Case 09-48 Student Name:
Class:
PHOTO ARTISTRY COMPANY
Master Budget
1. Sales Budget:
20×4 20×5
4th 1st 2nd 3rd 4th Entire
Quarter Quarter Quarter Quarter Quarter Year
S frame unit sales
x S sales price
S frame sales revenue
L frame unit sales
x L sales price
L frame sales revenue
Total sales revenue
* * * * * *
Cash sales*
Sales on account†
* * * * * *
*40% of total sales.
†60% of total sales.
2. Cash receipts budget:
20×5
1st 2nd 3rd 4th Entire
Quarter Quarter Quarter Quarter Year
Cash sales
Cash collections from credit sales
made during current quarter*
Cash collections from credit sales
made during previous quarter†
Total cash receipts
* * * * *
*80% of current quarter’s credit sales
†20% of previous quarter’s credit sales
3. Production budget:
20×4 20×5
4th 1st 2nd 3rd 4th Entire
Quarter Quarter Quarter Quarter Quarter Year
S frames:
Sales (in units)
Add: Desired ending inventory
Total units needed
Less: Expected beginning inventory
Units to be produced
* * * * * *
L frames:
Sales (in units)
Add: Desired ending inventory
Total units needed
Less: Expected beginning inventory
Units to be produced
* * * * * *
4. Direct-material budget:
20×4 20×5
4th 1st 2nd 3rd 4th Entire
Quarter Quarter Quarter Quarter Quarter Year
Metal strips:
S frames to be produced
Metal quantity per unit (ft.)
Needed for S frame production
L frames to be produced
Metal quantity per unit (ft.)
Needed for L frame production
Total metal needed for production;
to be purchased (ft.)
Price per foot
Cost of metal strips to be purchased
* * * * * *
Glass sheets:
S frames to be produced
Glass quantity per unit (sheets)
Needed for S frame production
L frames to be produced
Glass quantity per unit (sheets)
Needed for L frame production
Total glass needed for production (sheets)
Add: Desired ending inventory
Total glass needs
Less: Expected beginning inventory
Glass to be purchased
Price per glass sheet
Cost of glass to be purchased
* * * * * *
Total raw-material purchases (metal and glass)
* * * * * *
5. Cash disbursements budget:
20×5
1st 2nd 3rd 4th Entire
Quarter Quarter Quarter Quarter Year
Raw-material purchases:
Cash payments for purchases during
the current quarter*
Cash payments for purchases during
the preceding quarter†
Total cash pmts. for raw-material purchases
* * * * *
Direct labor:
Frames produced (S and L)
Direct-labor hours per frame
Direct-labor hours to be used
Rate per direct-labor hour
Total cash payments for direct labor
* * * * *
Manufacturing overhead:
Indirect material
Indirect labor
Other
Total cash payments for manufacturing OH
* * * * *
Cash pmts. for selling and admin. expenses
Total cash disbursements
* * * * *
*80% of current quarter’s purchases
†20% of previous quarter’s purchases
6. Summary cash budget:
20×5
2nd 3rd 4th Entire
Quarter Quarter Quarter Quarter Year
Cash receipts
Less: Cash disbursements
Change in cash balance due to operations
Payment of dividends
Proceeds from bank loan (1/2/x5)
Purchase of equipment
Quarterly installment on loan principal
Quarterly interest payment*
Change in cash balance during the period
Cash balance, beginning of period
Cash balance, end of period
* * * * *
PHOTO ARTISTRY COMPANY
Budgeted Schedule of Cost of Goods Manufactured and Sold
For the Year Ended December 31, 20×5
Direct material:
Raw material inventory, 1/1/x5
Add: Purchase of raw material
Raw material available for use
Deduct: Raw-material inventory, 12/31/x5
Raw material used
Direct labor
Manufacturing overhead:
Indirect material
Indirect labor
Other overhead
Depreciation
Total manufacturing overhead
Budgeting over/underapplied overhead
Overhead applied to work-in-progress*
Cost of goods manufactured†
Add: Finished-goods inventory, 1/1/x5
Cost of goods available for sale
Deduct: Finished-goods inventory, 1/1/x5**
Cost of Goods Sold *
* The applied manufacturing overhead may be verified
independently as follows:
Total number of frames produced *
Direct-labor hours per frame *
Total direct-labor hours *
Predetermined overhead rate per hour *
Total manufacturing overhead applied *
† The cost of goods manufactured may be verified
independently as follows: S Frames L Frames
Frames produced *
Manufacturing cost per unit *
Total manufacturing cost *
Grand total *
** The finished-goods inventory on 12/31/x5 may be verified
independently as follows:
S Frames L Frames
