Data for Budget Assignment: Master Budget Case for ToyWorks Ltd.

Version v(A.0)
fiscal year end 31-Dec
For the year ended December 31, 2008
estimated sales:

2007 (in units) 475,000

2008 (in units) 500,000
2009 (in units) 500,000

price per unit $ 10.00

cost per unit previous year $ 7.30 Absorption Costing
cost per unit previous year $ 6.0520 Variable Costing

Sales pattern
Jan 1%
Feb 5%
Mar 1%
Apr 10%
May 1%
Jun 1%
Jul 2%
Aug 2%
Sep 2%
Oct 15%
Nov 20%
Dec 40%
100%

desired ending inventory (finished goods) 25% of next month's sales

rental cost--Admn & Selling cost

Sep $ 20,000
Oct $ 20,000
Nov $ 20,000
Dec $ 20,000

Raw material: SSA

required for each unit of product 5 kg
cost per kilogram $ 0.45

desired ending inventory (raw materials) 40% next month's production needs
Accounts payable payment pattern: 20% in the month of purchase
45% in the month following the purchase
35% in the 2nd month following the purchase

Beginning Accounts Payable:

November Sales 70,000
December sales 150,000
 Nov Dec Jan Feb
Sales in units 70,000 150,000 5,000 25,000
Desired ending inventory 37,500 1,250 6,250
Total required 107,500 151,250 11,250
Less: beginning inventory 17,500 37,500 1,250
Production required 90,000 113,750 10,000

SAA per unit 5 5 5

Total raw material needed 450,000 568,750 50,000
desired ending inventory 227,500 20,000
total required 677,500 588,750
Less: beginning inventory 180,000 227,500
RM to be purchased 497,500 361,250
cost per unit $ 0.45 $ 0.45
Cost of purchases $ 223,875 $ 162,563

Nov paid $ 44,775

Dec paid $ 100,744 $ 32,513
Jan payable $ 78,356 $ 73,153
Feb payable $ 56,897
$ 208,406

Time in production 18 minutes or 0.30 hour

rate of pay $ 9.00 per hour

per unit variable manufacturing:

Utilities $ 0.60
Indirect materials $ 0.20
Plant maintenance $ 0.30
Environmental fee $ 0.14
Other $ 0.06
$ 1.30

fixed manufacturing: Insurance Tax

training & devel $ 43,200 Prepaid (beg) 64,000 19,200
property/bus tax $ 39,000 Purchased 96,000 39,600
supervisor's salary $ 149,400 Used 96,000 39,000
amortization $ 178,800 Ending Bal 64,000 19,800
insurance $ 96,000
other $ 117,600
$ 624,000
Less: one time pay $ 96,000 insurance $ 8,000 per month
$ 39,000 Property tax $ 3,200 per month from Jan to Jun
$ 3,300 per month from Jul to Dec
$ 178,800 $ 14,900 per month
cash disbursements $ 349,200 or $ 29,100 per month

Selling and Admin

 Lowest level of sales 375,000 total operating expenses $ 778,710
Highest level of sales 750,000 total operating expenses $ 1,022,460

Per unit $ 0.65

fixed $ 534,960 or $ 44,580 per month

Sales collection pattern

current month 55.0%
following month 35.0%
2 months after 9.5%
uncollectible 0.5%

Nov Dec
Total sales $ 700,000 $ 1,500,000
Nov collected $ 385,000
Dec collected $ 245,000 $ 825,000
Jan receivable $ 66,500 $ 525,000
Feb receivable $ 142,500
total receivable $ 734,000

Monthly tax installments $ 5,000

outstanding from previous year $ 21,500 to be paid in April
Income tax rate 25%

Fixed asset purchase $ 204,300

Nov payment 40% $ 81,720
Dec payment 60% $ 122,580

Payment of dividends:
Mar $ 50,000
Jun $ 50,000
Sep $ 50,000
Dec $ 50,000
$ 200,000

