Case 09-48

PHOTO ARTISTRY COMPANY

Master Budget
1. Sales Budget:
20x4
4th
Quarter
S frame unit sales
x S sales price
S frame sales revenue
L frame unit sales
x L sales price
L frame sales revenue
Total sales revenue
*

Cash sales*
Sales on account
*

*40% of total sales.

60% of total sales.
2. Cash receipts budget:
20x5
1st
Quarter
Cash sales
Cash collections from credit sales
made during current quarter*
Cash collections from credit sales
made during previous quarter
Total cash receipts
*

*80% of current quarter's credit sales

20% of previous quarter's credit sales
3. Production budget:
20x4
4th
Quarter
S frames:
Sales (in units)
Add: Desired ending inventory
Total units needed
Less: Expected beginning inventory
Units to be produced
*

L frames:

Sales (in units)

Add: Desired ending inventory
Total units needed
Less: Expected beginning inventory
Units to be produced
*

4. Direct-material budget:
20x4
4th
Quarter
Metal strips:
S frames to be produced
Metal quantity per unit (ft.)
Needed for S frame production
L frames to be produced
Metal quantity per unit (ft.)
Needed for L frame production
Total metal needed for production;
to be purchased (ft.)
Price per foot
Cost of metal strips to be purchased
*

Glass sheets:
S frames to be produced
Glass quantity per unit (sheets)
Needed for S frame production
L frames to be produced
Glass quantity per unit (sheets)
Needed for L frame production
Total glass needed for production (sheets)
Add: Desired ending inventory
Total glass needs
Less: Expected beginning inventory
Glass to be purchased
Price per glass sheet
Cost of glass to be purchased
*

Total raw-material purchases (metal and glass)

*

5. Cash disbursements budget:

20x5
1st
Quarter
Raw-material purchases:
Cash payments for purchases during
the current quarter*
Cash payments for purchases during

the preceding quarter

Total cash pmts. for raw-material purchases
*

Direct labor:
Frames produced (S and L)
Direct-labor hours per frame
Direct-labor hours to be used
Rate per direct-labor hour
Total cash payments for direct labor
*

Manufacturing overhead:
Indirect material
Indirect labor
Other
Total cash payments for manufacturing OH
*

Cash pmts. for selling and admin. expenses

Total cash disbursements
*

*80% of current quarter's purchases

20% of previous quarter's purchases
6. Summary cash budget:
20x5
Quarter
Cash receipts
Less: Cash disbursements
Change in cash balance due to operations
Payment of dividends
Proceeds from bank loan (1/2/x5)
Purchase of equipment
Quarterly installment on loan principal
Quarterly interest payment*
Change in cash balance during the period
Cash balance, beginning of period
Cash balance, end of period
*

PHOTO ARTISTRY COMPANY

Budgeted Schedule of Cost of Goods Manufactured and Sold
For the Year Ended December 31, 20x5
Direct material:
Raw material inventory, 1/1/x5
Add: Purchase of raw material
Raw material available for use
Deduct: Raw-material inventory, 12/31/x5
Raw material used
Direct labor

Manufacturing overhead:
Indirect material
Indirect labor
Other overhead
Depreciation
Total manufacturing overhead
Budgeting over/underapplied overhead
Overhead applied to work-in-progress*
Cost of goods manufactured
Add: Finished-goods inventory, 1/1/x5
Cost of goods available for sale
Deduct: Finished-goods inventory, 1/1/x5**
Cost of Goods Sold
* The applied manufacturing overhead may be verified
independently as follows:
Total number of frames produced
Direct-labor hours per frame
Total direct-labor hours
Predetermined overhead rate per hour
Total manufacturing overhead applied

The cost of goods manufactured may be verified

independently as follows:
Frames produced
Manufacturing cost per unit
Total manufacturing cost
Grand total

S Frames

** The finished-goods inventory on 12/31/x5 may be verified

independently as follows:
S Frames
Projected inventory on 12/31/x5
Manufacturing cost per unit
Cost of ending inventory
Total cost of ending inventory (S and L)

The cost of goods sold may be verified independently as follows:

S Frames
Frames sold
Manufacturing cost per unit
Cost of goods sold
Total cost of goods sold (S and L)

PHOTO ARTISTRY COMPANY

Budgeted Income Statement
For the Year Ended December 31, 20x5
Sales revenue

Less: Cost of goods sold

Gross margin
Selling and administrative expenses
Interest expense
Net income

PHOTO ARTISTRY COMPANY

Budgeted Statement of Retained Earnings
For the Year Ended December 31, 20x5
Retained earnings, 12/31/x4
Add: Net income
Deduct: Dividends
Retained earnings, 12/31/x1

PHOTO ARTISTRY COMPANY

Budgeted Balance Sheet
December 31, 20x5
Cash
Accounts receivable
Inventory:
Raw material
Finished goods
Plant and equipment (net of accumulated depreciation)
Total assets
Accounts payable
Common stock
Retained earnings
Total liabilities and stockholders' equity

Student Name:
Class:

ANY

1st
Quarter

20x5
2nd
3rd
4th
Entire
Quarter
Quarter Quarter Year

20x5
2nd
Quarter

3rd
Quarter

4th
Quarter

Entire
Year

1st
Quarter

20x5
2nd
3rd
4th
Entire
Quarter
Quarter Quarter Year

1st
Quarter

20x5
2nd
3rd
4th
Entire
Quarter
Quarter Quarter Year

20x5
2nd
Quarter

3rd
Quarter

4th
Quarter

Entire
Year

20x5
2nd
Quarter

3rd
Quarter

4th
Quarter

Entire
Year

*
*
*
*
*

L Frames
*
*
*
*

L Frames
*
*
*
*

L Frames
*
*
*
*