 85,000
Add: Cash from operations
Net income………………………………………………………………… $96,600
Depreciation of plant and equipment………………………………… 40,000 136,600
Less: Dividends to be paid in 2015 (18,000 × $0.15 × 4 qtrs.)…………… $10,800
Plant and equipment to be acquired in 2015………………………
…
75,000 (85,800)
Cash balance, December 31, 2015………………………………………………
…
$135,800
LIABILITIES
STOCKHOLDERS’ EQUITY
REGINA SOAP CO.
Budgeted Balance Sheet
December 31, 2015
ASSETS
22-37
CHAPTER 22 Budgeting
Prob. 22–1B
1.
Budget Actual Sales Amount Percent
Home Alert System:
United States 1,700 1,734 34 2%
2. 2015
2014 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 2014
22-38
CHAPTER 22 Budgeting
Prob. 22–1B (Concluded)
3.
Unit Sales Unit Selling
Volume Price Total Sales
Home Alert System:
United States 1,769 $250 $ 442,250
Product and Area
SENTINEL SYSTEMS INC.
For the Year Ending December 31, 2015
Sales Budget
22-39