Minimum bank balance $ 20,000

rate of interest 6% or 0.50% per month
borrowing blocks $ 1,000

Opening balance sheet

Cash $ 83,365
Accounts receivable 734,000
Inventory-raw materials 9,000
Inventory-finished goods 9,125
Prepaid insurance 64,000
Prepaid tax 19,200
Capital assets (net) 724,000
total $ 1,642,690

Accounts payable $ 208,406

Income tax payable $ 21,500
Capital stock $ 1,000,000
Retained earnings $ 412,784
$ 1,642,690
d December 31, 2008
 ToyWorks Ltd.
Sales Budget
For the year ended December 31, 2008

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
Percent of Annual Sales 1% 5% 1% 10% 1% 1% 2% 2% 2% 15% 20% 40% 100%
Expected sales in units 5,000 25,000 5,000 50,000 5,000 5,000 10,000 10,000 10,000 75,000 100,000 200,000 500,000
Selling price per unit $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
Total Budgeted Sales $ 50,000 $ 250,000 $ 50,000 $ 500,000 $ 50,000 $ 50,000 $ 100,000 $ 100,000 $ 100,000 $ 750,000 $ 1,000,000 $ 2,000,000 $ 5,000,000

ToyWorks Ltd.
Schedule of Expected Cash Collections
For the year ended December 31, 2008

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
Current month sales 55% $ 27,500 $ 137,500 $ 27,500 $ 275,000 $ 27,500 $ 27,500 $ 55,000 $ 55,000 $ 55,000 $ 412,500 $ 550,000 $ 1,100,000 2,750,000
Prior month's sales 35% 525,000 17,500 87,500 17,500 175,000 17,500 17,500 35,000 35,000 35,000 262,500 350,000 1,575,000
Two months prior sales 9.5% 66,500 142,500 4,750 23,750 4,750 47,500 4,750 4,750 9,500 9,500 9,500 71,250 399,000
Total cash collections $ 619,000 $ 297,500 $ 119,750 $ 316,250 $ 207,250 $ 92,500 $ 77,250 $ 94,750 $ 99,500 $ 457,000 $ 822,000 $ 1,521,250 $ 4,724,000

Nov 95000
Dec 700000 190000
985000

ToyWorks Ltd.
Schedule of Expected Cash Collections
For the year ended December 31, 2008

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
AR from November 66,500 66,500
AR from December 525,000 142,500 667,500
Jan 27,500 17,500 4,750 49,750
Feb 137,500 87,500 23,750 248,750
Mar 27,500 17,500 4,750 49,750
Apr 275,000 175,000 47,500 497,500
May 27,500 17,500 4,750 49,750
June 27,500 17,500 4,750 49,750
July 55,000 35,000 9,500 99,500
August 55,000 35,000 9,500 99,500
Sept 55,000 35,000 9,500 99,500
Oct 412,500 262,500 71,250 746,250
Nov 550,000 350,000 900,000
Dec - - ### - - - - ### - - - 1,100,000 1,100,000
619,000 297,500 119,750 316,250 207,250 92,500 77,250 94,750 99,500 457,000 822,000 1,521,250 4,724,000
 ToyWorks Ltd.
Production Budget
For the year ended December 31, 2008

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
Budgeted sales in units 5,000 25,000 5,000 50,000 5,000 5,000 10,000 10,000 10,000 75,000 100,000 200,000 500,000
Add desired ending inventory of
finished goods 6,250 1,250 12,500 1,250 1,250 2,500 2,500 2,500 18,750 25,000 50,000 1,250 1,250
Total needs 11,250 26,250 17,500 51,250 6,250 7,500 12,500 12,500 28,750 100,000 150,000 201,250 501,250
Less beginning inventory of finished
goods 1,250 6,250 1,250 12,500 1,250 1,250 2,500 2,500 2,500 18,750 25,000 50,000 1,250
Required production 10,000 20,000 16,250 38,750 5,000 6,250 10,000 10,000 26,250 81,250 125,000 151,250 500,000

