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1) The company Alfas SA, used the Alpha-Omega component for the manufacture of its product, industrial coolant (Polar Bear). For each item you need 2 liters of component, which is priced at $ 20 a liter. The company plans to their level of inventories in advance, so that there are no shortages in inventory. The purchasing department has a policy of ordering the raw material supplier on the first day of the month. Below are the following:
Inventory Initial of January Invetory final desired for January Invetory final desired for February Invetory final desired for March
Perform:
Assuming perform such plans, what would be the total cost of purchased materials in each of the first three months? What would be the cost assuming the price remains constant during the first half?
MODEL
Compaa Alfas S.A Requirement of Raw Materials JANUARY REQUIRED PRODUCTION OF REFRIGERANT *REQUIREMENT OF RAW MATERIAL BY EACH PRODUCT = REQUIREMENT OF RAW MATERIAL BY REFRIGERANT - INVENTORY INITIAL OF RAW MATERIAL + INVENTORY FINAL OF RAW MATERIAL = SHOPPING OF RAW MATERIALS * UNIT COST OF RAW MATERIALS TOTAL COST OF REQUIREMENT OF RAW MATERIALS 5000 2 ltrs 10000 ltrs -10000 ltrs 15000 ltrs 15000 ltrs $ 20.00 $ $ 300,000 $ FEBRUARY 9000 2 ltrs 18000 ltrs -15000 ltrs 30000 ltrs 33000 ltrs 20.00 $ 660,000 $ MARCH 14000 2 ltrs 28000 ltrs -30000 ltrs 20000 ltrs 18000 ltrs 20.00 360,000
EXERCISE 7.2
2) The company " Comercial del Sur SA", prepare their budgets for 2002. Here is some data from the company: Sales forecast for 2002 Sales 2002: JANUARY FEBRUARY MARCH APRIL Some balance sheet data at December 31, 2001: Balance Sheet 2001: $ $ $ $ 140,000 140,000 160,000 200,000
CASH CUSTOMERS November sales December sales INVENTORY OF GOODS SUPPLIERS (GOODS) ADDITIONAL INFORMATION:
$ $ $ 36,000 80,000 $ $
10,000
52,000 45,000
a) The sales are on credit. The 60% of sales is charged for the following month of the transaction, 40% to the second month after sales
Sales Charge: % charged after the transaction 1er mon 60% th 2do mon 40% th
Sales 2002: JANUARY $ FEBRUARY 84,000 140,000 $ MARCH 84,000 APRIL 96,000 $ MARCH 56,000 $ APRIL 56,000 $ MAY 64,000 $ TOTAL 140,000 TOTAL 140,000 TOTAL 160,000
FEBRUARY
140,000 $
MARCH
160,000 $
APRIL b) The cost of sales is 50% of sales COST OF SALES = Sales 2002: JANUARY FEBRUARY MARCH APRIL $ $ $ $ 140,000 140,000 160,000 200,000 50% SALES
JUNE 80,000 $
TOTAL 200,000
$ $ $ $
c) Other variable costs are 10% of sales, you pay the same month in which they are incurred. OTHER EXPENSES VAR = Sales 2002: JANUARY FEBRUARY MARCH APRIL $ $ $ $ 140,000 140,000 160,000 200,000 10% SALES Other Expenses variables 2002: JANUARY FEBRUARY MARCH APRIL
$ $ $ $
d) The final inventory is 150% of what is required for sales the following month. Inventory Final = 150% SALES NEXT MONTH Inventory Final 2002: $ $ $ $ 70,000 70,000 80,000 100,000 JANUARY FEBRUARY MARCH $ $ $ 105,000 120,000 150,000
The Finals are made initial inventory for the next month Inventory Final 2002: December $ JANUARY $ FEBRUARY $ MARCH $ Inventory Initial 2002: 52,000 105,000 120,000 150,000 JANUARY FEBRUARY MARCH APRIL $ $ $ $ 52,000 105,000 120,000 150,000
