Comprehensive budgets
Shredder Manufacturing has the following projected unit sales (at $18 per unit) for four months of operations:
Month |
Unit Sales |
|---|
January |
60,000 |
February |
72,000 |
March |
76,800 |
April |
84,000 |
Twenty-five percent of the customers are expected to pay in the month of sale and take a 3 percent discount; 70 percent of the customers are expected to pay in the month following sale. The remaining 5 percent will never pay.
It takes two pounds of raw material (costing $0.75 per pound) to produce a unit of product. In January, no raw material is in beginning inventories, but management wants to end each month with enough material for 20 percent of the next month’s production. (April’s production is assumed to be 81,600 units.) Shredder Manufacturing pays for 60 percent of its material purchases in the month of purchase and 40 percent in the following month.
Each unit of product requires 0.5 hours of labor time. Labor is paid $15 per hour and is paid in the same month as worked. Overhead is estimated to be $2 per unit plus $60,000 per month (including depreciation of $28,800). Overhead costs are paid as incurred.
Shredder will begin January with no Work in Process or Finished Goods Inventory. Inventory policy for these two accounts is set at zero ending WIP and 25 percent of the following month’s sales for FG.
Note: Do not use negatives signs in any of the schedules below.
a. Prepare a sales budget for January, February, and March.
|
Jan. |
Feb. |
March |
Total |
|---|
Unit sales |
Answer |
Answer |
Answer |
Answer |
Selling price |
Answer |
Answer |
Answer |
Answer |
Total sales |
Answer |
Answer |
Answer |
Answer |
b. Prepare a production budget for January, February, and March.
Note: Do not use a negative sign with your answers.
|
Jan. |
Feb. |
March |
Total |
|---|
Unit sales |
Answer |
Answer |
Answer |
Answer |
EI |
Answer |
Answer |
Answer |
Answer |
Less BI |
Answer |
Answer |
Answer |
Answer |
Production |
Answer |
Answer |
Answer |
Answer |
c. Prepare a purchases budget for January, February, and March.
Note: Do not use negative signs with your answers.
|
Jan. |
Feb. |
March |
Total |
|---|
Production |
Answer |
Answer |
Answer |
Answer |
EI |
Answer |
Answer |
Answer |
Answer |
Less BI |
Answer |
Answer |
Answer |
Answer |
Units |
Answer |
Answer |
Answer |
Answer |
Pounds per unit |
Answer |
Answer |
Answer |
Answer |
Total lbs. |
Answer |
Answer |
Answer |
Answer |
Price per lb. |
Answer |
Answer |
Answer |
Answer |
Purchases |
Answer |
Answer |
Answer |
Answer |
d. Prepare a direct labor budget for January, February, and March.
|
Jan. |
Feb. |
March |
Total |
|---|
Production |
Answer |
Answer |
Answer |
Answer |
DL time per unit |
Answer |
Answer |
Answer |
Answer |
DLHs |
Answer |
Answer |
Answer |
Answer |
DL rate |
Answer |
Answer |
Answer |
Answer |
DL cost |
Answer |
Answer |
Answer |
Answer |
e. Prepare an overhead budget for January, February, and March.
|
Jan. |
Feb. |
March |
Total |
|---|
Production |
Answer |
Answer |
Answer |
Answer |
VOH unit rate |
Answer |
Answer |
Answer |
Answer |
Total VOH |
Answer |
Answer |
Answer |
Answer |
FOH cost |
Answer |
Answer |
Answer |
Answer |
Total OH |
Answer |
Answer |
Answer |
Answer |
f. Prepare a cash receipts schedule for sales and a cash payments schedule for material purchased.
Cash Receipts Schedule
|
Jan. |
Feb. |
March |
Total |
|---|
Jan. |
Answer |
Answer |
Answer |
Answer |
Feb. |
Answer |
Answer |
Answer |
Answer |
March |
Answer |
Answer |
Answer |
Answer |
Total |
Answer |
Answer |
Answer |
Answer |
Cash Payments Schedule
|
Jan. |
Feb. |
March |
Total |
|---|
Jan. |
Answer |
Answer |
Answer |
Answer |
Feb. |
Answer |
Answer |
Answer |
Answer |
March |
Answer |
Answer |
Answer |
Answer |
Total |
Answer |
Answer |
Answer |
Answer |