1243
Exercise 22-30 (10 minutes)
HECTOR COMPANY
Budgeted Cash Payments
For August and September
August
Sept.
Payments for:
Merchandise* ………………………………………………………………….
$14,400
$19,200
Rent expense ………………………………………………………………….
7,400
7,400
1244
Exercise 22-31 (25 minutes)
CASTOR, INC.
Cash Budget
For April, May, and June
April
May
June
Beginning cash balance* ……………………….
$12,000
$12,000
$12,279
$18,339
Additional loan from bank ……………………..
1245
Exercise 22-31 (continued)
CASTOR, INC.
Cash Receipts Budget
For April, May, and June
April
May
June
Sales ……………………………………………………..
$32,000
$40,000
$24,000
Exercise 22-32 (30 minutes)
(1)
KELSEY
Cash Receipts Budget
For July, August, and September
July
August
Sept.
Sales ……………………………………………………..
$64,000
$80,000
$48,000
1246
(2)
KELSEY
Cash Budget
For July, August, and September
July
August
Sept.
Beginning cash balance* ……………………….
$15,000
$15,000
$25,504
Cash payments for:
1247
Exercise 22-33 (15 minutes)
ZETROV COMPANY
Budgeted Balance Sheet
As of March 31
ASSETS
Cash ……………………………………………………………………..
$ 50,000
Accounts receivable ($140,000 x 70%) ………………………..
98,000
Total current assets ……………………………………………….
Less accumulated depreciation (note 1) ………………….
LIABILITIES AND EQUITY
Supporting calculations
(1) Accumulated depreciation
Beginning ……………………………………………………….
$46,000
Depreciation expense …………………………..
Ending ……………………………………………………….
$47,000
(2) Retained earnings
Beginning ……………………………………………………….
$ 8,000
Net income ……………………………………………………….
Ending ……………………………………………………….
$56,000
Tax rate ……………………………………………………
Exercise 22-34 (15 minutes)
FORTUNE, INC.
Budgeted Income Statement
For Quarter Ended March 31
Sales (note 1) ……………………………………………………………
$3,750,000
Cost of goods sold (note 2) ………………………………………
2,100,000
Supporting calculations
(1) Sales
Unit sales (45,000 + 55,000 + 50,000) ………….
Unit price …………………………………………………
$25
(2) Cost of goods sold
Unit sales (45,000 + 55,000 + 50,000) ………….
Unit cost…………………………………………………..
(3) Income tax expense
Pre-tax income …………………………………………
$ 397,375
1249
Exercise 22-35 (15 minutes)
RENDER CO. CPA
Activity-Based Budget
For Year Ending December 31, 2017
Budgeted
Hours
Budgeted
Price/hour
Budgeted
Cost
Data-entry ……………………………………………..
2,200
$10
$ 22,000
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 22
1250
PROBLEM SET A
Problem 22-1A (40 minutes)
Part 1
BLACK DIAMOND COMPANY
Production Budget (in units)
Third Quarter
Budgeted ending inventory (skis) …………………………………………………
3,500
Part 2
BLACK DIAMOND COMPANY
Direct Materials Budget (in lbs, except where noted)
Third Quarter
Materials (carbon fiber) needed for production (148,500 x 2) ……..
297,000
Direct materials cost per pound ………………………………………………..
1251
Problem 22-1A (concluded)
Part 3
BLACK DIAMOND COMPANY
Direct Labor Budget
Third Quarter
Units to be produced ………………………………………………………
148,500
Direct labor rate (per hour) ……………………………………………..
Part 4
BLACK DIAMOND COMPANY
Factory Overhead Budget
Third Quarter
Total labor hours needed ………………………………………………..
74,250
1252
Problem 22-2A (30 minutes)
(1)
BUILT-TIGHT
Cash Receipts Budget
For July, August, and September
July
August
Sept.
Sales ……………………………………………………..
$64,000
$80,000
$48,000
1253
Problem 22-2A (continued)
(2)
BUILT-TIGHT
Cash Budget
For July, August, and September
July
August
Sept.
Beginning cash balance* ……………………….
$15,000
$15,000
$25,504
Cash receipts (from part 1) …………………….
57,800
67,200
73,600
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
8,000
4,800
$30,054
Repayment of loan to bank …………………….
450
Problem 22-3A (50 minutes)
Part 1
MERLINE MANUFACTURING
Budgeted Income Statement
For Months of January, February, and March, 2018
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
Expenses
287,500
287,500
287,500
Total expenses ………………………………….
Part 2: Analysis Component
The plan for increasing sales volume by reducing the price and increasing
advertising would cause the company to generate less net income in each of the
1255
Problem 22-4A (130 minutes)
Part 1
ZIGBY MANUFACTURING
Sales Budgets
April, May, and June 2017
Budgeted
Units
Budgeted
Unit Price
Budgeted
Sales Dollars
April 2017 ……………………………………………………..
20,500
$23.85
$ 488,925
20,000
Part 2
ZIGBY MANUFACTURING
Production Budget
April, May, and June 2017
April
May
June
Total
Next month’s budgeted sales ……………
19,500
20,000
20,500
Ratio of inventory to future sales ………
x 80%
x 80%
x 80%
Add budgeted sales ………………………….
Deduct beginning inventory ……………..
1256
Problem 22-4A (continued)
Part 3
ZIGBY MANUFACTURING
Raw Materials Budget
April, May, and June 2017
April
May
June
Total
Production budget (units) …………………
19,700
19,900
20,400
Add budgeted ending inventory ………..