ToyWorks Ltd.
Manufacturing Overhead Budget
For the year ended December 31, 2008

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
Production in Units 10,000 20,000 16,250 38,750 5,000 6,250 10,000 10,000 26,250 81,250 125,000 151,250 500,000
Variable overhead rate per unit $ 1.30 $ 1.30 $ 1.30 $ 1.30 $ 1.30 $ 1.30 $ 1.30 $ 1.30 $ 1.30 $ 1.30 $ 1.30 $ 1.30 $ 1.30
Variable manufacturing overhead $ 13,000 $ 26,000 $ 21,125 $ 50,375 $ 6,500 $ 8,125 $ 13,000 $ 13,000 $ 34,125 $ 105,625 $ 162,500 $ 196,625 $ 650,000
Fixed manufacturing overhead:
Training and development 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 43,200
Property and business taxes 3,200 3,200 3,200 3,200 3,200 3,200 3,300 3,300 3,300 3,300 3,300 3,300 39,000
Supervisor Salaries 12,450 12,450 12,450 12,450 12,450 12,450 12,450 12,450 12,450 12,450 12,450 12,450 149,400
Amortization on equipment 14,900 14,900 14,900 14,900 14,900 14,900 14,900 14,900 14,900 14,900 14,900 14,900 178,800
Insurance 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 96,000
Other 9,800 9,800 9,800 9,800 9,800 9,800 9,800 9,800 9,800 9,800 9,800 9,800 117,600
Total fixed manufacturing OH 51,950 51,950 51,950 51,950 51,950 51,950 52,050 52,050 52,050 52,050 52,050 52,050 624,000
Total manufacturing OH 64,950 77,950 73,075 102,325 58,450 60,075 65,050 65,050 86,175 157,675 214,550 248,675 1,274,000
Less prepaid property tax 3,200 3,200 3,200 3,200 3,200 3,200 3,300 3,300 3,300 3,300 3,300 3,300 39,000
Less prepaid insurance 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 96,000
Less amortization 14,900 14,900 14,900 14,900 14,900 14,900 14,900 14,900 14,900 14,900 14,900 14,900 178,800
Cash disbursements for
manufacturing OH $ 38,850 $ 51,850 $ 46,975 $ 76,225 $ 32,350 $ 33,975 $ 38,850 $ 38,850 $ 59,975 $ 131,475 $ 188,350 $ 222,475 $ 960,200
 ToyWorks Ltd.
Direct Materials Budget - SAA (kilograms)
For the year ended December 31, 2008

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
Units to be produced 10,000 20,000 16,250 38,750 5,000 6,250 10,000 10,000 26,250 81,250 125,000 151,250 500,000
Raw Materials needed per unit 5 5 5 5 5 5 5 5 5 5 5 5 5
Production needs 50,000 100,000 81,250 193,750 25,000 31,250 50,000 50,000 131,250 406,250 625,000 756,250 2,500,000
Add desired ending inventory 40,000 32,500 77,500 10,000 12,500 20,000 20,000 52,500 162,500 250,000 302,500 20,000 20,000
Total needs 90,000 132,500 158,750 203,750 37,500 51,250 70,000 102,500 293,750 656,250 927,500 776,250 2,520,000
Less beginning inventory 20,000 40,000 32,500 77,500 10,000 12,500 20,000 20,000 52,500 162,500 250,000 302,500 20,000
Raw materials to be purchased 70,000 92,500 126,250 126,250 27,500 38,750 50,000 82,500 241,250 493,750 677,500 473,750 2,500,000