e) Purchases are paid the following month made f) Fixed expenses are $ 15,000 per month. Includes $ 5,000 of depreciation expense WITH FIXED EXPENSES $ D=15,000 DEPRECIATION = $ 5,000 NO FIXED EXPENSES $ DEP = 10,000 g) Top management will implement in 2001 a new policy on cash Perform: 1) Prepare a purchases budget for each of the first three months of 2002 and describe your procedure 2) Prepare an income statement for each of the first 4 months 3) Prepare a cash budget for each of the first four months of 2002, showing the balance before interest and ending balance 4) It is assumed that May was a cash balance before financing of $ 30,000 How would you respond about the new policy from the general direction of the minimum cash balance? Cash balance = $ 30,000 Ending balance in cash = $ 10,000
FEBRUARY
$ 70,000 $
MARCH
80,000 $
APRIL
100,000
$ $ $
$ $ $
$ $ $
SHOPPING
STATE OF RESULTS
Comercial del Sur S.A
to December 31, 2002 JANUARY 140,000 (70,000) 70,000 (15,000) (14,000) 41,000 FEBRUARY $ 140,000 $ (70,000) $ 70,000 $ (15,000) $ (14,000) $ 41,000 MARCH 160,000 (80,000) 80,000 (15,000) (16,000) 49,000 APRIL 200,000 (100,000) 100,000 (15,000) (20,000) 65,000
Sales (-) Cost of sales (=) Utility gross in sales (-) Fixed Expenses (-) Other variable costs (=) Utility in operations
$ $ $ $ $ $
$ $ $ $ $ $
$ $ $ $ $ $
2do mon th
40%
COLLECTION SCHEDULE
Comercial del Sur S.A
to December 31, 2002 SALES 36,000 80,000 140,000 140,000 160,000 556,000 JANUARY FEBRUARY $ 36,000 $ 48,000 $ 32,000 $ 84,000 $ $ $ 84,000 $ 116,000 $ MARCH APRIL MAY
$ $ $ $ $ $
$ $
64,000 64,000
Beginning Cash Balance (+) Cash Check Customer Billing (=) Available Cash (-) Cash Outputs Payments to suppliers Fixed Expense Variable Expenses (=) Inputs - Outputs Surplus or missing (=) FINAL BALANCE IN BOX loan Loan Payment Interest Payment
EXERCISE 7.3
3) The company "Leader SA" presents its balance sheet at December 31, 2001 and calls for the preparation of the statement of financial position budgeted for 2002:
3) The company "Leader SA" presents its balance sheet at December 31, 2001 and calls for the preparation of the statement of financial position budgeted for 2002:
BALANCE SHEET
At December 31, 2001 ASSETS CURRENT Cash Customers Finished Goods Inventory TOTAL CURRENT NO CURRENT Ground Building and Equipment Accumulated Depreciation TOTAL NON-CURRENT LIABILITIES SHORT TERM suppliers Notes payable TOTAL SHORT TERM LONG-TERM Obligations payable TOTAL LIABILITIES CAPITAL ACCOUNTANT Capital contributed Capital cattle TOTAL CAPITAL TOTAL ASSETS $ 100,000 TOTAL LIABILITIES + HERITAGE
$ $ $ $
$ $ $
$ $ $ $
$ $
5,000 40,000
$ $ $ $
2)The materials budget required is equal to 25% of sales budget budgeted Sales = Required MP = Required MP = 3) The materials purchases budget is $ 32,000 Purchase Materials = $ 32,000 $ 90,000 25% Ventas presupuestadas 22,500
4)The work budget is equal to 30% of budgeted sales budgeted Sales = Labor = Labor = $ 90,000 30% Ventas presupuestadas 27,000
5) The budget of indirect manufacturing costs is 10% higher than the labor budgeted Sales = Labor = Labor= $ 90,000 30% budgeted Sales 27,000 Indirect manufacturing costs = Indirect manufacturing costs = Indirect manufacturing costs = 10% $ $ > MO 2,700 (+MO) 29,700
$ $
7) The desired ending inventory of finished goods is $ 4,600 Desired Ending Inventory of Finished Goods = $ 4,600
8) 85% of 2002 sales are charged in that period while 15% will be charged on the following collection: 2002 = 2003 = 85% 15% Sales Sales 2002 90,000 $ 76,500 $ 2003 13,500 $ TOTAL 90,000
budgeted Sales
9) The 2001 account customers will be charged in 2002 Account Customers 2001 = $ -
