CHAPTER 7 - Solution to Class Problem

CHAPTER 7 - Solution to Class Problem - CHAPTER7

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CHAPTER 7 SOLUTION TO COMPREHENSIVE BUDGETING EXAMPLE SALES BUDGET April May June Quarter Budgeted unit sales. ....... 20,000 50,000 30,000 100,000 Selling price per unit. ......          ×     $10              ×     $10              ×     $10                 ×     $10     Total sales. ..................... $200,000 $500,000 $300,000 $1,000,000 SCHEDULE OF EXPECTED CASH COLLECTIONS April May June Quarter Accounts receivable  beginning balance. .......... $ 30,000 $ 30,000 April sales 70% × $200,000. ............. 140,000 140,000 25% × $200,000. ............. $ 50,000 50,000 May sales 70% × $500,000. ............. 350,000 350,000 25% × $500,000. ............. $125,000 125,000 June sales 70% × $300,000. .............                                                   210,000       210,000     Total cash collections. ........ $170,000 $400,000 $335,000 $905,000 1
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PRODUCTION BUDGET April May June July Budgeted unit sales [TM 7-4]. .... 20,000 50,000 30,000 25,000  Add desired ending inventory. . 10,000   6,000       5,000       3,000     * Total needs. ............................. 30,000 56,000 35,000 28,000  Less beginning inventory. ........   4,000     10,000   6,000       5,000       Required production. ................ 26,000 46,000 29,000 23,000   * Budgeted sales for August = 15,000 units.    Desired ending inventory in July = 15,000 units × 20% = 3,000 units. DIRECT MATERIALS BUDGET April May June Quarter Required production in units  [TM 7-6] ..................................... 26,000 46,000 29,000 101,000 Raw materials per unit (pounds)            ×     5                ×     5                ×     5                ×     5     Production needs. ...................... 130,000 230,000 145,000 505,000 Add desired ending inventory*. ..   23,000       14,500       11,500       11,500     Total needs. ............................... 153,000 244,500 156,500 516,500 Less beginning inventory. ..........   13,000       23,000       14,500       13,000     Raw materials to be purchased. . 140,000 221,500 142,000 503,500 Cost of raw materials to be  purchased at $0.40 per pound. $56,000 $88,600 $56,800 $201,400 * For June: 23,000 units produced in July [TM 7-6] × 5 pounds = 115,000  pounds; 115,000 pounds × 10% = 11,500 pounds 2
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SCHEDULE OF EXPECTED CASH DISBURSEMENTS FOR  MATERIAL Accounts payable  beginning balance. ......... $12,000 $ 12,000 April purchases 50% × $56,000. .............. 28,000 28,000 50% × $56,000. .............. $28,000 28,000 May purchases 50% × $88,600. .............. 44,300
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This note was uploaded on 06/05/2010 for the course ACC Acc208 taught by Professor Acc208 during the Fall '09 term at Cal Poly Pomona.

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CHAPTER 7 - Solution to Class Problem - CHAPTER7

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