2010s2w13PrepQ - Suggested solutions to preparation...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Suggested solutions to preparation questions – Week 13 Problem 18.12 ‐ Operating Budget; Comprehensive Analysis Smith Manufacturing Morgan Division For the Quarter Ended March 31, 20XX Schedule 1: Sales Budget January February March Total Units 20,000 25,000 30,000 75,000 x $90 x $90 x $90 Unit selling price x $90 Sales $1,800,000 $2,250,000 $2,700,000 $6,750,000 Schedule 2: Production Budget January February March Total Sales (Schedule 1) 20,000 25,000 30,000 75,000 24,000 24,000 24,000 Desired ending inventory 20,000 Total needs 40,000 49,000 54,000 99,000 Less: Beginning inventory (16,000) (20,000) (24,000) (16,000) Units to be produced 24,000 29,000 30,000 83,000 Schedule 3: Direct Materials Purchases Budget January* February* No. 325 No. 326 No. 325 No. 326 Units to be produced (Schedule 2) 24,000 24,000 29,000 29,000 Direct materials per unit x 5 x 3 x 5 x 3 Production needs Desired ending inventory Total needs Less: Beginning inventory Direct materials to be purchased Cost per unit Total cost 120,000 62,500 182,500 (50,000) 72,000 37,500 109,500 (30,000) 145,000 75,000 220,000 (62,500) 87,000 45,000 132,000 (37,500) 132,500 x $8 79,500 157,500 94,500 x $2 x $8 x $2 $1,060,000 $159,000 $1,260,000 $189,000 Solution Outline for Problem 18.12 (Cont) March* Total No. 325 No. 326 No. 325* No. 326* Units to be produced (Schedule 2) 30,000 30,000 83,000 83,000 Direct materials per unit x 5 x 3 x 5 x 3 Production needs 150,000 90,000 415,000 249,000 Desired ending inventory 75,000 45,000 75,000 45,000 Total needs 225,000 135,000 490,000 294,000 Less: Beginning inventory (75,000) (45,000) (50,000) (30,000) Direct materials to be purchased 150,000 90,000 440,000 264,000 Cost per unit x $8 x $2 x $8 x $2 Total cost $1,200,000 $180,000 $3,520,000 $528,000 *Note: As you can see, a direct materials purchase budget should be separately prepared for each job (i.e., a type of product in this case) as purchases plan should be separately made for each of them. Schedule 4: Direct Labour Budget January February March Total Units to be produced (Schedule 2) 24,000 29,000 30,000 83,000 Direct labour time per unit (hours) x 2 x 2 x 2 x 2 Total hours needed 48,000 Cost per hour x $9.25 Total dir. labour cost $444,000 Schedule 5: Overhead Budget January Budgeted direct labour hours (Schedule 4) 48,000 Variable overhead rate x $3.40 Budgeted var. overhead $163,200 Budget fixed overhead 169,000 Total overhead $332,200 58,000 x $9.25 $536,500 February 58,000 x $3.40 $197,200 169,000 $366,200 60,000 x $9.25 $555,000 Total 60,000 x $3.40 $204,000 169,000 $373,000 166,000 x $3.40 $564,400 507,000 $1,071,400 166,000 x $9.25 $1,535,500 March Solution Outline for Problem 18.12 (Cont) Schedule 6: Selling & Administrative Expense Budget January February March Total Planned sales (Schedule 1) 20,000 25,000 30,000 75,000 Variable S&A per unit x $1.80 x $1.80 x $1.80 x $1.80 Total variable expense $36,000 $45,000 $54,000 $135,000 Fixed S&A expense: Salaries $25,000 $25,000 $25,000 $75,000 Depreciation 20,000 20,000 20,000 60,000 Other 10,000 10,000 10,000 30,000 Total fixed expenses $55,000 $55,000 $55,000 $165,000 Total S&A expense $91,000 $100,000 $109,000 $300,000 Schedule 7: Ending Finished Goods Budget Unit cost computation: Direct materials: 325 (5 @ $8) = $40 326 (3 @ $2) = 6 $46.00 Direct Labour: (2 @ $9.25) 18.50 Overhead: Variable (2 @ $3.40) 6.80 Fixed (2 @ $3.054)* 6.11 Total unit cost $77.41 *$507,000/166,000 Units Cost per Unit Total Amount Finished goods 24,000 $77.41 $1,857,840 Solution Outline for Problem 18.12 (Cont) Schedule 8: Cost of Goods Sold Budget Direct materials used (Schedule 3) No. 325 (415,000 x 8) $3,320,000 No. 326 (249,000 x 2) 498,000 $3,818,000 Direct labour used (Schedule 4) 1,535,500 Overhead (Schedule 5) 1,071,400 Budgeted manufacturing costs $6,424,900 Add: Beginning finished goods (16,000 x $77.41)* 1,238,560 Goods available for sale $7,663,460 Less: Ending finished goods (Schedule 7) (1,857,840) Budgeted cost of goods sold $5,805,620 *Assumes that these units cost the same as current quarter’s production. Schedule 9: Budgeted Income Statement Sales (Schedule 1) Less: Cost of goods sold (Schedule 8) Gross margin Less: Selling & admin. expense (Schedule 6) Income before taxes Schedule 10: Cash Budget January Beg. balance $ 200,000 Cash receipts 1,800,000 Cash available $2,000,000 Less: Disbursements Purchases $1,219,000 DL payroll 444,000 Overhead 232,200 Marketing & admin. 71,000 Total Tentative: Ending balance Borrowed/repaid Interest paid Ending balance $6,750,000 5,805,620 $ 944,380 300,000 $ 644,380 February March $ 33,800 $ 0 2,250,000 2,700,000 $2,283,800 $2,700,000 Total $ 233,800 6,750,000 $6,983,800 $1,449,000 536,500 266,200 $1,380,000 555,000 273,000 $4,048,000 1,535,500 771,400 $1,966,200 80,000 $2,331,700 89,000 $2,297,000 240,000 $6,594,900 $ 33,800 0 0 $ 33,800 $ (47,900) 47,900 0 $ 0 $ 403,000 $ 355,100 (47,900) 0 (479) (479) $ 354,621 $ 354,621 ...
View Full Document

Ask a homework question - tutors are online