10) It will pay 80% of purchases of materials in 2002. The remaining 20% will be paid in the next period Payments: 2002 = 2003 = 80% 20% Purchase Materials Purchase Materials 2002 25,600 $ 2003 6,400 $ TOTAL 32,000
Compra de Materiales
32,000 $
Depreciation budgeted = $ 12) It will borrow $ 15,000 short-term Short term loan = 13)They settled accounts payable 2001 pay Suppliers 2001 = $ $
2,000
15,000
14) The minimum cash balance that must be maintained is $ 2000 Minimum cash balance = $ 2,000
STATEMENT Sales (-) Cost of Sales (=)Gross profit on sales (-) Operating Expenses (=) Operating Income
COST OF SALES BUDGETED Raw Material Used (+) Direct Labor (+) Manufacturing expenses (=)COST OF PRODUCTION (+) Opening Stock of Finished Goods (=) Finished Goods Available (-) Finished Goods Ending Inventory (=) COST OF SALES
STATEMENT
El Lder S.A
to December 31, 2002 Sales (-) Cost of Sales (=) Gross profit on sales (-) Operating Expenses (=) Operating Income $ $ $ $ $ 90,000 (79,600) 10,400 (7,000) 3,400
2,000
$ $ $ $ $ $ $ $ $
$ $ $
$ $
5,000 42,200
$ $ $ $
EXERCISE 7.4
4)The company Dulcera Linares SA, produces several product lines, among which is that of filled chocolates. Because the company accountant is on vacation and the only person who knows how to develop budgets requested the management accounting consultant to develop: It asks:
a) Sales Budget b)Production Budget The data shown below are relevant: FILLED CHOCOLATES MATERIALS (Raw Material) Chocolate filling Labor The indirect manufacturing expense applied hours based direct labor
The sales department estimates, based on market analysis and opinions of the sellers, sales of chocolates filled for the next year will be 1000000 of chocolates. Also, do know that the price is expected to sell the box is $ 50 and each box contains 25 chocolates. Budgeted Sales = Price box = $ 1000000 uni 50.00 Chocolates per box = Price per chocolate = 25 uni 2.00
The company's balance sheet at December 31, 2001, shows an inventory of 250000 300000 chocolates and chocolates are desired ending inventory to 2002 inventory Ending inventory 2002 = 250000uni 300000uni
$ $
EXERCISE 7.5
5) Southern Plastics Company SA produces three lines of plastic pens: Fine Point, Midpoint and Punto Grande. The CEO is interested in hiring an expert to fill the post of head of budgets, but first want to make sure that person knows the art to put in evidence which to draw: It asks: a) The Production Budget b) The Budget Raw Material Requirements c) Materials Purchase Budget d) The Budget Direct Labor e) The Budget Indirect Manufacturing Costs f) The Budget and Administrative Expense g) The budget Ending Stocks h) Cost of Goods Sold Budget
This relevant information is provided: FEATHERS midpoint 1 gr 3 grs 5 grs 0.03 20.00 500000 $ 800000 20.00 $ 400000
MATERIALS component A Component B component C Hours Direct Labor Cost per hour of MOD I budgeted Sales Sem 2001
The B component cost is $ 2000 per kg. Kilogram the cost of A is considered to be equal to 5% of the cost of a kilogram of B, the cost of the component C is estimated as the cost of component A MATERIALS Component B Component A Component C COST 2,000.00 x kgr 100.00 x kgr 100.00 x kgr COST 2.00 gr 0.1 gr 0.1 gr
$ $ $
The Sales department believes it would be desirable to have an inventory for the period 700000 feathers, composed as follows: 25% Fine Point, Midpoint 60% and 15% of Great Point.