Cost of SAA per kilogram $ 0.45 $ 0.45 $ 0.45 $ 0.45 $ 0.45 $ 0.45 $ 0.45 $ 0.45 $ 0.45 $ 0.45 $ 0.45 $ 0.45 $ 0.45
Total cost of purchases of SAA $ 31,500 $ 41,625 $ 56,813 $ 56,813 $ 12,375 $ 17,438 $ 22,500 $ 37,125 $ 108,563 $ 222,188 $ 304,875 $ 213,188 $ 1,125,000

ToyWorks Ltd.
Schedule of Expected Cash Disbursement for Purchases of Raw Material SAA
For the year ended December 31, 2008

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
Current month's purchases 20% $ 6,300 $ 8,325 $ 11,363 $ 11,363 $ 2,475 $ 3,488 $ 4,500 $ 7,425 $ 21,713 $ 44,438 $ 60,975 $ 42,638 $ 225,000
Prior month's purchases 45% 78,356 14,175 18,731 25,566 25,566 5,569 7,847 10,125 16,706 48,853 99,984 137,194 488,672

Two month's prior purchases 35%

73,153 56,897 11,025 14,569 19,884 19,884 4,331 6,103 7,875 12,994 37,997 77,766 342,478
Total cash disbursements for
purchases of raw material $ 157,809 $ 79,397 $ 41,119 $ 51,497 $ 47,925 $ 28,941 $ 16,678 $ 23,653 $ 46,294 $ 106,284 $ 198,956 $ 257,597 $ 1,056,150

ToyWorks Ltd.
Schedule of Expected Cash Disbursement for Purchases of Raw Material SAA
For the year ended December 31, 2008

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
A/P from November 78,356 78,356
A/P from December 73,153 56,897 130,050
Jan 6,300 14,175 11,025 31,500
Feb 8,325 18,731 14,569 41,625
Mar 11,363 25,566 19,884 56,813
Apr 11,363 25,566 19,884 56,813
May 2,475 5,569 4,331 12,375
Jun 3,488 7,847 6,103 17,438
Jul 4,500 10,125 7,875 22,500
Aug 7,425 16,706 12,994 37,125
Sep 21,713 48,853 37,997 108,563
Oct 44,438 99,984 77,766 222,188
Nov 60,975 137,194 198,169
Dec - - - - - - - ### - - - 42,638 42,638
157,809 79,397 41,119 51,497 47,925 28,941 16,678 23,653 46,294 106,284 198,956 257,597 1,056,150
106,706 95,934
208,406 74,616
277,256
 ToyWorks Ltd.
Direct Labour Budget
For the year ended December 31, 2008

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
Units to be Produced 10,000 20,000 16,250 38,750 5,000 6,250 10,000 10,000 26,250 81,250 125,000 151,250 500,000

Direct Labour time per unit (hours)

0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30
Total hours of direct labour time
needed 3,000 6,000 4,875 11,625 1,500 1,875 3,000 3,000 7,875 24,375 37,500 45,375 150,000
Direct Labour cost per hour $ 9.00 $ 9.00 $ 9.00 $ 9.00 $ 9.00 $ 9.00 $ 9.00 $ 9.00 $ 9.00 $ 9.00 $ 9.00 $ 9.00 $ 9.00
Total direct labour cost $ 27,000 $ 54,000 $ 43,875 $ 104,625 $ 13,500 $ 16,875 $ 27,000 $ 27,000 $ 70,875 $ 219,375 $ 337,500 $ 408,375 $ 1,350,000
 ToyWorks Ltd.
Selling and Administrative Expense Budget
For the year ended December 31, 2008

