MANAGERIAL ACCOUNTING - Fourth Edition Solutions Manual

WASATCH MANUFACTURING
Master Budget

Sales Budget
December January February March April May
Unit Sales 7,000.00 8,000.00 9,000.00 8,600.00 9,400.00 6,800.00
Sales Price $ 15.00 $ 15.00 $ 15.00 $ 15.00 $ 15.00 $ 15.00
Total Sales Revenue $ 105,000.00 $ 120,000.00 $ 135,000.00 $ 129,000.00 $ 141,000.00 $ 102,000.00

Cash Collections Budget

January February March Quarter
Cash Sales $ 36,000.00 $ 40,500.00 $ 38,700.00 $ 115,200.00
Credit Sales 73,500.00 84,000.00 94,500.00 252,000.00

Total Cash Collections $ 109,500.00 $ 124,500.00 $ 133,200.00 $ 367,200.00

Production Budget
January February March Quarter
Unit Sales 8,000.00 9,000.00 8,600.00 25,600.00
Plus: Desired ending inventory 1,800.00 1,720.00 1,880.00 1,880.00
Total needed 9,800.00 10,720.00 10,480.00 27,480.00
Less: Beginning inventory 1,600.00 1,800.00 1,720.00 1,600.00

Units to produce 8,200.00 8,920.00 8,760.00 25,880.00

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MANAGERIAL ACCOUNTING - Fourth Edition Solutions Manual

Direct Materials Budget

January February March Quarter
Units to be produced 8,200.00 8,920.00 8,760.00 25,880.00
Multiply by: Quanity of DM neded per unit 4.00 4.00 4.00 4.00
(lbs.)
Quanity of DM needed for production (lbs.) 32,800.00 35,680.00 35,040.00 103,520.00
Plus: Desired ending inventory of DM (lbs.) 5,352.00 5,256.00 5,328.00 15,936.00
Total quanity of DM needed (lbs.) 38,152.00 40,936.00 40,368.00 119,456.00
Less: Beginning inventory of DM (lbs.) 4,920.00 5,352.00 5,256.00 15,528.00
Quanity of DM to purchase (lbs.) 33,232.00 35,584.00 35,112.00 103,928.00
Multiply by: Cost per round $ 1.00 $ 1.00 $ 1.00 $ 1.00

Total cost of DM purchases $ 33,232.00 $ 35,584.00 $ 35,112.00 $ 103,928.00

Cash Payments for Direct Material Purchases Budget

January February March Quarter
December Purchases (from A/P) $ 37,000.00 $ 37,000.00
January Purchases 8,308.00 $ 24,924.00 33,232.00
February Purchases 8,896.00 $ 26,688.00 35,584.00
March Purchases 8,778.00 8,778.00
Total Cash Payments $ 45,308.00 $ 33,820.00 $ 35,466.00 $ 114,594.00

Cash Payments for Direct Labor Budget

January February March Quarter
Units Produced 8,200.00 8,920.00 8,760.00 25,880.00
Multiply by: Hours per Unit 0.10 0.10 0.10 0.10
Direct Labor Hours 820.00 892.00 876.00 2,588.00
Multiply by: Direct Labor Rate per Hour $ 15.00 $ 15.00 $ 15.00 $ 15.00
Direct Labor Cost $ 12,300.00 $ 13,380.00 $ 13,140.00 $ 38,820.00

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Cash Payments for Manufacturing Overhead Budget

January February March Quarter
Rent (fixed) $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 30,000.00
Other Manufacturing Overhead (fixed) 6,000.00 6,000.00 6,000.00 18,000.00
Variable Manufacturing Overhead Costs 10,250.00 11,150.00 10,950.00 32,350.00
Cash Payments for Manufacturing Overhea $ 26,250.00 $ 27,150.00 $ 26,950.00 $ 80,350.00

Cash Payments for Operating Expenses Budget

January February March Quarter
Variable Operating Expenses $ 10,660.00 $ 11,596.00 $ 11,388.00 $ 33,644.00
Fixed Operating Expenses 2,200.00 10,200.00 27,200.00 39,600.00
Cash Payments for Operating Expenses $ 12,860.00 $ 21,796.00 $ 38,588.00 $ 73,244.00

Combined Cash Budget

January February March Quarter
Cash Balance, Beginning $ 17,000.00 $ 15,000.00 $ 15,354.00 $ 17,000.00
Plus: Cash Collections 109,500.00 124,500.00 133,200.00 367,200.00
Total Cash Available $ 126,500.00 $ 139,500.00 $ 148,554.00 $ 384,200.00
Less Cash Payments:
DM Purchases 45,308.00 33,820.00 35,466.00
114,594.00
Direct Labor 12,300.00 13,380.00 13,140.00
38,820.00
Manufacturing Overhead costs 26,250.00 27,150.00 26,950.00
80,350.00
Operating Expenses 12,860.00 21,796.00 38,588.00
73,244.00
Tax Payment 28,000.00 3,531.42
31,531.42
Equipment Purchases 20,000.00 20,000.00
Total Cash Payments $ 116,718.00 $ 124,146.00 $ 117,675.42 $ 358,539.42
Ending Cash before Financing $ 9,782.00 $ 15,354.00 $ 30,878.58 $ 25,660.58
Financing:
Borrowings 5,218.00 - - 5,218.00

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MANAGERIAL ACCOUNTING - Fourth Edition Solutions Manual

Repayments (5,218.00) (5,218.00)

Interest Payments (16.31) (16.31)
Cash Balance, Ending $ 15,000.00 $ 15,354.00 $ 25,644.27 $ 25,644.27

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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 3.10
Fixed manufacturing overhead per unit 0.75
Cost of manufacturing each unit $ 9.35

Budgeted Income Statement

Sales Revenue $ 384,000.00
Less: Cost of Goods Sold 239,480.68
Gross Profit $ 144,519.32
Less: Operating Expenses 73,244.00
Less: Depreciation Expense 10,000.00
Operating Income $ 61,275.32
Less: Interest Expense 16.31
Less: Income Tax Expense 31,531.42
Net Income $ 92,823.05

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