MANAGERIAL ACCOUNTING

Master Budget

Sales Budget
December January February March April
Budgeted sales(units) 7000 8000 9200 9900 9700
Selling price per unit $10 $10 $10 $10 $10
Budget Sales(dollars) $70,000 $80,000 $92,000 $99,000 $97,000

Cash Collections Budget

January February March Quarter
Cash sales $24,000.0 $27,600.0 $29,700.0 $81,300.0
Credit sales $49,000.0 $56,000.0 $64,400.0 $169,400.0
Total cash collections $73,000.0 $83,600.0 $94,100.0 $250,700.0

Production Budget
January February March Quarter
Unit sales 8000 9200 9900 27100
Plus:Desired ending inventory 2300 2475 2425 2425
Total needed 10300 11675 12325 29525
Less:Beginning inventory 2000 2300 2475 2000
Number of units to produce 8300 9375 9850 27525

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Direct Materials Budget

January February March Quarter
Units to be produced (from Production Budget) 8300 9375 9850 27525
Multiply by: Quantity (pounds) of DM needed per 2 2 2 2
unit
Quantity (pounds) needed for production 16600 18750 19700 55050
Plus: Desired ending inventory of DM 1875 1970 1880 1880
Total quantity (pounds) needed 18475 20720 21580 56930
Less: Beginning Inventory of DM 1660 1875 1970 1660
Quantity (pounds) to purchase 16815 18845 19610 55270
Multiply by: cost per pound $2 $2 $2 $2
Total cost of DM purchases $33,630 $37,690 $39,220 $110,540

Cash Payments for Direct Material Purchases Budget

January February March Quarter
20% of current month DM purchases $6,726.0 $7,538.0 $7,844.0 $22,108.0
80% of prior month DM purchases $33,920.00 $ 26,904.00 $30,152.0 $90,976.00
Total cash payments $40,646.00 $34,442.00 $37,996.0 $113,084.00

Cash Payments for Direct Labor Budget

January February March Quarter
Total cost of direct labor $996 $1,125 $1,182 $3,303

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Cash Payments for Manufacturing Overhead Budget

January February March Quarter
Variable maunfacturing overhead costs $ 9,960.00 $ 11,250.00 $ 11,820.00 $ 33,030.00
Rent(fixed) $5,000 $5,000 $5,000 $15,000

Other fixed MOH $3,000 $3,000 $3,000 $9,000

Cash payments for manufacturing overhead $ 17,960.00 $ 19,250.00 $ 19,820.00 $ 57,030.00

Cash Payments for Operating Expenses Budget

January February March Quarter
Variable operating expenses $8,300 $9,375 $9,850 $27,525
Fixed operating expenses $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 3,000.00
Cash Payments for operating expenses $9,300.00 $10,375.00 $10,850.00 $30,525.00

Combined Cash Budget

January February March Quarter
Beginning cash balance $4,500 $4,598.00 $13,006.00 $4,500
Plus: Cash collections $73,000.0 $83,600.0 $94,100.0 $250,700.0
Total cash available $77,500.0 $88,198.00 $107,106.00 $272,804.00
Less cash payments:
Direct material purchases $40,646.00 $34,442.00 $37,996.0 $113,084.00
Direct labor $996 $1,125 $1,182 $3,303
Manufacturing overhead costs $ 17,960.00 $ 19,250.00 $ 19,820.00 $ 57,030.00
Operating expenses $9,300.00 $10,375.00 $10,850.00 $30,525.00
Tax payment 0 $ 10,000.00 0 $ 10,000.00
Equipment Purchases $ 5,000.00 0 0 $ 5,000.00
Total Cash payments $ 73,902.00 $75,192.00 $69,848.00 $ 218,942.00
Ending cash before financing $3,598.00 $13,006.00 $37,258.00 $53,862.00
Financing:

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Plus: New borrowings $ 1,000.00 $ - $ - $ 1,000.00

Less: Debt repayments $ - $ - $ 1,000.00 $ 1,000.00
Less: Interest payments $ - $ - $ 2.50 $ 2.50
Ending cash balance $4,598.00 $13,006.00 $36,255.50 $53,859.50

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Budgeted Manufacturing Cost per Unit

Direct materials cost per unit 2
Direct labor cost per unit 0.12
Variable manufacturing overhead costs per unit 1.2
Fixed manufacturing overhead costs per unit 0.8
Budgeted cost of manufacturing one unit 4.12

Budgeted Income Statement

Sales revenue $ 271,000.00
Less: Costs of goods sold $ 111,652.00
Gross profit $ 159,348.00
Less: Operating expenses $ 30,525.00
Less: Depreciation expense $ 4,600.00
Operating income $ 124,223.00
Less: Interest expense $ 2.50
Less:Income tax expense $ 10,000.00
Net income $ 114,220.50

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May
8500
$10
$85,000

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