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Budget Project LL

1. The document provides the requirements and solution for a comprehensive budgeting problem involving preparing budgets for production, direct materials, cash payments, operating expenses, and combined cash for a company over a three month period. 2. It includes preparing budgets for production, materials, cash payments, operating expenses, and a combined cash budget. It also includes calculating manufacturing cost per unit and a budgeted income statement. 3. The summaries provide step-by-step solutions to preparing the required budgets and financial statements over the three month period ending March 31st.

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84 views

Budget Project LL

1. The document provides the requirements and solution for a comprehensive budgeting problem involving preparing budgets for production, direct materials, cash payments, operating expenses, and combined cash for a company over a three month period. 2. It includes preparing budgets for production, materials, cash payments, operating expenses, and a combined cash budget. It also includes calculating manufacturing cost per unit and a budgeted income statement. 3. The summaries provide step-by-step solutions to preparing the required budgets and financial statements over the three month period ending March 31st.

Uploaded by

api-220037346
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Introduction to Management Accounting

Solutions Manual

Problems: Set A

P9-59A Comprehensive budgeting problem (Learning Objectives 2 & 3)


Requirements
1. Prepare a schedule of cash collections for January, February, and March, and for the quarter
in total.
2. Prepare a production budget.
3. Prepare a direct materials budget.
4. Prepare a cash payments budget for the direct material purchases from Requirement 3.
5. Prepare a cash payments budget for conversion costs.
6. Prepare a cash payments budget for operating expenses.
7. Prepare a combined cash budget.
8. Calculate the budgeted manufacturing cost per unit.
9. Prepare a budgeted income statement for the quarter ending March 31.

Solution:
Given
Sales Budget
December
Unit sales

January

7,000

Unit selling price

Total sales Revenue

8,000

10 $
70,000

10
80,000

Req. 1
Cash Collections
Cash Collections
Credit Collections
Total Collections

January
24,000
49,000
$73,000

February
27,600
56,000
$83,600

Req. 2
Production Budget
Unit Sales

January
8,000

Chapter 9: The Master Budget and Responsibility Accounting

February
9,200

Introduction to Management Accounting


Plus: Desired Ending Inventory
Total Needed
Less: Beginning Inventory
Units to Produce

Solutions Manual
2,300
10,300
2,000
8,300

2,475
11,675
2,300
9,375

Req. 3
Direct Materials Budget
Units to be Produced
X Pounds of DM needed per unit
Pounds needed for production
Plus Desired ending inventory of DM
Total quantity needed
Less: Beginning Inventory of DM
Quantity to Purchase
X Cost per pound
Total cost of DM purchases

Unit Sales
Plus: Desired Ending Inventory
Total Needed
Less: Beginning Inventory
Units to Produce
Pounds of DM needed per unit
Pounds needed for production
Desired End Inventory of DM for March

January
8,300
2
16,600
1,875
18,475
1,660
16,815
2
$33,630

April
9,700
2,125
11,825
2,425
9,400
2
18,800
1,880

February
9,375
2
18,750
1,970
20,720
1,875
18,845
2
$37,690

May
8,500

Req. 4
Schedule of Expected Cash DisbursementsMaterial Purchases
December Purchases
January Purchases
February Purchases
March Purchases
Total Direct Material Purchases

January
42,400
6,726

February

49,126

34,442

Chapter 9: The Master Budget and Responsibility Accounting

26,904
7,538

Introduction to Management Accounting

Chapter 9: The Master Budget and Responsibility Accounting

Solutions Manual

Introduction to Management Accounting

Solutions Manual

Req. 5
Schedule of Expected Cash DisbursementsConversion Costs
Variable conversion costs
Rent (fixed)
Other fixed MOH
Total Payments for conversion costs

January
$9,960
$5,000
3000
$17,960

February
$11,250
$5,000
3000
$19,250

Req. 6
Schedule of Expected Cash Disbursements -- Operating Expenses
Variable Operating Expenses
Fixed Operating Expenses
Total payments for operating expenses

January
February
$
8,000 $
9,200
$
1,000 $
1,000
$
9,000 $
10,200

Req. 7
Combined Cash Budget
Cash Balance, beginning
Add Cash Collections
Total Cash Available
Less Cash Payments
Direct material purchases
Conversion Costs
Operating expenses
Equipment purchases
Tax payment
Total Cash Payments
Ending Cash Balance before financing
Financing:
Borrowings
Repayments
Interest Payments
Ending Cash Balance

Total interest

January
$4,500
73,000
77,500

February
$4,414
83,600
88,014

49,126
17,960
9,000
5,000
81,086
-3,586

34,442
19,250
10,200
12,000
10,000
85,892
2,122

8,000
0
0
4,414

2,000
0
0
4,122

$280

Chapter 9: The Master Budget and Responsibility Accounting

Introduction to Management Accounting

Solutions Manual

Req. 8
Budgeted Manufacturing Cost per Unit
Direct materials cost per unit
Conversion costs per unit
Fixed manufacturing overhead per unit
Budgeted cost of manufacturing each unit

$4.00
$2.07
$0.80
$6.87

Req. 9
Silverman Manufacturing
Budgeted Income Statement
For the Quarter Ended March 31
Sales
Cost of goods sold
Gross Profit
Operating Expenses
Depreciation
Operating Income
Less Interest Expense
Less Provision for income taxes
Net Income

$
$
$
$
$
$
$
$
$

Chapter 9: The Master Budget and Responsibility Accounting

271,000
186,229
84,771
30,100
4,800
49,871
280
14,961
34,629

Introduction to Management Accounting

Solutions Manual

(60 min.) P 9-59A

ves 2 & 3)

March, and for the quarter

from Requirement 3.

udget
February

March

9,200

April

9,900

May

9,700

8,500

10

10 $

10

10

92,000

99,000 $

97,000

85,000

March
29,700
64,400
$94,100

Quarter
81,300
169,400
$250,700

March
9,900

Quarter
27,100

Chapter 9: The Master Budget and Responsibility Accounting

Introduction to Management Accounting


2,425.00
12,325
2,475
9,850

2,425
29,525
2,000
27,525

March
9,850
2
19,700
1,880
21,580
1,970
19,610
2

Quarter
27,525
2
55,050
1,880
56,930
1,660
55,270
2

$39,220

$110,540

Solutions Manual

aterial Purchases
March

30,152
7,844
37,996

Quarter
42,400
33,630
37,690
7,844
121,564

Chapter 9: The Master Budget and Responsibility Accounting

Introduction to Management Accounting

Chapter 9: The Master Budget and Responsibility Accounting

Solutions Manual

Introduction to Management Accounting

Solutions Manual

onversion Costs
March
$11,820
$5,000
3000
$19,820

Quarter
$33,030
$15,000
$9,000
$57,030

erating Expenses
March
Quarter
$
9,900 $
27,100
$
1,000 $
3,000
$
10,900 $
30,100

March
$4,122
94,100
98,222

Quarter
$4,500
250,700
255,200

37,996
19,820
10,900
16,000
84,716
13,506

121,564
57,030
30,100
33,000
10,000
251,694
3,506

0
9,000
280
4,226

10,000
9,000
280
4,226

Chapter 9: The Master Budget and Responsibility Accounting

Introduction to Management Accounting

Chapter 9: The Master Budget and Responsibility Accounting

Solutions Manual

10

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