Solutions Manual

WASATCH MANUFACTURING
Master Budget

Unit Sales
Price per Unit
Sales Revenue

Cash Sales
Credit Sales
Total cash Collections

Unit Sales
Plus: Desired ending inventory
Total Needed
Less: beginning inventory
Units to produce

Sales Budget
January
February
8,000
9,000
15
15
120,000
135,000

March
8,600
15
129,000

April
9,400
15
141,000

Cash Collections Budget

January
February
36,000
40,500
73,500
84,000
109,500
124,500

March
38,700
94,500
133,200

Quarter
115,200
252,000
367,200

Production Budget
January
February
8,000
9,000
1,800
1,720
9,800
10,720
(1,600)
(1,800)
8,200
8,920

March
8,600
1,880
10,480
(1,720)
8,760

Quarter
December
25,600
7,000
1,880
1,600.0
27,480
8,600.0
(1,600)
25,880

December
7,000
15
105,000

May
6,800
15
102,000

Direct Materials Budget

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January
8,200
4

February
8,920
4

March
8,760
4

Quarter
25,880
4

32,800
5,352
38,152
(4,920)
33,232
1
33,232

35,680
5,256
40,936
(5,352)
35,584
1
35,584

35,040
5,328
40,368
(5,256)
35,112
1
35,112

103,520
5,328
108,848
(4,920)
103,928
1
103,928

Cash Payments for Direct Material Purchases Budget

January
February
March
December Purchases (from A/P)
37,000
January Purchases
8,308
24,924
February Purchases
8,896
26,688
March Purchases
8,778
Total Cash Payments
45,308
33,820
35,466

Quarter
37,000
33,232
35,584
8,778
114,594

Cash Payments for Direct Labor Budget

January
February
Units produced
8,200
8,920
Multiply by: Hours per Unit
0.1
0.1
Direct Labor Hours
820
892
Multiple by: Direct Labor Rate per Hour
15
15

Quarter
25,880
0.1
2,588
15

Units to be produced
Multiply by: Quantity of DM needed per unit
(lbs.)
Quantity of DM needed for production
Plus: Desired ending inventory DM
Total quantity of DM needed
Less: Beginning inventory of DM
Quantity of DM to purchase
Multiply by: cost per pound
Total cost of DM purchases

March
8,760
0.1
876
15

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Direct Labor Cost

12,300

13,380

13,140

Cash Payments for Manufacturing Overhead Budget

January
February
March
Rent (fixed)
10,000
10,000
10,000
Other manufacturing overhead (fixed)
6,000
6,000
6,000
10,250
11,150
10,950
Variable Manufacturing Overhead Costs
Cash payments for manufacturing overhead
26,250
27,150
26,950

Cash Payments for Operating Expenses Budget

January
February
Variable Operating expenses
10,660
11,596
Fixed operating expenses
2,200
2,200
Cash payments for opreating expenses
12,860
13,796

Cash Balance, Beginning

Plus: Cash collections
Total cash available
Less cash payments:
DM Purchases
Direct Labor
MOH costs
Operating expenses

Combined Cash Budget

January
February
17,000
29,782
109,500
124,500
126,500
154,282
45,308
12,300
26,250
12,860

33,820
13,380
27,150
13,796

38,820

Quarter
30,000
18,000
32,350
80,350

March
11,388
2,200
13,588

Quarter
33,644
6,600
40,244

March
30,136
133,200
163,336

Quarter
17,000
367,200
384,200

35,466
13,140
26,950
13,588

114,594
38,820
80,350
40,244
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Tax payments
Equipment purchases
Total cash payments
Ending cash before financing
Financing:
Borrowings
Repayments
Interest payments
Total Financing
Cash balance, ending

20,000
96,718
29,782

28,000
8,000
124,146
30,136

25,000
114,144
49,192

28,000
53,000
355,008
29,192

29,782

30,136

49,192

29,192

Budgeted Manufacturing Cost per Unit

Direct materials cost per unit
Direct labor cost per unit
Variable manufacturing costs per unit
Fixed manufacturing overhead per unit
Cost of manufacturing each unit

4
1.5
1.25
0.7
7.45

Budgeted Income Statement

Sales Revenue
Less: cost of goods sold
Gross profit
Less: operating expenses
Less: Depreciation expense
Operating income
Less: interest expense

384,000

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Less: income tax expense
Net Income

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April
9,400
1,360
10,760
(1,880)
8,880

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8,880
4
35520

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