Materials to be purchased ………………..
Material price per unit ………………………
$ 20
Part 4
ZIGBY MANUFACTURING
Direct Labor Budget
April, May, and June 2017
April
May
June
Total
Budgeted production (units) …………….
19,700
19,900
20,400
Labor requirements per unit (hours) ….
Total labor hours needed ………………….
Direct labor rate (per hour) ……………….
Budgeted direct labor cost ……………….
Part 5
ZIGBY MANUFACTURING
Factory Overhead Budget
April, May, and June 2017
April
May
June
Total
Labor hours needed ………………………..
9,850
9,950
10,200
Budgeted variable overhead ……………
27,540
1257
Problem 22-4A (continued)
Part 6
ZIGBY MANUFACTURING
Selling Expense Budgets
April, May, and June 2017
April
May
June
Total
Budgeted sales …………………………..
$488,925
$465,075
$477,000
Sales commission percent ………………
x 8%
Part 7
ZIGBY MANUFACTURING
General and Administrative Expense Budgets
April, May, and June 2017
April
May
June
Total
Salaries ……………………………………………….
$12,000
$12,000
$12,000
$36,000
1258
Problem 22-4A (Continued)
Part 8
ZIGBY MANUFACTURING
Cash Budgets
April, May, and June 2017
April
May
June
Beginning cash balance ………………………………..
$ 40,000
$ 83,346
$124,295
Loan interest ($12,000 x 1%) …………………………..
120
Long-term note interest ($500,000 x .0.9%) …………
Purchase of equipment ……………………………….
4,500
_______
4,500
_______
4,500
130,000
$124,295
Supporting calculations
April
May
June
Total
Note A: Cash receipts from customers
Total sales …………………………………………………
$488,925
$465,075
$477,000
$1,431,000
Cash sales (30%) ……………………………………….
Credit sales (70%) ……………………………………..
Cash collections
Month after sale (100%) …………………………..
$342,248
$342,248
$325,553
$1,010,049
Cash sales…………………………………………………
Total cash received ……………………………………
$488,925
$481,770
$468,653
$1,439,348
Month after purchase (100%) ……………………..
$200,500
$198,000
$201,500
1259
Problem 22-4A (Continued)
Part 9
ZIGBY MANUFACTURING
Budgeted Income Statement
For Three Months Ended June 30, 2017
Sales ……………………………………………………………………..
$1,431,000
Cost of goods sold (60,000 units @ $19.85) …………….
1,191,000
Gross profit …………………………………………………………..
$114,480
Income before taxes ………………………………………………
Part 10
ZIGBY MANUFACTURING
Budgeted Balance Sheet
June 30, 2017
ASSETS
Cash ……………………………………………………
$ 40,000
Cash budget
Accounts receivable …………………………..
Note C
Total current assets …………………………..
Equipment …………………………………………..
$730,000
Note F
Less accumulated depreciation ……………
210,000
520,000
Note G
Total assets …………………………………………
Accounts payable ………………………………..
Note H
Bank loan payable ……………………………….
Cash budget
Taxes payable ……………………………………..
23,415
Income stmt.
Total current liabilities …………………………
Common stock …………………………………….
$335,000
Unchanged
Retained earnings ………………………………..
242,273
Note I
577,273
1260
Problem 22-4A (Concluded)
Supporting Footnotes
Note C
Beginning receivables ………………………………………………
$ 342,248
Credit sales ………………………………………………………………
1,001,701
Less collections ……………………………………………………….
Note D
Beginning raw materials inventory …………………………..
$ 98,500
Purchases of raw materials ……………………………………….
Less materials used in production** …………………………..
(600,000)
Note E
Beginning finished goods inventory …………………………..
$ 325,540
Cost of goods completed during the period ……………….
Less cost of goods sold during the period …………………
(1,191,000)
*Also equals 16,400 units @ $19.85 = $325,540
Note F
Beginning equipment ………………………………………………..
$ 600,000
Purchased in June ……………………………………………………
130,000
Note G
Beginning accumulated depreciation …………………………
$ 150,000
Depreciation expense ……………………………………………….
60,000
Note H
Beginning accounts payable ……………………………………..
$ 200,500
Purchases of raw materials ……………………………………….
Payments for raw materials ……………………………………….
(600,000)
Note I
ZIGBY MANUFACTURING
Budgeted Statement of Retained Earnings
For Three Months Ended June 30, 2017
Retained earnings, beginning ……………………. $208,788
1261
Problem 22-5A (60 minutes)
Part 1
KEGGLER’S SUPPLY
Merchandise Purchases Budgets
For March, April, and May
March
April
May
FOOTWEAR
Budgeted sales for next month ………………………
25,000
32,000
35,000
Budgeted ending inventory …………………………..
10,500
Required units of available merchandise ………..
22,500
34,600
42,500
Budgeted purchases ……………………………………..
SPORTS EQUIPMENT
Budgeted sales for next month ………………………
90,000
95,000
90,000
Ratio of ending inventory to future sales ………..
30%
30%
30%
Budgeted ending inventory …………………………..
27,000
28,500
27,000
Required units of available merchandise ………..
97,000
Budgeted purchases ……………………………………..
1262
Problem 22-5A (Continued)
Part 2. Analysis Component
Inventory levels might become too high for a number of reasons, including:
• Management may have simply lost sight of inventory levels, thereby
allowing them to reach inappropriately high levels.