ACCT 2020

EXCEL BUDGET PROBLEM

VERSION

DESCRIPTION
To demonstrate your understanding of the master budget and all of the supporting
budgets, use the data set provided below to complete a comprehensive budget problem
for WASATCH MANUFACTURING. You must prepare the assignment in Excel using the
template provided in MAL>Shared Documents. You must use formulas and link the
budgets wherever possible, as indicated below in the grading criteria.

SUBMISSION DETAILS

Upload your completed Budget Excel file to your SLCC ePortfolio and submit the
web link in Canvas as an assignment.

GRADING CRITERIA

The formatting is consistent, professional, and easy to read. The budgets are in the
correct order (10%).
In every cell possible, formulas are used to compute the required answers (15%).
In every cell possible, data between budgets are linked. For example, if a change is
made to January sales revenue, all other budgets update automatically as a result
of the new revenue figure (10%).
Each budget correctly computes the required data, including quarterly calculations
(60%).
The Excel document was uploaded to the students SLCC ePortfolio (5%).

HELP WITH EXCEL

If you are unfamiliar with preparing budgets in Excel, below is a series of videos prepared
by Paige Paulsen that cover preparing each of the budgets.
Preparing budgets in Excel video series:

Sales & cash collections budget: http://youtu.be/3yG7FzDnvgM

Production Budget: http://youtu.be/MhrasFoIun0
Direct Materials Budget: http://youtu.be/eZJdhpm_bvc
Cash Disbursements for Direct Materials: http://youtu.be/58rCJpE-fCo
Conversion Costs Budgets: http://youtu.be/3N4DknOlBWk
Operating Expenses Budget: http://youtu.be/j81CLBhSWYs
Cash Budget: http://youtu.be/IXM3paew5n0
Budgeted Manufacturing Cost per Unit: http://youtu.be/EaS_f1IsqgI
Budgeted Income Statement: http://youtu.be/95ffm5qPfsU

For better viewing quality in YouTube, please adjust the YouTube viewing settings to
720p.

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HELP WITH EPORTFOLIO

To receive full credit, this assignment needs to be uploaded into your SLCC ePortfolio. For
assistance with ePortfolios, please visit http://www.slcc.edu/gened/eportfolio/

DATA SET
Wasatch Manufacturing is preparing its master budget for the first quarter of the
upcoming year. The following data pertain to Wasatch Manufacturings operations:
Current Assets as of December 31
(prior year):
Cash
$17,000
Accounts Receivable, net $73,500
Inventory
$20,000
Property, Plant &
$105,00
Equipment, Net
0
Accounts Payable
$37,000
Capital Stock
$95,000
Retained Earnings
$40,000
A. Actual sales in December were $105,000. Selling price per unit is projected to
remain stable at $15 per unit throughout the budget period. Sales for the first five
months of the upcoming year are budgeted to be as follows:
Januar
$120,
y
000
Februa
$135,
ry
000
$129,
March
000
$141,
April
000
$102,
May
000
B. Sales are 30% cash and 70% credit. All credit sales are collected in the month
following the sale.
C. Wasatch Manufacturing has a policy that states that each months ending
inventory of finished goods should be 20% of the following months sales (in units).
D. Of each months direct materials purchases, 25% are paid for in the month of
purchase, while the remainder is paid for in the month following purchase. Four
pounds of direct materials is needed per unit at $1.00 per pound. Ending inventory
of direct materials should be 15% of next months production needs.
E. Most of the labor at the manufacturing facility is indirect, but there is some direct
labor incurred. Each unit requires 0.10 direct labor hours. The direct labor wage

