MANAGERIAL ACCOUNTING - Fourth Edition Solutions Manual

WASATCH MANUFACTURING
Master Budget

Sales Budget
December January February March April
Unit Slaes 8444 8900 9900 9200 9500
Price per Unit $9 $9 $9 $9 $9
Budget Sales $76,000 $80,100 $89,100 $82,800 $85,500

Cash Collections Budget

January February March Quarter
Cash collection $20,025 $22,275 $20,700 $63,000
Credit collection $57,000 $60,075 $66,825 $183,900
Total Cash Collection $77,025 $82,350 $87,525 $246,900

Production Budget
January February March Quarter
Unit sales 8900 9900 9200 28000
Plus: Desired ending inventory 1485 1380 1425 1425
Total needed 10385 11280 10625 29425
Less: Begging inventory -1335 -1485 -1380 -1335
Units to Prduce 9050 9795 9245 28090

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Direct Materials Budget

January February March Quarter
Units to be produced 9050 9795 9245 28090
2 2 2 2
Multply by:Quantity of DM needed per unit (lbs.) 18100 19590 18490 56180
Plus: Desired ending inventory of DM (lbs.) 1959 1849 1873 1873
Total quantity of DM needed (lbs.) 20059 21439 20363 61861
Less: Beginning inventory of DM (lbs.) 1810 1950 1849 1810
Quantity of DM to purchase (lbs.) 18249 19480 18514 60051
Mutiply by: Cost per pund $1.50 $1.50 $1.50 $1.50
Total cost of DM purchases $27,374 $29,220 $27,771 $90,077

Cash Payments for Direct Material Purchases Budget

January February March Quarter
December Purchases (from A/P) $22,000 $22,000
January Purchases $8,212 $19,161 $27,374
February Purchases $8,766 $20,454 $20,220
March Purchases $8,331 $8,331
Total Cash Payments $30,212 $27,927 $28,785 $86,925

Cash Payments for Direct Labor Budget

January February March Quarter
Units Produced 9050 9795 9245 28090
Multiply by: Hours per Unit $0.03 $0.03 $0.03 $0.03
Direct Labor Hours 271.5 293.85 277.35 842.7
Multiply by:Direct Labor Rate per Hour $13 $13 $13 $13
Direct Labor Cost $3,530 $3,820 $3,605 $10,955

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Cash Payments for Manufacturing Overhead Budget

January February March Quarter
Rent (fixed) $6,500 $6,500 $6,500 $19,500
Other Manufacturing Overhead (fixed) $2,100 $2,100 $2,100 $6,300

Variable Manufacturing Overhead Costs $12,670 $13,713 $12,943 $39,326

Cash Payments for Manufacturing Overhead $21,270 $22,313 $21,543 $65,126

Cash Payments for Operating Expenses Budget

January February March Quarter
Variable Operating Expenses $10,680 $11,880 $11,040 $33,600
Fixed Operating Expenses $1,400 $1,400 $1,400 $4,200
Cash Payments for Operating Expenses $12,080 $13,280 $12,440 $37,800

Combined Cash Budget

January February March Quarter
Cash Balance, Beginning $6,000 $4,933 $5,143 $6,000
Plus: Cash Collection $77,025 $82,350 $87,525 $246,900
Total Cash Available $83,025 $87,283 $92,668 $252,900
Less Cash Payments:
DM Purchases ($30,212) ($27,927) ($28,785) ($86,925)
Direct Labor ($3,530) ($3,820) ($3,606) ($10,955)
Manufacturing Overhead cost ($21,270) ($22,313) ($21,543) ($65,126)
Operating Expenses ($12,080) ($13,280) ($12,440) ($37,800)
Tax Payment ($10,800) ($10,800)
Equipment Purchases ($15,000) ($6,000) ($4,000) ($25,000)
Total Cash Payments ($82,092) ($84,141) ($70,374) ($236,606)
Ending Cash before Financing $933 $3,143 $22,294 $16,294
Financing:

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Borrowings $4,000 $2,000 $6,000

Repayments ($6,000) ($6,000)
Interest Payments ($240) ($240)
Total Financing $4,000 $2,000 ($6,240) ($6,240)
Cash Balance, Ending $4,933 $5,143 $16,054 $16,054

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Budgeted Manufacturing Cost per Unit

Direct materials cost per unit $3
Direct labor cost per unit $0.90
variable manufacturing cost per unit $1.40
Fixed manufacturing overhead per unit $0.60
Cost of manufacutring each unit $5

Budgeted Income Statement

Sales Revenue $252,000
Less: Cost of Goods Sold ($150,920)
Gross: Profit $101,080
Less: Operating Expense ($37,800)
Less: Depreciation Expense ($5,200)
Operating Income $58,080
Interest Expense ($240)
Less: Income Tax Expense ($16,195)
Net Income $41,645

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May
8600
$9
77400

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