Projected inventory on 12/31/x5 *
Manufacturing cost per unit *
Cost of ending inventory *
Total cost of ending inventory (S and L) *
†† The cost of goods sold may be verified independently as follows:
S Frames L Frames
Frames sold *
Manufacturing cost per unit *
Cost of goods sold *
Total cost of goods sold (S and L) *
PHOTO ARTISTRY COMPANY
Budgeted Income Statement
For the Year Ended December 31, 20×5
Sales revenue
Less: Cost of goods sold
Gross margin
Selling and administrative expenses
Interest expense
Net income *
PHOTO ARTISTRY COMPANY
Budgeted Statement of Retained Earnings
For the Year Ended December 31, 20×5
Retained earnings, 12/31/x4
Add: Net income
Deduct: Dividends
Retained earnings, 12/31/x1 *
PHOTO ARTISTRY COMPANY
Budgeted Balance Sheet
December 31, 20×5
Cash
Accounts receivable
Inventory:
Raw material
Finished goods
Plant and equipment (net of accumulated depreciation)
Total assets
Accounts payable
Common stock
Retained earnings
Total liabilities and stockholders’ equity *
Case 09-45 Student Name:
Class:
PHOTO ARTISTRY COMPANY
Master Budget
1. Sales Budget:
20×4 20×5
4th 1st 2nd 3rd 4th Entire
Quarter Quarter Quarter Quarter Quarter Year
S frame unit sales 50,000 55,000 60,000 65,000 70,000 250,000
x S sales price 10$ 10$ 10$ 10$ 10$ 10$
2. Cash receipts budget:
20×5
1st 2nd 3rd 4th Entire
Quarter Quarter Quarter Quarter Year
Cash sales 490,000$ 540,000$ 590,000$ 640,000$ 2,260,000$
Cash collections from credit sales
3. Production budget:
20×4 20×5
4th 1st 2nd 3rd 4th Entire
Quarter Quarter Quarter Quarter Quarter Year
S frames:
Sales (in units) 50,000 55,000 60,000 65,000 70,000 250,000
Add: Desired ending inventory 11,000 12,000 13,000 14,000 15,000 15,000
4. Direct-material budget:
20×4 20×5
4th 1st 2nd 3rd 4th Entire
Quarter Quarter Quarter Quarter Quarter Year
Metal strips:
S frames to be produced 51,000 56,000 61,000 66,000 71,000 254,000
Metal quantity per unit (ft.) 2 2 2 2 2 2
Instructor
McGraw-Hill/Irwin
L frames to be produced 41,000 46,000 51,000 56,000 61,000 214,000
Glass quantity per unit (sheets) 0.50 0.50 0.50 0.50 0.50 0.50
5. Cash disbursements budget:
20×5
1st 2nd 3rd 4th Entire
Quarter Quarter Quarter Quarter Year
Raw-material purchases:
Cash payments for purchases during
the current quarter* 441,600$ 485,600$ 529,600$ 573,600$ 2,030,400$
Correct! Correct! Correct! Correct! Correct!
Direct labor:
Frames produced (S and L) 102,000 112,000 122,000 132,000 468,000
Direct-labor hours per frame 0.1 0.1 0.1 0.1 0.1
Manufacturing overhead:
Indirect material 10,200$ 11,200$ 12,200$ 13,200$ 46,800$
Indirect labor 40,800 44,800 48,800 52,800 187,200
6. Summary cash budget:
20×5
2nd 3rd 4th Entire
Quarter Quarter Quarter Quarter Year
Cash receipts 1,210,000$ 1,335,000$ 1,460,000$ 1,585,000$ 5,590,000$
Less: Cash disbursements 927,000 1,012,000 1,097,000 1,182,000 4,218,000
Change in cash balance due to operations 283,000$ 323,000$ 363,000$ 403,000$ 1,372,000$
PHOTO ARTISTRY COMPANY
Budgeted Schedule of Cost of Goods Manufactured and Sold
For the Year Ended December 31, 20×5
Direct material:
Raw material inventory, 1/1/x5 59,200$
Add: Purchase of raw material 2,538,000
Depreciation 80,000
Total manufacturing overhead 468,000$
Budgeting over/underapplied overhead –
Overhead applied to work-in-progress* 468,000
* The applied manufacturing overhead may be verified
independently as follows:
Total number of frames produced 468,000$
Direct-labor hours per frame 0.10
† The cost of goods manufactured may be verified
independently as follows: S Frames L Frames
Frames produced 254,000 214,000
** The finished-goods inventory on 12/31/x5 may be verified
independently as follows:
S Frames L Frames
Projected inventory on 12/31/x5 15,000 13,000
†† The cost of goods sold may be verified independently as follows:
S Frames L Frames
Frames sold 250,000 210,000
Manufacturing cost per unit 7.00$ 10.00$
PHOTO ARTISTRY COMPANY
Budgeted Income Statement
For the Year Ended December 31, 20×5
Sales revenue 5,650,000$
Less: Cost of goods sold 3,850,000
PHOTO ARTISTRY COMPANY
Budgeted Statement of Retained Earnings
For the Year Ended December 31, 20×5
Retained earnings, 12/31/x4 3,353,800$
Add: Net income 1,337,500
PHOTO ARTISTRY COMPANY
Budgeted Balance Sheet
December 31, 20x5
Cash 204,500$
Accounts receivable 192,000
Inventory:
Raw material 83,200
Finished goods 235,000