700000 plumas 25% Inv. Final 60% Inv. Final 15% Inv. Final FEATHERS MIDPOINT 420000
The stock of the year just completed an inventory of 500000 arrojn feathers, that is for each line the same percentage as the sales department for final inventory estimates.
500000 plumas 25% Inv. Final 60% Inv. Final 15% Inv. Final
Unit costs for each product line were $ 5.00 for Fine Point, $ 7.00 for middle and $ 12.00 for large point last year.
Last Year: Cost UNIT COST $ FINE POINT 5.00 $ MIDPOINT 7.00 $ GREAT POINT 12.00
Indirect manufacturing expenses are as follows (applied on the basis of hours of direct labor):
MANUFACTURING OVERHEAD Maintenance Costs insurance energy supervision accessories depreciation The pomp and sales management will include SELLING AND ADMINISTRATIVE EXPENSES Salaries Commissions Stationery and office tilies depreciation Miscellaneous Expenses
$ $ $ $ $
$ $ $ $ $
Commissions
10%
SUELDOS
ACCOUNTS projected Sales (+) Finished Produc Final Inv (-) Inv. Initial Finished Products REQUIRED PRODUCTION
PRODUCT FINE POINT MIDPOINT BIG POINT GRAMS TOTAL REQUIRED PRODUCTION Total required production kilograms Cost per kilogram TOTAL
$ $
COMPONENT A 550000 grs 920000 grs 430000 grs 1900000 grs 1900 Kg 100.00 $ 190,000.00 $
COMPONENTB 1100000 grs 2760000 grs 2150000 grs 6010000 grs 6010 Kg 2,000.00 $ 12,020,000.00 $
COMPONENT C 2750000 grs 4600000 grs 2150000 grs 9500000 grs 9500 Kg 100.00 950,000.00
Required Raw Material in Kg (+) Desired Ending Inventory (-) Initial Inventory (=) Purchase of Raw Material (*) Unit Cost (=) TOTAL PURCHASES
$ $
Planned Production Hrs per Unit Total hrs Cost per hr COST OF DIRECT LABOR
$ $
BUDGET GIF
Plsticos del Sur S.A
maintenance insurance energy supervision depreciation accessories TOTAL $ $ $ $ $ $ $ 10,000 7,000 80,000 809,000 12,000 10,000 928,000
TOTAL
RATEGIF =
RATE GIF =
RATE GIF =
Arm the Sales Budget Arming the Production Budget Arm Budget Direct Depletion Arm Budget Raw Material Purchasing Direct Arm Budget Direct Labor Arm GIF Budget Arming the Operating Expense Budget Inventories Arm Budget
SALES BUDGET
Laboratorios Regionales S.A
I SEMESTER D Di Z 10000 uni 6000 uni 5000 uni 200.00 $ 100.00 $ 150.00 $ 2,000,000 $ 600,000 $ 750,000 $ $ 3,350,000 $ II SEMESTER D Di Z 5000 uni 4000 uni 5000 uni 220.00 $ 120.00 $ 150.00 1,100,000 $ 480,000 $ 750,000 $ 2,330,000 5,680,000
SALES BUDGETED (*) SALE PRICE TOTAL TOTAL SEMESTER TOTAL ANNUAL
$ $
PRODUCTION BUDGET
Laboratorios Regionales S.A