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rate is $15 per hour. All direct labor is paid for in the month in which the work is
performed.
F. Monthly manufacturing overhead costs are $10,000 for factory rent, $6,000 for
other fixed manufacturing expenses, and $1.25 per unit for variable manufacturing
overhead. No depreciation is included in these figures. All expenses are paid for in
the month in which they are incurred.
G. Computer equipment for the administrative offices will be purchased in the
upcoming quarter. In January, Wasatch Manufacturing will purchase equipment for
$20,000 (cash), while Februarys cash expenditures will be $8,000, and Marchs
cash expenditure will be $25,000.
H. Operating expenses are budgeted to be $1.30 per unit sold plus fixed operating
expenses of $2,200 per month. All operating expenses are paid in the month in
which they are incurred.
I. Depreciation on the building and equipment for the general and administrative
offices is budgeted to be $10,000 for the entire quarter, which includes
depreciation on new acquisitions.
J. Wasatch Manufacturing has a policy that the ending cash balance in each month
must be at least $15,000. It has a line of credit with a local bank. The company can
borrow in increments of $1,000 at the beginning of each month, up to a total
outstanding loan balance of $100,000. The interest rate on these loans is 1.25%
per month simple interest (not compounded). The company would pay down on
the line of credit balance in increments of $1,000 if it has excess funds at the end
of the quarter. The company would also pay the accumulated interest at the end of
the quarter on the funds borrowed during the quarter.
K. The companys income tax rate is projected to be 23% of operating income less
interest expense. The company pays $28,000 cash at the end of February in
estimated taxes.

SPECIFIC REQUIREMENTS
1. Prepare a schedule of cash collections for January, February, and March, and for
the quarter in total. To assist with the cash collections budget, first prepare a sales
budget (Hint: Unit Sales = Sales in Dollars / Selling Price per Unit).

December

Sales Budget
January
February

March

April

Unit Sales
Price per Unit
Sales Revenue

Cash Collections Budget

January February

March

Quarter

May

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Cash sales
Credit sales
Total cash collections

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2. Prepare a production budget.

Production Budget
January February

March

Quarter

Unit sales
Plus: Desired ending inventory
Total needed
Less: Beginning inventory
Units to produce
3. Prepare a direct materials budget.
Direct Materials Budget
January February

March

Quarter

Units to be produced
Multiply by: Quantity of DM needed
per unit (lbs.)
Quantity of DM needed for production (lbs.)
Plus: Desired ending inventory of DM (lbs.)
Total quantity of DM needed (lbs.)
Less: Beginning inventory of DM (lbs.)
Quantity of DM to purchase (lbs.)
Multiply by: Cost per pound
Total cost of DM purchases
4. Prepare a cash payments budget for the direct material purchases from
Requirement 3.
Cash Payments for Direct Material Purchases Budget
January
February
March
December Purchases (from A/P)
January Purchases
February Purchases
March Purchases
Total Cash Payments

Quarter

5. Prepare a cash payments budget for direct labor.

Cash Payments for Direct Labor Budget
January February
Units Produced
Multiply by: Hours per Unit
Direct Labor Hours
Multiply by: Direct Labor Rate per Hour
Direct Labor Cost

March

Quarter

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6. Prepare a cash payments budget for manufacturing overhead costs.

Cash Payments for Manufacturing Overhead Budget
January
February
March

Quarter

Rent (fixed)
Other Manufacturing Overhead (fixed)
Variable Manufacturing Overhead Costs
Cash Payments for Manufacturing Overhead
7. Prepare a cash payments budget for operating expenses.
Cash Payments for Operating Expenses Budget
January
February
March
Variable Operating Expenses
Fixed Operating Expenses
Cash Payments for Operating Expenses

Quarter

8. Prepare a combined cash budget.

Combined Cash Budget
January
February
Cash Balance, Beginning
Plus: Cash Collections
Total Cash Available
Less Cash Payments:
DM Purchases
Direct Labor
Manufacturing Overhead costs
Operating Expenses
Tax Payment
Equipment Purchases
Total Cash Payments
Ending Cash before Financing
Financing:
Borrowings
Repayments
Interest Payments
Cash Balance, Ending

March

Quarter

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9. Calculate the budgeted manufacturing cost per unit (assume that fixed
manufacturing overhead is budgeted to be $0.75 per unit for the year.)
Budgeted Manufacturing Cost per Unit
Direct materials cost per unit
Direct labor cost per unit
Variable manufacturing costs per unit
Fixed manufacturing overhead per unit
Cost of manufacturing each unit
10.
Prepare a budgeted income statement for the quarter ending March 31 (Hint:
Cost of Goods Sold = Budgeted Manufacturing Cost per Unit X Number of Units
Sold).
Budgeted Income Statement
For the Quarter Ended March 31
Sales Revenue
Less: Cost of Goods Sold
Gross Profit
Less: Operating Expenses
Less: Depreciation Expense
Operating Income
Less: Interest Expense
Less: Income Tax Expense
Net Income