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
Budgeted sales in units 5,000 25,000 5,000 50,000 5,000 5,000 10,000 10,000 10,000 75,000 100,000 200,000 500,000
Variable selling and administrative
expense per unit $ 0.65 $ 0.65 $ 0.65 $ 0.65 $ 0.65 $ 0.65 $ 0.65 $ 0.65 $ 0.65 $ 0.65 $ 0.65 $ 0.65 $ 0.65
Variable expenses $ 3,250 $ 16,250 $ 3,250 $ 32,500 $ 3,250 $ 3,250 $ 6,500 $ 6,500 $ 6,500 $ 48,750 $ 65,000 $ 130,000 $ 325,000
Fixed selling and administrative
expenses 44,580 44,580 44,580 44,580 44,580 44,580 44,580 44,580 44,580 44,580 44,580 44,580 534,960
Bad Debts 250 1,250 250 2,500 250 250 500 500 500 3,750 5,000 10,000 25,000
Warehouse rental - - - - - - - - 20,000 20,000 20,000 20,000 80,000
Total budgeted selling and
administrative expenses $ 48,080 $ 62,080 $ 48,080 $ 79,580 $ 48,080 $ 48,080 $ 51,580 $ 51,580 $ 71,580 $ 117,080 $ 134,580 $ 204,580 $ 964,960
Less: non-cash items
Bad debt expense $ 250 $ 1,250 $ 250 $ 2,500 $ 250 $ 250 $ 500 $ 500 $ 500 $ 3,750 $ 5,000 $ 10,000 25,000
$ 47,830 $ 60,830 $ 47,830 $ 77,080 $ 47,830 $ 47,830 $ 51,080 $ 51,080 $ 71,080 $ 113,330 $ 129,580 $ 194,580 $ 939,960

Variable rate per unit: Total Costs Units

High $ 1,022,460 750,000
Low $ 778,710 375,000
Change $ 243,750 375,000

Variable rate per unit $ 0.6500

Fixed expenses per year $ 534,960
 ToyWorks Ltd.
Ending Finished Goods Inventory Budget (Absorption Costing)
For the year ended December 31, 2008

Item Quantity Cost/unit Total

Production cost per unit:
Direct materials: 5.00 kg. 0.45 2.25
Direct Labour 0.30 hr 9.00 2.70
Manufacturing overhead 1.00 unit 2.55 2.55
Unit product cost 7.50

Budgeted finished goods inventory:

Ending finished goods inventory in units 1,250
Unit product costs (see above) $ 7.50
Ending finished goods inventory in dollars $ 9,373

Budgeted cost of goods sold:

Beginning finished goods inventory 9,125
Plus cost of goods manufactured 3,749,000
Less: ending inventory 9,373
Budgeted cost of goods sold in dollars: 3,748,753

ToyWorks Ltd.
Ending Finished Goods Inventory Budget (Variable Costing)
For the year ended December 31, 2008

Item Quantity Cost/unit Total

Production cost per unit:
Direct materials: 5.00 kg. 0.45 2.25
Direct Labour 0.30 hr 9.00 2.70
Manufacturing overhead 1.00 unit 1.30 1.30
Unit product cost 6.25

Budgeted finished goods inventory:

Ending finished goods inventory in units 1,250
Unit product costs (see above) $ 6.25
Ending finished goods inventory in dollars $ 7,813

Budgeted cost of goods sold:

Beginning finished goods inventory 7,565
Plus cost of goods manufactured 3,125,000
Less: ending inventory 7,813
Budgeted cost of goods sold in dollars: 3,124,753
 ToyWorks Ltd.
Cash Budget
For the year ended December 31, 2008