I SEMESTER D Di 10000 uni 6000 uni II SEMESTER D Di 5000 uni 4000 uni
SALES BUDGETED
Z 5000 uni
Z 5000 uni
PRODUCTION ANNUAL
D 12000 uni
Z 7000 uni
MATERIAL REQUIREMENT FINAL INVENTORY WANTED NEC TO BUY INITIAL INVENTORY TOTAL TO BUY COST PER KG COST OF PROCUREMENT
RAW MATERIALA RAW MATERIALB RAW MATERIAL CRAW MATERIAL RAW A MATERIAL RAW B MATERIALC 78000 uni 42000 uni 24000 uni 26000 uni 14000 uni 8000 uni 10000 15000 5000 8000 4000 3000 88000 uni 57000 uni 29000 uni 34000 uni 18000 uni 11000 uni -10000 -15000 -5000 -10000 -15000 -5000 78000 uni 42000 uni 24000 uni 24000 uni 3000 uni 6000 uni $ 2.00 $ 2.70 $ 4.00 $ 2.10 $ 3.00 $ 4.40 $ 156,000 $ 113,400 $ 96,000 $ 50,400 $ 9,000 $ 26,400 $ 365,400 $ 85,800
LABOR BUDGET
Laboratorios Regionales S.A
I SEMESTER DI 6000 uni 1 hrs 6000 hrs 10.00 $ 60,000 $ II SEMESTER D DI 2000 uni 2000 uni 3 hrs 1 hrs 6000 hrs 2000 hrs 11.00 $ 11.00 $ 66,000 $ 22,000 $ $
REQUEST FOR PRODUCTION HRS REQUIRED BY PRODUCT TOTAL HOURS COST PER HOUR COST OF MOD TOTAL ANNUAL
$ $
460,000 132,000
592,000
$ $
30,000 537,000
RAW MATERIAL REQUIRED (+) OD HAND (+) EXPENSES IF (=) COST OF PRODUCTION (+) INV ART ORIGINAL ENDING (=) ENDED ART AVAILABLE (-) ART FINAL INVENTORY TERMIN (=) COST OF SALES BUDGETED
$ $ $ $
$ $ $ $
$ $ $ $ $
STATEMENT BUDGETED
Laboratorios Regionales S.A
to December 31, 2002
SALES (-) Cost of sales (=) GROSS PROFIT (-) OPERATING EXPENSES (=) OPERATING INCOME (-) 15% JOB SHARING (=) TAXABLE (-) 22% INCOME TAX (=) NET INCOME
$ $ $ $ $ $ $ $ $
(+) INFLOW CHARGED SALES (90%) YEAR SALES TOTAL TICKET (=) AVAILABLE (-) OUT OF CASH PAYMENT OF MACHINERY CTS PAYMENT PAYABLE SUPPLIER TAX YEAR CURRENT YEAR TAX DIRECT LABOR GIF (WITHOUT DEPRECIATION) OPERATING EXPENSES (SIN depreciates) PAYMENT OF PURCHASES OF RAW MATERIAL (60%) TOTAL OUTPUT (=) CASH BALANCE $ $ 5,112,000 50,000 $ $ $ $ $ $ $ $ $ $ 50,000 150,000 50,000 679,184 592,000 132,000 527,000 1,112,640 $ $ (3,292,824) 1,919,176 5,162,000 5,212,000
BALANCE
Laboratorios Regionales S.A
At December 31, 2001
ASSETS
LIABILITIES
CURRENT cash customers Material inventory Term Art Inventory TOTAL CURRENT NO CURRENT ground Plant and Equipment Accumulated Depreciation TOTAL NON-CURRENT
SHORT TERM suppliers Notes payable TOTAL SHORT TERM LONG-TERM Obligations payable TOTAL LIABILITIES EQUITY Capital contributed Capital won Contribution to capital fut TOTAL CAPITAL TOTAL LIABILITIES + EQUITY
$ $ $
$ 150,000 $
1,436,560
$ $ $ $ $
TOTAL ASSETS
$ 5,332,576