EXERCISE 23-9
RODRIQUEZ, INC.
Direct Labor Budget
For the Year Ending December 31, 2017
Quarter
1
2
3
4
Year
Units to be produced
Direct labor time
(hours) per unit
20,000
X 1.5
25,000
X 1.5
35,000
X 1.5
30,000
X 1.5
110,000
.2
EXERCISE 23–10
LOWELL COMPANY
Production Budget
For the Quarter Ending March 31, 2017
Jan Feb Mar Total
Sales in units 12,000 14,000 13,000 39,000
EXERCISE 23-10 (Continued)
LOWELL COMPANY
Direct Labor Budget
For the Quarter Ending March 31, 2017
Jan Feb Mar Total
Production in units 13,600 12,200 11,000
EXERCISE 23–11
ATLANTA COMPANY
Manufacturing Overhead Budget
For the Year Ending December 31, 2017
Quarter
1
2
3
4
Year
Variable costs
Indirect materials ($.80/hour)
Indirect labor ($1.20/hour)
Fixed costs
Supervisory salaries
Depreciation
Maintenance
$12,000
18,000
35,000
15,000
12,000
$ 14,400
21,600
35,000
15,000
12,000
$ 16,800
25,200
35,000
15,000
12,000
$ 19,200
28,800
35,000
15,000
12,000
$ 62,400
93,600
140,000
60,000
48,000
EXERCISE 23–12
KIRKLAND COMPANY
Selling and Administrative Expense Budget
For the Six Months Ending June 30, 2017
Quarter
Six
Months
1
2
Budgeted sales in units
Variable expenses (1)
Sales commissions
Delivery expense
20,000
$20,000*
8,000
22,000
$22,000
8,800
$ 42,000
16,800
Fixed expenses
Sales salaries
Office salaries
Depreciation
Insurance
12,000
8,000
4,200
1,500
12,000
8,000
4,200
1,500
24,000
16,000
8,400
3,000
(1) Variable costs per dollar of sales are: Sales commissions (5%), Delivery
expense (2%), and Advertising (3%).
EXERCISE 23–13
(a)
FULTZ COMPANY
Computation of Cost of Goods Sold
For the Year Ending December 31, 2017
Cost of one unit of finished goods:
Direct materials (1 X $5) ……………………………………………………… $ 5
(b)
FULTZ COMPANY
Budgeted Income Statement
For the Year Ending December 31, 2017
Sales (30,000 X $85) …………………………………………………… $2,550,000
Cost of goods sold (see part (a)) ………………………………… 1,950,000
Gross profit ………………………………………………………………. 600,000
EXERCISE 23–14
DANNER COMPANY
Cash Budget
For the Two Months Ending February 28, 2017
January
February
Beginning cash balance ……………………………………
Add: Receipts
Collections from customers …………………..
Sale of marketable securities …………………
Excess (deficiency) of available cash over cash
disbursements ……………………………………………..
Financing
$ 45,000
85,000
12,000
27,500
$ 27,500
150,000
0
14,000
EXERCISE 23–15
DEITZ CORPORATION
Cash Budget
For the Quarter Ended March 31, 2017
Beginning cash balance …………………………………………………..
Add: Receipts
Collections from customers …………………………………..
Sale of equipment …………………………………………………
Less: Disbursements
Direct materials …………………………………………………….
Direct labor …………………………………………………………..
Manufacturing overhead ……………………………………….
$ 30,000
185,000
3,000
43,000
70,000
35,000
EXERCISE 23–16
(a) TRENSHAW COMPANY
Cash Budget
For the Month Ended July 31, 2017
Beginning cash balance ………………………. $45,000
Add: Cash collections ………………………… 90,000
Total cash available …………………………….. $135,000
Less: Cash disbursements
Merchandise purchases ……… $56,200
(b) An advantage of cash budgeting is that it allows cash shortfalls to be
predicted. If the timing of future cash shortfalls is known, arrange–
EXERCISE 23–17
(a) NIETO COMPANY
Expected Collections from Customers
March
March cash sales (30% X $250,000) ……………………………….
$ 75,000
Collection of March credit sales
[(70% X $250,000) X 10%] …………………………………………..
17,500
(b) NIETO COMPANY
Expected Payments for Direct Materials
March
March cash purchases (50% X $38,000) …………………………
$19,000
Payment of March credit purchases
EXERCISE 23–18
(a) (1)
GREEN LANDSCAPING INC.
Schedule of Expected Collections From Clients
For the Quarter Ending March 31, 2017
January
February
March
Quarter
November ($80,000) …………………………..
December ($90,000) …………………………..
$ 8,000
27,000
$ 9,000
$ 8,000
36,000
(2)
GREEN LANDSCAPING INC.
Schedule of Expected Payments for Landscaping Supplies
For the Quarter Ending March 31, 2017
________________________________________________________
January
February
March
Quarter
December ($14,000) …………………………..
January ($12,000) …………………………..
$ 5,600
7,200
$ 4,800
$ 5,600
12,000
(b)
(1)
Accounts receivable at March 31, 2017: ($120,000 X 10%) +
EXERCISE 23–19
PLETCHER DENTAL CLINIC
Cash Budget
For the Two Quarters Ending June 30, 2017
1st Quarter
2nd Quarter
Beginning cash balance …………………………………..
Add: Receipts
Collections from patients ……………………
Sale of equipment ………………………………
Investment interest …………………………..