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
Cash balance, beginning $ 83,365 $ 425,876 $ 472,299 $ 357,250 $ 337,573 $ 398,218 $ 268,498 $ 207,139 $ 156,306 $ 20,758 $ 20,868 $ 20,732 $ 83,365
Add receipts:
Collections from customers 619,000 297,500 119,750 316,250 207,250 92,500 77,250 94,750 99,500 457,000 822,000 1,521,250 4,724,000
Total cash available before financing 702,365 723,376 592,049 673,500 544,823 490,718 345,748 301,889 255,806 477,758 842,868 1,541,982 4,807,365
Less disbursements:
Direct materials 157,809 79,397 41,119 51,497 47,925 28,941 16,678 23,653 46,294 106,284 198,956 257,597 1,056,150
Direct labour 27,000 54,000 43,875 104,625 13,500 16,875 27,000 27,000 70,875 219,375 337,500 408,375 1,350,000
Manufacturing overhead 38,850 51,850 46,975 76,225 32,350 33,975 38,850 38,850 59,975 131,475 188,350 222,475 960,200
Selling and administrative expenses 47,830 60,830 47,830 77,080 47,830 47,830 51,080 51,080 71,080 113,330 129,580 194,580 939,960
Tax remittance 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
Tax payable - - - 21,500 - - ### - - - - ### 21,500
Prepaid insurance - - - ### - - ### - 96,000 - - ### 96,000
Prepaid property and business tax 39,600 39,600
Capital asset purchases - - - ### - - ### - - - 81,720 122,580 204,300
Dividend payment - - 50,000 - - 50,000 - - 50,000 - - 50,000 200,000
Total disbursements 276,489 251,077 234,799 335,927 146,605 222,221 138,608 145,583 399,224 575,464 941,106 1,260,607 4,927,710
Excess (deficiency) of cash available over
disbursements 425,876 472,299 357,250 337,573 398,218 268,498 207,139 156,306 - 143,418 - 97,707 - 98,238 281,375 - 120,345

Financing:
Borrowing (at the beginning of the month) 165,000 120,000 121,000 406,000
Repayment (at the end of the month) 259,000 259,000
Interest expense (paid monthly) - - - - - - - - 825 1,425 2,030 2,030 6,310
Total financing - - - - - - - - 164,175 118,575 118,970 - 261,030 140,690
Cash balance, ending $ 425,876 $ 472,299 $ 357,250 $ 337,573 $ 398,218 $ 268,498 $ 207,139 $ 156,306 $ 20,758 $ 20,868 $ 20,732 $ 20,345 $ 20,345

Running total - - - - - - - - 165,000 285,000 406,000 147,000

 ToyWorks Ltd.
Budgeted Income Statement
For the year ended December 31, 2008

Sales $ 5,000,000
Cost of goods sold 3,748,753
Gross Margin 1,251,248
Less:
Selling & administrative expenses 964,960
Net operating income 286,288
Less: Interest expense 6,310
Net income before taxes 279,978
Income taxes 69,994
Net Income $ 209,983

ToyWorks Ltd.
Budgeted Statement of Retained Earnings
For the year ended December 31, 2008

Retained earnings beginning of year $ 412,784

Plus: Net Income 209,983
Sub-total 622,767
Less: Dividends declared 200,000
Retained earnings end of year $ 422,767

ToyWorks Ltd.
Budgeted Balance Sheet
December 31, 2008

Assets
Cash $ 20,345
Accounts Receivable 985,000
Inventory: Raw Materials 9,000
Inventory: Finished goods 9,373
Prepaid Insurance 64,000
Prepaid Property and Business Tax 19,800
Capital assets (net) 749,500
Total Assets $ 1,857,018
Liabilities and Shareholders' Equity
Liabilities
Bank Loan Payable $ 147,000
Accounts payable 277,256
Income taxes payable 9,994
Total Liabilities 434,251
Shareholders' Equity
Capital stock 1,000,000
Retained earnings 422,767
Total Shareholders' equity 1,422,767
Total Liabilities & Shareholders' Equity $ 1,857,018 $ -
 ToyWorks Ltd.
Budgeted Income Statement
For the year ended December 31, 2008

Sales $ 5,000,000
Less: Variable costs
Variable cost of goods sold 3,124,753
Variable selling & admin expenses 325,000 3,449,753
Contribution Margin 1,550,248
Less: Fixed costs
Manufacturing overhead 624,000
Selling & administrative expenses 639,960 1,263,960
Net operating income 286,288
Less: Interest expense 6,310
Net income before taxes 279,978
Income taxes 69,994
Net Income $ 209,983