MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

WASATCH MANUFACTURING
Master Budget

Sales Budget
January
February

December
Unit Sales

7,000

8,000

March

9,000

April
8,600

Price per Unit

15 $

15 $

15 $

15 $

Sales Revenue

105,000 $

120,000 $

135,000 $

129,000 $

Cash Collections Budget

January
February
Cash Sales

36,000 $

40,500 $

May

March

9,400

6,800

15

###

141,000 $

Quarter

38,700 $

115,200

Credit Sales

73,500 $

84,000 $

94,500 $

252,000

Total Cash Collections

109,500 $

124,500 $

133,200 $

367,200

Production Budget
January
February

March

Quarter

Unit Sales

8,000

9,000

8,600

25,600

Plus: Desired ending inventory

1,800

1,720

1,880

1,880

Total Needed

9,800

10,720

10,480

27,480

Less: Beginning inventory

1,600

1,800

1,720

1,600

Units to produce

8,200

8,920

8,760

25,880

Chapter 9: The Master Budget

102,000

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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Direct Materials Budget

January
February
Units to be produced

March

Quarter

8,200

8,920

8,760

25,880

Quantity of DM needed for production (lbs.)

32,800

35,680

35,040

103,520

Plus: Desired ending inventory of DM (lbs.)

5,352

5,256

5328

5328

38,152

40,936

40,368

108,848

Multiply by: Quantity of DM needed per unit (lbs.)

Total quantity of DM needed (lbs.)

Less: Beginning inventory of DM (lbs.)
Quantity of DM to purchase (lbs.)
Mulitply by: Cost per pound

Total cost of DM purchases

4,920

5,352

5,256

15,528

33,232

35,584

35,112

93,320

1.00 $
$33,232

1.00 $
$35,584

1.00 $
$35,112

Cash Payments for Direct Material Purchases Budget

January
February
March
December Purchases (from A/P)
January Purchases
February Purchases

$37,000
$24,924
$8,896

$33,232
$26,688

$35,584

$8,778

$8,778

$35,466

$114,594

March Purchases
Total Cash Payments

$45,308

$33,820

Cash Payments for Direct Labor Budget

January
February
Units Produced

$93,320

Quarter

$37,000
$8,308

1.00

March

Quarter

8,200

8,920

8,760

25,880

Multiply by: Hours per Unit

0.10

0.10

0.10

0.10

Direct Labor Hours

820

892

876

2,588

Multiply by: Direct Labor Rate per Hour

$15

$15

$15

$15

$12,300

$13,380

$13,140

$38,820

Direct Labor Cost

Chapter 9: The Master Budget

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MANAGERIAL ACCOUNTING - Fourth Edition

Chapter 9: The Master Budget

Solutions Manual

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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Cash Payments for Manufacturing Overhead Budget

January
February
March
Rent (fixed)
Other Manufacturing Overhead (fixed)

Quarter

$10,000

$10,000

$10,000

$30,000

$6,000

$6,000

$6,000

$18,000

Variable Manufacturing Overhead Costs

$10,250

$11,150

$10,950

$32,350

Cash Payments for Manufacturing Overhead

$26,250

$27,150

$26,950

$80,350

Cash Payments for Operating Expenses Budget

January
February
March
Variable Operating Expenses

$10,400

Fixed Operating Expenses

Cash Payments for Operating Expenses

$11,700

$11,180

$33,280

$2,200

$2,200

$2,200

$6,600

$12,600

$13,900

$13,380

$39,880

Combined Cash Budget

January
February
Cash Balance, Beginning

Quarter

March

$17,000 $

10,042 $

Quarter

38,292

$17,000

Plus: Cash Collections

109,500 $

124,500 $

133,200 $

367,200

Total Cash Available

126,500 $

134,542 $

171,492 $

384,200

DM Purchases

$45,308

$33,820

$35,466

$114,594

Direct Labor

$12,300

$13,380

$13,140

$38,820

Manufacturing Overhead costs

$26,250

$27,150

$26,950

$80,350

Operating Expenses

$12,600

$13,900

$13,380

$39,880

Less Cash Payments:

Tax Payment
Equipment Purchases

$20,000

$8,000

Total Cash Payments

$116,458

$96,250

Ending Cash before Financing

10,042 $

38,292 $

$25,000

$53,000

$113,936 $

326,644

57,556 $

57,556

Financing:

Chapter 9: The Master Budget

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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Borrowings

Repayments

Interest Payments

Cash Balance, Ending

Chapter 9: The Master Budget

10,042 $

38,292 $

57,556 $

57,556

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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Budgeted Manufacturing Cost per Unit

Direct materials cost per unit

4.00

Direct labor cost per unit

1.50

Variable manufacturing costs per unit

1.25

Fixed manufacturing overhead per unit

0.75

Cost of manufacturing per unit

7.50

Budgeted Income Statement

Sales Revenue

$384,000

Less: Cost of Goods Sold

$192,000

Gross Profit

$192,000

Less: Operating Expenses

$39,880

Less: Depreciation Expense

$10,000

Operating Income
Less: Interest Expense
Less: Income Tax Expense
Net Income

Chapter 9: The Master Budget

$142,120
$0
$32,688
$109,432

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