1A.

SALES BUDGET
April
Budgeted sales (units)
Selling price per unit
Total sales

May

$10

June

$10

Quarter

$10

1B. SCHEDULE OF CASH COLLECTION BUDGET

April
May
Accounts receivable beginning
balance
April sales
70% $.
25% $....
May sales
70% $.
25% $.
June sales
70% $.
Total cash collections

June

$10

Quarter

2. PRODUCTION BUDGET
April

May

June

July

Budgeted sales
Add desired ending inventory
Total needs
Less beginning inventory
Required production
3A. DM BUDGET
April
Required production in units
Raw materials per unit (pounds)...............
Production needs (pounds)
Add desired ending inventory (pounds)
Total needs (pounds)
Less beginning inventory (pounds)
Raw materials to be purchased (pounds)
Cost of raw materials to be purchased at
$0.40 per pound.....................................

May
5

June
5

3B. SCHEDULE OF EXPECTED CASH DISBURSEMENT FOR MATERIAL

Accounts payable beginning balance
April purchases
50% $56,000
50% $56,000
May purchases
50% $88,600

Quarter
5

50% $88,600
June purchases
50% $56,800
Total cash disbursements for
materials
4. DL BUDGET
April
Units to be produced
Direct labor-hours per unit
Total hours of direct labor time
needed
Direct labor cost per hour
Total direct labor cost

May

June

Quarter

0.05

0.05

0.05

0.05

$10

$10

$10

$10

5. MOH BUDGET
April
Budgeted direct labor-hours
Variable manufacturing overhead rate
Variable manufacturing overhead
Fixed manufacturing overhead
Total manufacturing overhead
Less depreciation
Cash disbursements for manufacturing
overhead

May

$20

June

$20

Quarter

$20

$20

6. ENDING FINISHED GOODS INVENTORY BUDGET

Computation of absorption unit product cost:
Direct materials............................
Direct labor..................................
Manufacturing overhead..............
Unit product cost.........................

Quantity
5 pounds
0.05 hours
0.05 hours

Cost
$0.40 per pound
$10.00 per hour
$50.00 per hour*

Predetermined = Total manufacturing overhead

overhead rate
Total direct labor hours
=

$252,500
= $50.00 per hour
5,050 hours

Budgeted ending finished goods inventory (month of June):

Ending finished goods inventory in units
Unit product cost
Ending finished goods inventory in dollars
7. SELLING AND ADMINISTRATIVE EXPENSE BUDGET
April
May

$5

June

Quarter

Total
$2.00
0.50
2.50
$5.00

Budgeted sales in units

Variable selling and administrative
expense
per unit
Variable selling and administrative
expense
Fixed selling and administrative
expense
Total selling and administrative
expense
Less depreciation
Cash disbursements for selling and
administrative expenses

20,000

50,000

30,000

100,000

$0.50

$0.50

$0.50

$0.50

8. CASH BUDGET
RoyalCompany
CashBudget
FortheQuarterEndingJune30
April
$ 40,000

May
$ 30,000

June
$ 30,000

Quarter
$ 40,000

170,000
210,000

400,000
430,000

335,000
365,000

905,000
945,000

40,000
13,000

72,300
23,000

72,700
14,500

185,000
50,500

56,000

76,000

59,000

191,000

Equipment purchases.......................
Dividends
Total disbursements.............................

70,000
0
51,000
230,000

85,000
143,700
0
400,000

75,000
48,800
0
270,000

230,000
192,500
51,000
900,000

Excess (deficiency) of cash available

over disbursements..........................

(20,000)

30,000

95,000

45,000

Financing:
Borrowings......................................
Repayments.....................................
Interest*...........................................
Total financing....................................

50,000
0
0
50,000

0
0
0
0

0
(50,000)
( 2,000)
(52,000)

50,000
(50,000)
( 2,000)
( 2,000)

Cash balance, ending...........................

$ 30,000
* $50,000 16% (3 months/12 months) = $2,000.

$ 30,000

Cash balance, beginning......................

Add receipts:
Cash collections
Total cash available.............................
Less disbursements:
Direct materials
Direct labor
Manufacturing overhead
Selling & administrative

$ 43,000

$ 43,000

9. BUDGETED INCOME STATEMENT

Royal Company
Budgeted Income Statement
For the Quarter Ending June 30
Net sales
Less cost of goods sold
Gross margin
Less selling & administrative expenses
Net operating income
Less interest expense
Net income

$950,000
500,000
450,000
260,000
190,000
2,000
$188,000

Computation of net sales:

Sales....................................................................
Less uncollectible amounts (5%).......................
Net sales.............................................................

$1,000,000
50,000
$ 950,000

Computation of cost of goods sold:

Budgeted sales (units)........................................
Unit product cost................................................
Cost of goods sold..............................................

100,000
$5
$500,000