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Problems

1) The document provides requirements and solutions for a comprehensive budgeting problem including preparing budgets for cash collections, production, direct materials, cash payments, combined cash, manufacturing cost per unit, and an income statement. 2) Key budgets include cash collections of $81,300 for January, $27,100 units to produce for the quarter, $122,488 for direct material purchases, and $252,108 in total cash payments. 3) The budgeted manufacturing cost per unit is $6 and the budgeted net income for the quarter is $63,220.

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29 views

Problems

1) The document provides requirements and solutions for a comprehensive budgeting problem including preparing budgets for cash collections, production, direct materials, cash payments, combined cash, manufacturing cost per unit, and an income statement. 2) Key budgets include cash collections of $81,300 for January, $27,100 units to produce for the quarter, $122,488 for direct material purchases, and $252,108 in total cash payments. 3) The budgeted manufacturing cost per unit is $6 and the budgeted net income for the quarter is $63,220.

Uploaded by

api-316770820
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Problems: Set A

(60 min.) P 959A


P9-59A Comprehensive budgeting problem (Learning
Objectives 2 & 3)
Requirements
1. Prepare a schedule of cash collections for January, February, and March, and for the
quarter
in total.
2. Prepare a production budget.
3. Prepare a direct materials
budget.
4. Prepare a cash payments budget for the direct material purchases from Requirement
3.
5. Prepare a cash payments budget for
conversion costs.
6. Prepare a cash payments budget for operating
expenses.
7. Prepare a combined cash budget.
8. Calculate the budgeted manufacturing cost
per unit.
9. Prepare a budgeted income statement for the quarter ending
March 31.

Solution:
Given
Sales Budget
Decembe
Februar
r
January
y
Unit sales
Unit selling price
Total sales Revenue

7,000
$
10
$
70,000

8,000
$
10
$
80,000

9,200
$
10
$
92,000

March
9,900

9,7

10

$
$

99,000

Req. 1

Cash sales

Cash Collections
January
February
$24,000
$27,600

March
$29,700

Quarter
$81,300

97,

Credit sales
Total cash collections

56000
$80,000

64400
$92,000

69300
$99,000

$189,700
$271,000

March
9,900
2425
12,325
2,475
9,850

Quarter
27,100
2,425
29,525
1,750
27,775

March
9,850
2

Quarter
27,775
2

19,700

55,550

1,940
21,640
1,970
19,670
2
$39,340

1,940
57,490
1,710
55,780
2
$111,560

Req. 2

Unit Sales
Plus: Desired ending inventory
Total needed
Less: Beginning inventory
Units to produce

Production Budget
January
February
8,000
9,200
2,300
2,475
10,300
11,675
1,750
2,300
8,550
9,375

Req. 3
Direct Materials Budget
January
February
Units to be produced
8,550
9,375
x Pounds of DM needed per unit
2
2
Quantity (pounds) need for
production
17,100
18,750
Plus: Desired ending inventory of
DM
1,875
1,970
Total quantity (pounds) needed
18,975
20,720
Less: Beginning inventory of DM
1,710
1,875
Quantity (pounds) to purchase
17,265
18,845
x Cost per pound
2
2
Total cost of DM purchases
$34,530
$37,690
Req. 4
Schedule of Expected Cash DisbursementsMaterial Purchases
January
February
March
Quarter
December purchases (From AP)
$42,400
0
0
$42,400
$27,624.
January purchases
$6,906
0
0
$34,530

February purchases

$7,538.0

March purchases

$30,152
.0
$7,868.
0

$49,306

$35,162

$38,020

Total cash payments for direct


material purchases
Req. 5

$37,690
$7,868
$122,488

Schedule of Expected Cash DisbursementsConversion Costs


January
February
March
Quarter
Variable conversion costs
$9,600
$11,040
$11,880
$32,520
Rent (fixed)
$5,000
$5,000
$5,000
$15,000
Other fixed MOH
3000
3000
3000
$9,000
Total payments for conversion costs $17,600
$19,040
$19,880
$56,520

Req. 6
Schedule of Expected Cash Disbursements -- Operating Expenses
January
February
March
Quarter
Variable operating expenses
Fixed operating expenses
Total payments for operating
expenses

8,000
$1,000

9,200
$1,000

9,900
$1,000

$27,100
$3,000

$9,000

$10,200

$10,900

$30,100

Combined Cash Budget


January
February
$4,500
$4,000
80,000
92,000
84,500
96,000

March
$9,188
99,000
108,188

Quarter
$17,688
$271,000
$288,688

38,020
19,880
10,900
16,000
0
84,800

$122,488
$56,520
$30,100
$33,000
$10,000
$252,108

Req. 7

Cash balance, beginning


Add cash collections
Total cash available
Less cash payments:
Direct material purchases
Conversion costs
Operating expenses
Euipment purchases
Tax payment
Total cash payments

49,306
17,600
9,000
5,000
0
80,906

35,162
19,040
10,200
12,000
10,000
86,402

Ending cash balance before


financing
Financing:
Borrowings
Repayments
Interest payments
Ending cash balance

Total interest

3,594

9,598

23,388

$36,580

406
0
0
4,000

0
406
4.06
9,188

0
0
0
23,388

$406
$406
$4
$36,576

$280

Req. 8
Budgeted Manufacturing Cost per Unit
Direct materials cost per unit
$4.00
Conversion costs per unit
$1.20
Fixed manufacturing overhead per
unit
$0.80
Budgeted cost of manufacturing
each unit
$6.00
Req. 9
Silverman Manufacturing
Budgeted Income Statement
For the Quarter Ended March 31
Sales
COGS
Gross Profit
Operating expenses
Depreciation
Operating Income
Less interest expense
Less provision for income taxes
Net income

$
271,000
162,600
108,400
30,100
4,800
73,500
$280
10,000
$63,220

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