Aldira Jasmine Rizky Arifin
12010119190284
X.IUP
Budgeting Exercise
1) Suppose Johnson and Johnson Co have estimated sales as follows:
July August September Total Budgeted
Sales on account $600,000 $900,000 $500,000 $2,000,000
From his past experience, the company has learned that 20% of a month’s sales are
collected in the month of sale, another 70% are collected in the month following sale
and the remaining 10% are collected in the second month following sale. Bad debts
are negligible and can be ignored. May sales totaled $430,000 and June sales totaled
$540,000.
Required:
a) Prepare a schedule of expected cash collections from sales, by month and in
total, for the third quarter.
No
. Description July August September Total
1 May sales
$ $
430,000 x 10% 43,000 43,000
2 June sales
378,00 $ 432,00
540,000 x 70% x 10% 0 54,000 0
2 July sales
600,000 x 20% x 70% x 120,00 420,00 $ 600,00
10% 0 0 60,000 0
4 August sales
180,00 630,00 810,00
900,000 x 20% x 70% 0 0 0
5 September sales
100,00 100,00
500,000 x 20% 0 0
541,00 654,00 790,00 1,985,00
Total cash collections 0 0 0 0
b) Compute the accounts receivable as September 30.
From August sales: $900,000 x 10% = $90,000
From September sales: $500,000 x (70% + 10%) = $400,000
Total account receiveables at September 30 = $490,000
2) Company A sells a single product. Each unit takes two pounds of material and costs
$3.00 per pound. Company A has prepared a production budget by quarters for Year
2 and for the first quarter of Year 3, as follows:
Year 2 Year 3
First Second Third Fourth First
Budgeted production 30,000 60,000 90,000 100,000 50,000
The ending inventory at the end of a quarter must be equal to 25% of the following
quarter’s production needs. 26,000 pounds of material are on hand to start the first
quarter of Year 2.
Prepare direct materials budget for the chips by quarter and in for Year 2 in total
including the dollar amount of purchases.
Answer:
Year 2 Year 3
Description
Qtr1 Qtr2 Qtr3 Qtr4
30,00 60,00 90,00 100,00 50,00
Calculators produced unit 0 0 0 0 0
Chip per unit 2 x 2 2 2 2 2
60,00 120,00 180,00 200,00 100,00
Production needs = 0 0 0 0 0
30,00 45,00 50,00 25,00 25,00
Ending inventory + 0 0 0 0 0
90,00 165,00 230,00 225,00 125,00
Total needs = 0 0 0 0 0
Beginning inventory
26,00 30,00 45,00 50,00 25,00
(25% x production (-)
0 0 0 0 0
needs)
64,00 135,00 185,00 175,00 100,00
Required purchase = 0 0 0 0 0
$ $ $ $ $
Purchase cost per chip x 3 3 3 3 3
$ $ $ $ $
Total purchase cost = 192,000 405,000 555,000 525,000 300,000
3) Jasmine Company produces hand tools. Budgeted sales will be: March 12,000 units,
April 14,000, May 16,000 and June 19,000. Ending finished goods inventory policy is
10% of the following month's sales. What is budgeted finished goods inventory for
May?
Budgeted finised goods inventory for May :
16,000 x 10% = 1,600 units
4) Jasmine Company produces hand tools. Budgeted sales will be: March 12,000 units,
April 13,000, May 15,000 and June 19,000. Ending finished goods inventory policy is
10% of the following month's sales. March 1 inventory is projected to be 1,500 units.
How many units will be produced in March?
March production units
sales for the month 12,000
(add) desired ending inventory
1,300
10% of April sales units of 13,000
13,300
(less) beginning inventory 1,500
will be produced in March 11,800
5) Based on problem number 2, the budgeted direct labor-hours for the A Company are
as followed:
First Second Third Fourth
Budgeted direct labor hours 15,000 16,500 16,000 15,500
The A Company’s variable manufacturing overhead rate is $1.5 per direct labor-hour
and the company’s fixed manufacturing overhead is $60,000 per quarter. The only
noncash item included in the fixed mfg. overhead is depreciation, which is $18,000
Required:
a) Prepare a manufacturing overhead budget for the year.
first second third fourth year
15,00 16,50 16,00 15,50 63,00
budgeted direct labor-hours 0 0 0 0 0
$ $ $ $ $
variable overhead rate 1.50 1.50 1.50 1.50 1.50
$ $ $ $ $
variable overhead 22,500 24,750 24,000 23,250 94,500
60,00 60,00 60,00 60,00 240,0
fixed overhead 0 0 0 0 00
$ $ $ $ $
total overhead 82,500 84,750 84,000 83,250 334,500
18,00 18,00 18,00 18,00 18,00
(less) depreciation 0 0 0 0 0
$ $ $ $ $
cash disbursement 64,500 66,750 66,000 65,250 262,500
$
total manufacturing overhead 334,500
63,00
budgeted direct labor-hours 0
$
overhead rate for the year 5.31
b) Compute the variable, fixed and total manufacturing overhead rates for the year.
Overhead $ 94,500
Variable overhead = = = $ 1,5
Direct Labor Hour 63,000
¿ $ 240,000
Fixed Overhead = Total ¿ Overhead Direct Labor Hour =
63.000
= $ 3,8
Total Overhead = $ 5,3
