Data for Budget Assignment: Master Budget Case for

Version v(A.0)
fiscal year end
31-Dec

ToyWorks Ltd.

For the year ended December 31, 2008

estimated sales:
2007 (in units)
2008 (in units)
2009 (in units)
price per unit
$ 10.00
cost per unit previous year
cost per unit previous year
Sales pattern
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec

475,000
500,000
500,000

$
$

7.30 Absorption Costing

6.0520 Variable Costing

1%
5%
1%
10%
1%
1%
2%
2%
2%
15%
20%
40%
100%

desired ending inventory (finished goods)

25% of next month's sales

rental cost--Admn & Selling cost

Sep
Oct
Nov
Dec

$
$
$
$

20,000
20,000
20,000
20,000

Raw material: SSA

required for each unit of product
cost per kilogram
desired ending inventory (raw materials)
Accounts payable payment pattern:

Beginning Accounts Payable:

November Sales
December sales

5 kg
0.45
40%
20%
45%
35%

70,000
150,000

next month's production needs

in the month of purchase
in the month following the purchase
in the 2nd month following the purchase

Nov
70,000
37,500
107,500
17,500
90,000

Dec
150,000
1,250
151,250
37,500
113,750

Jan
5,000
6,250
11,250
1,250
10,000

SAA per unit

Total raw material needed
desired ending inventory
total required
Less: beginning inventory
RM to be purchased
cost per unit
$
Cost of purchases
$

5
450,000
227,500
677,500
180,000
497,500
0.45
223,875

5
50,000

$
$

5
568,750
20,000
588,750
227,500
361,250
0.45
162,563

Nov
Dec
Jan
Feb

44,775
100,744
78,356

$
$
$
$

32,513
73,153
56,897
208,406

Sales in units
Desired ending inventory
Total required
Less: beginning inventory
Production required

Time in production
rate of pay

paid
paid
payable
payable

18 minutes or
9.00 per hour

per unit variable manufacturing:

Utilities
Indirect materials
Plant maintenance
Environmental fee
Other

fixed manufacturing:
training & devel
property/bus tax
supervisor's salary
amortization
insurance
other
Less: one time pay

cash disbursements
Selling and Admin

$
$
$

$
$
$
$
$
$

Feb
25,000

0.30 hour

0.60
0.20
0.30
0.14
0.06
1.30

$
$
$
$
$
$
$
$
$

43,200
39,000
149,400
178,800
96,000
117,600
624,000
96,000 insurance
39,000 Property tax

$
$

178,800
349,200 or

Prepaid (beg)
Purchased
Used
Ending Bal

$
$
$
$
$

8,000
3,200
3,300
14,900
29,100

Insurance
64,000
96,000
96,000
64,000

Tax
19,200
39,600
39,000
19,800

per month
per month from Jan to Jun
per month from Jul to Dec
per month
per month

Lowest level of sales

Highest level of sales
Per unit
fixed

375,000 total operating expenses

750,000 total operating expenses
$
$

Sales collection pattern

current month
following month
2 months after
uncollectible

Nov
Dec
Jan
Feb

Total sales
collected
collected
receivable
receivable
total receivable

Nov
$
$
$
$

$
$

Fixed asset purchase

Nov
payment
Dec
payment

Minimum bank balance

rate of interest
borrowing blocks

Opening balance sheet

Cash
Accounts receivable
Inventory-raw materials

44,580 per month

55.0%
35.0%
9.5%
0.5%

Monthly tax installments

outstanding from previous year
Income tax rate

Payment of dividends:
Mar
Jun
Sep
Dec

0.65
534,960 or

$
778,710
$ 1,022,460

$
$
$
$
$

$
$

700,000
385,000
245,000
66,500

Dec
$
1,500,000
$
$
$
$

825,000
525,000
142,500
734,000

5,000
21,500 to be paid in
25%
204,300
40% $
60% $

April

81,720
122,580

50,000
50,000
50,000
50,000
200,000

20,000
6% or
1,000

0.50% per month

83,365
734,000
9,000

Inventory-finished goods
Prepaid insurance
Prepaid tax
Capital assets (net)
total
Accounts payable
Income tax payable
Capital stock
Retained earnings