Less: Disbursements
Professional salaries ………………………….
Overhead costs ………………………………….
Excess (deficiency) of cash available
over cash disbursements ……………………………..
Financing
$ 30,000
235,000
12,000
0
140,000
77,000
12,000
$ 25,000
380,000
0
7,000
140,000
100,000
50,000
EXERCISE 23–20
(a) GRAND STORES
Merchandise Purchases Budget
For the Month Ending June 30, 2017
Budgeted cost of goods sold ($500,000 X 75%) ……………… $375,000
(b) GRAND STORES
Budgeted Income Statement
For the Month Ending June 30, 2017
EXERCISE 23–21
Emeric and Ellie’s Painting Service
Direct Labor Budget
For the Month Ending June 30, 2017
Small
Medium
Large
Total
Homes to be painted
10
5
2
Direct labor cost per hour
X $18
Total direct labor cost
Direct labor time (hours)
SOLUTIONS TO PROBLEMS
PROBLEM 23–1A
COOK FARM SUPPLY COMPANY
Sales Budget
For the Six Months Ending June 30, 2017
Quarter
Six
Months
1
2
Total sales ……………………………..
Expected unit sales …………………
40,000
56,000
96,000
COOK FARM SUPPLY COMPANY
Production Budget
For the Six Months Ending June 30, 2017
Quarter
Six
Months
1
2
Required production units …………………………..
Expected unit sales ……………………………………..
Add: Desired ending finished goods
40,000
56,000
PROBLEM 23-1A (Continued)
COOK FARM SUPPLY COMPANY
Direct Materials Budget—Gumm
For the Six Months Ending June 30, 2017
Quarter
Six
Months
1
2
Units to be produced ………………………………
Direct materials per unit ………………………….
Total pounds needed for production ……….
47,000
X 4
59,000
X 4
COOK FARM SUPPLY COMPANY
Direct Labor Budget
For the Six Months Ending June 30, 2017
Quarter
Six
Months
1
2
Units to be produced ………………………
Direct labor time (hours) per unit ……..
47,000
X 1/4
59,000
X 1/4
PROBLEM 23-1A (Continued)
COOK FARM SUPPLY COMPANY
Selling and Administrative Expense Budget
For the Six Months Ending June 30, 2017
Quarter
Six
Months
1
2
Budgeted sales in units
40,000
56,000
96,000
COOK FARM SUPPLY COMPANY
Budgeted Income Statement
For the Six Months Ending June 30, 2017
Sales ………………………………………………………………………………… $5,760,000
Cost of goods sold (96,000 X $33.20)* ………………………………… 3,187,200
Gross profit ………………………………………………………………………. 2,572,800
Net income ……………………………………………………………………….. $ 881,160
*Cost Per Bag
Cost Element
Quantity
Unit Cost
Total
Direct materials
Gumm ……………………………………
4 pounds
$ 3.80
$15.20
PROBLEM 23–2A
(a) DELEON INC.
Sales Budget
For the Year Ending December 31, 2017
JB 50
JB 60
Total
Expected unit sales …………..
400,000
200,000
(b) DELEON INC.
Production Budget
For the Year Ending December 31, 2017
JB 50
JB 60
Expected unit sales …………………………
Add: Desired ending finished
400,000
200,000
PROBLEM 23-2A (Continued)
(c) DELEON INC.
Direct Materials Budget
For the Year Ending December 31, 2017
JB 50
JB 60
Total
Units to be produced ………………….
Direct materials per unit ……………..
405,000
X 2
205,000
X 3
(d) DELEON INC.
Direct Labor Budget
For the Year Ending December 31, 2017
JB 50
JB 60
Total
Units to be produced ………………….
405,000
205,000
650,000
PROBLEM 23-2A (Continued)
(e) DELEON INC.
Budgeted Income Statement
For the Year Ending December 31, 2017
JB 50
JB 60
Total
Sales ………………………………..
Cost of goods sold ……………
Gross profit ………………………
$8,000,000
5,200,000
2,800,000
(1)
$5,000,000
4,000,000
1,000,000
(2)
$13,000,000
9,200,000
3,800,000
PROBLEM 23–3A
(a) HILL INDUSTRIES
Sales Budget
For the Year Ending December 31, 2017
Plan A
Plan B
Expected unit sales ……………………………..
Unit selling price ………………………………….
765,000
X $8.40
(1)
950,000
X $7.50
(2)
(3)
(b) HILL INDUSTRIES
Production Budget
For the Year Ending December 31, 2017
Plan A
Plan B
Expected unit sales ……………………………………….
Add: Desired ending finished goods units ……
765,000
38,250
(1)
950,000
60,000
(c) Variable costs = $4.40 per unit ($1.80 + $1.40 + $1.20) for both plans.
Plan A
Plan B
Total variable costs
Total fixed costs
Total costs (a)
$3,358,300
1,895,000
$5,253,300
(763,250 X $4.40)
$4,268,000
1,895,000
$6,163,000
(970,000 X $4.40)
PROBLEM 23-3A (Continued)
(d) Gross Profit
Plan A
Plan B
Sales
$6,426,000
$7,125,000
PROBLEM 23–4A
(a) (1) Expected Collections from Customers
January
February
November ($250,000) …………………………..
$ 50,000
$ 0
(2) Expected Payments for Direct Materials
January
February
December ($100,000) …………………………..
$ 40,000
$ 0