Case 09-48

PHOTO ARTISTRY COMPANY Master Budget 1. Sales Budget: 20x4 4th Quarter S frame unit sales x S sales price S frame sales revenue L frame unit sales x L sales price L frame sales revenue Total sales revenue
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20 1st Quarter

Cash sales* Sales on account

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*40% of total sales. 60% of total sales. 2. Cash receipts budget: 1st Quarter Cash sales Cash collections from credit sales made during current quarter* Cash collections from credit sales made during previous quarter Total cash receipts
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20x5 2nd Quarter

*80% of current quarter's credit sales 20% of previous quarter's credit sales 3. Production budget: 20x4 4th Quarter S frames: Sales (in units) Add: Desired ending inventory Total units needed Less: Expected beginning inventory Units to be produced
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20 1st Quarter

L frames: Sales (in units)

Add: Desired ending inventory Total units needed Less: Expected beginning inventory Units to be produced
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4. Raw-material budget: 20x4 4th Quarter Metal strips: S frames to be produced Metal quantity per unit (ft.) Needed for S frame production L frames to be produced Metal quantity per unit (ft.) Needed for L frame production Total metal needed for production; to be purchased (ft.) Price per foot Cost of metal strips to be purchased
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20 1st Quarter

Glass sheets: S frames to be produced Glass quantity per unit (sheets) Needed for S frame production L frames to be produced Glass quantity per unit (sheets) Needed for L frame production Total glass needed for production (sheets) Add: Desired ending inventory Total glass needs Less: Expected beginning inventory Glass to be purchased Price per glass sheet Cost of glass to be purchased
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Total raw-material purchases (metal and glass)

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5. Cash disbursements budget: 1st Quarter Raw-material purchases: Cash payments for purchases during the current quarter* Cash payments for purchases during the preceding quarter Total cash pmts. for raw-material purchases 20x5 2nd Quarter

Direct labor: Frames produced (S and L) Direct-labor hours per frame Direct-labor hours to be used Rate per direct-labor hour Total cash payments for direct labor
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Manufacturing overhead: Indirect material Indirect labor Other Total cash payments for manufacturing OH
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Cash pmts. for selling and admin. expenses Total cash disbursements
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*80% of current quarter's purchases 20% of previous quarter's purchases 6. Summary cash budget: 20x5 2nd Quarter

Quarter Cash receipts Less: Cash disbursements Change in cash balance due to operations Payment of dividends Proceeds from bank loan (1/2/x5) Purchase of equipment Quarterly installment on loan principal Quarterly interest payment* Change in cash balance during the period Cash balance, beginning of period Cash balance, end of period
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PHOTO ARTISTRY COMPANY Budgeted Schedule of Cost of Goods Manufactured and Sold For the Year Ended December 31, 20x5 Direct material: Raw material inventory, 1/1/x1 Add: Purchase of raw material Raw material available for use Deduct: Raw-material inventory, 12/31/x1 Raw material used Direct labor Manufacturing overhead: Indirect material Indirect labor Other overhead

Depreciation Total manufacturing overhead Budgeting over/underapplied overhead Overhead applied to work-in-progress* Cost of goods manufactured Add: Finished-goods inventory, 1/1/x1 Cost of goods available for sale Deduct: Finished-goods inventory, 12/31/x1** Cost of Goods Sold * The applied manufacturing overhead may be verified independently as follows: Total number of frames produced Direct-labor hours per frame Total direct-labor hours Predetermined overhead rate per hour Total manufacturing overhead applied

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The cost of goods manufactured may be verified independently as follows: Frames produced Manufacturing cost per unit Total manufacturing cost Grand total

S Frames

L Frames

** The finished-goods inventory on 12/31/x1 may be verified independently as follows: S Frames Projected inventory on 12/31/x1 Manufacturing cost per unit Cost of ending inventory Total cost of ending inventory (S and L)

L Frames

The cost of goods sold may be verified independently as follows: S Frames Frames sold Manufacturing cost per unit Cost of goods sold Total cost of goods sold (S and L) L Frames

PHOTO ARTISTRY COMPANY Budgeted Income Statement For the Year Ended December 31, 20x5 Sales revenue Less: Cost of goods sold Gross margin Selling and administrative expenses Interest expense Net income

PHOTO ARTISTRY COMPANY Budgeted Statement of Retained Earnings For the Year Ended December 31, 20x5 Retained earnings, 12/31/x0 Add: Net income Deduct: Dividends Retained earnings, 12/31/x1

PHOTO ARTISTRY COMPANY Budgeted Balance Sheet December 31, 20x5 Cash Accounts receivable Inventory: Raw material Finished goods Plant and equipment (net of accumulated depreciation) Total assets Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity

Student Name: Class:

20x5 2nd Quarter 3rd 4th Entire Quarter Quarter Year

20x5 3rd Quarter 4th Quarter Entire Year

20x5 2nd Quarter 3rd 4th Entire Quarter Quarter Year

20x5 2nd Quarter 3rd 4th Entire Quarter Quarter Year

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20x5 3rd Quarter 4th Quarter Entire Year

20x5 3rd Quarter 4th Quarter Entire Year

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