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1243
Exercise 22-30 (10 minutes)
HECTOR COMPANY
Budgeted Cash Payments
For August and September
August
Sept.
Payments for:
Merchandise* ............................................................................
$14,400
$19,200
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
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
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
Supporting calculations
(1) Accumulated depreciation
(2) Retained earnings
Beginning ................................................................
$ 8,000
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
(2) Cost of goods sold
(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
1251
Problem 22-1A (concluded)
Part 3
BLACK DIAMOND COMPANY
Direct Labor Budget
Third Quarter
Units to be produced ...............................................................
148,500
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 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
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
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
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%
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
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
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
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
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
Supporting calculations
April
May
June
Total
Note A: Cash receipts from customers
Total sales .........................................................
$488,925
$465,075
$477,000
$1,431,000
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
Part 10
ZIGBY MANUFACTURING
Budgeted Balance Sheet
June 30, 2017
ASSETS
Cash ............................................................
$ 40,000
Cash budget
Equipment ..................................................
$730,000
Note F
Less accumulated depreciation ...............
210,000
520,000
Note G
Common stock ...........................................
$335,000
Unchanged
1260
Problem 22-4A (Concluded)
Supporting Footnotes
Note C
Beginning receivables ......................................................
$ 342,248
Credit sales ........................................................................
1,001,701
Note E
Beginning finished goods inventory ................................
$ 325,540
Note F
Beginning equipment ........................................................
$ 600,000
Note G
Beginning accumulated depreciation ..............................
$ 150,000
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
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
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.
