Week 13 - ACCT1511 TUTORIAL PREPARATION QUESTIONS WEEK 13...

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Unformatted text preview: ACCT1511 TUTORIAL 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 25,000 x $90 $2,250,000 March 30,000 x $90 $2,700,000 Total 75,000 x $90 $6,750,000 Units 20,000 Unit selling price x $90 Sales $1,800,000 Schedule 2: Production Budget January Sales (Schedule 1) 20,000 Desired ending inventory 20,000 February 25,000 24,000 49,000 (20,000) 29,000 March 30,000 24,000 54,000 (24,000) 30,000 Total 75,000 24,000 99,000 (16,000) 83,000 Total needs 40,000 Less: Beginning inventory (16,000) Units to be produced 24,000 Schedule 3: Direct Materials Purchases Budget January* February* No. 325 No. 326 No. 325 No. 326 Units to be produced (Schedule 2) 24,000 Direct materials per unit x 5 Production needs 120,000 Desired ending inventory 62,500 Total needs 182,500 Less: Beginning inventory (50,000) Direct materials to be purchased 132,500 Cost per unit x $8 Total cost $1,060,000 24,000 x 3 72,000 37,500 109,500 (30,000) 79,500 x $2 $159,000 29,000 x 5 145,000 75,000 220,000 (62,500) 157,500 x $8 $1,260,000 29,000 x 3 87,000 45,000 132,000 (37,500) 94,500 x $2 $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 60,000 x $9.25 $555,000 166,000 x $9.25 $1,535,500 February 58,000 x $3.40 $197,200 169,000 $366,200 March 60,000 x $3.40 $204,000 169,000 $373,000 Total 166,000 x $3.40 $564,400 507,000 $1,071,400 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 $1,966,200 $ 33,800 0 0 $ 33,800 $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 $1,449,000 536,500 266,200 80,000 $2,331,700 $ (47,900) 47,900 0 $ 0 $1,380,000 555,000 273,000 89,000 $2,297,000 Total $ 233,800 6,750,000 $6,983,800 $4,048,000 1,535,500 771,400 240,000 $6,594,900 $ 403,000 $ 355,100 (47,900) 0 (479) (479) $ 354,621 $ 354,621 Problem 18.13 Gardner Company Cash Budget For the Month of April 1998 Beginning cash balance $12,500 Collections: Cash sales (.3 x $565,000) 169,500 April with discounta 116,277 b without discount 118,650 c March 70,000 d February 42,000 Sale of old equipment 13,000 Total cash available $541,927 Less disbursements: Raw materials: $60,000 April e f March 56,500 Direct labour 50,000 Operating expenses 143,000 Dividends 65,000 Equipment 80,000 Total disbursements $454,500 Minimum cash balance 10,000 Total cash needs $464,500 Excess of cash available over needs 77,427 Ending cash balance $ 87,427 (.7 x $565,000) x .6 x .5 x .98 (.7 x $565,000) x .6 x .5 c (.7 x $500,000) x .2 d (.7 x $300,000) x .2 e April requirements (.2 x $565,000) Desired ending inventory (.2 x $600,000) Total requirements Less: Beginning inventory Purchases April payment: $120,000/2 b f a $113,000 120,000 $233,000 113,000 $120,000 $113,000/2 (purchases for March are computed as shown for April) ...
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