budgeting - computation - class answer to distributed file

8/9/2019 Budgeting - Computation - Class Answer to Distributed File

1/12

12

Apri l May June Quarter

Sales in units 20,000 50,000

Add: desired

end. inventory 10,000

Total needed 30,000

Less: beg.inventory 4,000Units to be

produced 26,000


Sales in units 20,000 50,000

Add: desired

end. inventory 10,000

Total needed 30,000

Less: beg.inventory 4,000Units to be

produced 26,000

From sales

budget

March 31ending inventory

May sales 50,000 units

Desired percent 20%

Desired inventory 10,000 units

Production Budget


2/12

What is the required production for May?

a. 56,000 units

b. 46,000 units

c. 62,000 unitsd. 52,000 units

Quick Check

14


3/12

15


Sales in units 20,000 50,000 30,000 100,000

Add: desired

end. inventory 10,000 6,000 5,000 5,000

Total needed 30,000 56,000 35,000 105,000

Less: beg.inventory 4,000 10,000 6,000 4,000Units to be

produced 26,000 46,000 29,000 101,000


Sales in units 20,000 50,000 30,000 100,000

Add: desired

end. inventory 10,000 6,000 5,000 5,000

Total needed 30,000 56,000 35,000 105,000

Less: beg.inventory 4,000 10,000 6,000 4,000Units to be

produced 26,000 46,000 29,000 101,000

Production Budget

20%


4/12

18


Production in units 26,000 46,000 29,000 101,000

Materials per unit 5 5 5 5

Production needs 130,000 230,000 145,000 505,000

Add: desired

endinginventory 23,000 14,500 11,500 11,500

Total needed 153,000 244,500 156,500 516,500Less: beginning

inventory 13,000 23,000 14,500 13,000Materials to be

purchased 140,000 221,500 142,000 503,500





Add: desired




purchased 140,000 221,500 142,000 503,500

Direct-material Budget

March 31inventory

10% of the followingmonths production

From ourproduction

budget

How much materials should bepurchased in May?

a. 221,500 pounds

b. 240,000 pounds

c. 230,000 pounds

d. 211,500 pounds


5/12

How much materials should be purchased in May?

a. 221,500 pounds

b. 240,000 pounds

c. 230,000 poundsd. 211,500 pounds

Quick Check

19


6/12

20





Add: desired




purchased 140,000 221,500 142,000 503,500





Add: desired




purchased 140,000 221,500 142,000 503,500


March 31inventory

10% of the followingmonths production

From ourproduction

budget


7/12

21






Add : desiredending inventory 23,000 14,500 11,500 11,500

Total needed 153,000 244,500 156,500 516,500

Less: beginning

inventory 13,000 23,000 14,500 13,000Materials to bepurchased 140,000 221,500 142,000 503,500





Add : desiredending inventory 23,000 14,500 11,500 11,500

Total needed 153,000 244,500 156,500 516,500

Less: beginning

inventory 13,000 23,000 14,500 13,000Materials to bepurchased 140,000 221,500 142,000 503,500

July Production

July Sales in units 25,000

Add: assumed ending inventory (Aug sales 15,000 units) 3,000Total uni ts needed 28,000

Less: beginning inventory - F.G. 5,000

Production in units 23,000

June End ing Inventory - Direct MaterialJuly production in uni ts 23,000Materials per uni t 5Total uni ts needed 115,000Inventory percentage 10%June desired ending inventory 11,500

Slide 11


8/12

24



Direct-labor hours 0.10 0.10 0.10 0.10Labor hours required 2,600 4,600 2,900 10,100

Guaranteed labor

hours 3,000 3,000 3,000

Labor hours paid 3,000 4,600 3,000 10,600Wage rate 8$ 8$ 8$ 8$

Total direct-labor cost 24,000$ 36,800$ 24,000$ 84,800$



Direct-labor hours 0.10 0.10 0.10 0.10Labor hours required 2,600 4,600 2,900 10,100

Guaranteed labor

hours 3,000 3,000 3,000

Labor hours paid 3,000 4,600 3,000 10,600Wage rate 8$ 8$ 8$ 8$

Total direct-labor cost 24,000$ 36,800$ 24,000$ 84,800$

This is the greater oflabor hours required orlabor hours guaranteed.

From ourproduction

budget

Direct-labour Budget


9/12

30

April May June QuarterSales in units 20,000 50,000 30,000 100,000

Variable S&A rate 0.50$ 0.50$ 0.50$ 0.50$

Variable expense 10,000$ 25,000$ 15,000$ 50,000$

Fixed S&A expense 70,000 70,000 70,000 210,000

Total expense 80,000$ 95,000$ 85,000$ 260,000$

Less: noncash expenses 10,000 10,000 10,000 30,000

Cash disbursements 70,000$ 85,000$ 75,000$ 230,000$

From our

Sales budget

Selling and General AdministrativeExpense Budget

Try Additional Exercises Q3


10/12

34

Apri l May June QuarterAccounts rec. - 3/31 30,000$ 30,000$

Apri l sales

70% x $200,000 140,000 140,000

25% x $200,000 50,000$ 50,000

May sales

70% x $500,000 350,000 350,000

25% x $500,000 125,000$ 125,000

June sales

70% x $300,000 210,000 210,000Tota l cash co llections 170,000$ 400,000$ 335,000$ 905,000$

Apri l May June QuarterAccounts rec. - 3/31 30,000$ 30,000$

Apri l sales

70% x $200,000 140,000 140,000

25% x $200,000 50,000$ 50,000

May sales

70% x $500,000 350,000 350,000

25% x $500,000 125,000$ 125,000

June sales

70% x $300,000 210,000 210,000Tota l cash co llections 170,000$ 400,000$ 335,000$ 905,000$

Cash Receipts Budget

Slide 8

25% x $300,000Accounts Receivable @ 30 June = $75,000


11/12

37


Accounts pay. 3/31 12,000$ 12,000$

Apri l purchases 50% x $56,000 28,000 28,000

50% x $56,000 28,000$ 28,000

May pu rchases

50% x $88,600 44,300 44,30050% x $88,600 44,300$ 44,300

June purchases

50% x $56,800 28,400 28,400

Total cash paymentsfor materials 40,000$ 72,300$ 72,700$ 185,000$


Accounts pay. 3/31 12,000$ 12,000$

Apri l purchases 50% x $56,000 28,000 28,000

50% x $56,000 28,000$ 28,000

May pu rchases

50% x $88,600 44,300 44,30050% x $88,600 44,300$ 44,300

June purchases

50% x $56,800 28,400 28,400

Total cash paymentsfor materials 40,000$ 72,300$ 72,700$ 185,000$

Required Purchase (see slide 20 )140,000 lbs. $0.40/lb. = $56,000

221,500 lbs. $0.40/lb. = $88,600142,000 lbs. $0.40/lb. = $56,800

Cash Disbursements Budget

Accounts Payable @ 30 June= 50% x 56800 = $28,400


12/12

46

Cash BudgetFinancing and RepaymentApr il May June Quar ter

Excess (deficiency) ofCash available over

disbursements (5,000)$ 16,200$ 86,000$

Financing:

Borrowing 35,000 13,800

Repayments - - (48,800)Interest - - (838)

Total financing 35,000 13,800 (49,638)

Ending cash balance 30,000$ 30,000$ 36,362$

Borrowing @

month end Rate

Annual

Interest

Months

Outstandin

g

Interest

Expense

35,000$ 12% = 4,200$ 2 mths = 700$

13,800 12% = 1,656 1 mth. = 138

Assumed no

borrowing in

the previous

month

budgeting - computation - class answer to distributed file

Documents