9,125
64,000
19,200
724,000
1,642,690

$
$
$
$
$

208,406
21,500
1,000,000
412,784
1,642,690

d December 31, 2008

ToyWorks Ltd.
Sales Budget
For the year ended December 31, 2008
Jan
1%
5,000

Percent of Annual Sales

Expected sales in units

Feb
5%
25,000

Mar
1%
5,000

Apr
10%
50,000

May
1%
5,000

Jun
1%
5,000

Jul
2%
10,000

Aug
2%
10,000

Sep
2%
10,000

Oct
15%
75,000

Nov
20%
100,000
$

Dec
40%
200,000

Year
100%
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

Aug
55,000
35,000

Sep
55,000
35,000

Oct
412,500
35,000

Nov
550,000
262,500

Dec
1,100,000
350,000

94,750

99,500

457,000

822,000

1,521,250

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

Current month sales 55%

Prior month's sales 35%

Jan
27,500
525,000

619,000

Two months prior sales 9.5%

Total cash collections

66,500

Feb
137,500
17,500

Mar
27,500
87,500

119,750

142,500
$

297,500

Apr
275,000
17,500

316,250

4,750

May
27,500
175,000

207,250

23,750

Jun
27,500
17,500

92,500

4,750

Jul
55,000
17,500

77,250

47,500

4,750

4,750

9,500

9,500

9,500

Year
2,750,000
1,575,000

71,250

399,000
$

4,724,000

Nov
Dec

95000
700000

190000
985000

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

AR from November
AR from December
Jan
Feb
Mar
Apr
May
June
July
August
Sept
Oct
Nov
Dec

Jan
66,500
525,000
27,500

619,000

Feb

Mar

142,500
17,500
137,500

297,500

Apr

4,750
87,500
27,500

###
119,750

May

23,750
17,500
275,000

316,250

Jun

4,750
175,000
27,500

207,250

Jul

47,500
17,500
27,500

92,500

Aug

4,750
17,500
55,000

77,250

Sep

4,750
35,000
55,000

###
94,750

Oct

9,500
35,000
55,000

99,500

Nov

9,500
35,000
412,500
457,000

Dec

9,500
262,500
550,000
822,000

71,250
350,000

Year
66,500
667,500
49,750
248,750
49,750
497,500
49,750
49,750
99,500
99,500
99,500
746,250
900,000

1,100,000

1,100,000

1,521,250

4,724,000

ToyWorks Ltd.
Production Budget
For the year ended December 31, 2008
Jan
Budgeted sales in units

Feb

5,000

Add desired ending inventory of

finished goods
Total needs
Less beginning inventory of finished
goods
Required production

Mar

25,000

5,000

6,250

1,250

11,250

26,250

Apr

May

Jun

50,000

5,000

5,000

12,500

1,250

1,250

2,500

17,500

51,250

6,250

7,500

Jul

Aug

10,000

Sep

Oct
75,000

Nov

Dec

Year

100,000

200,000

500,000

10,000

10,000

2,500

2,500

18,750

25,000

50,000

1,250

1,250

12,500

12,500

28,750

100,000

150,000

201,250

501,250

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

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

Nov

Dec

Year

125,000

151,250

ToyWorks Ltd.
Manufacturing Overhead Budget
For the year ended December 31, 2008
Jan
Production in Units

Feb

10,000

Mar

20,000

Apr

16,250

May

38,750

Jun

5,000

Jul

6,250

Aug

10,000

Sep

10,000

Oct

26,250

81,250

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

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

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

Insurance
Other
Total fixed manufacturing OH
Total manufacturing OH
Less prepaid property tax
Less prepaid insurance
Less amortization
Cash disbursements for
manufacturing OH

43,200

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

51,950
64,950
3,200
8,000

51,950
77,950
3,200
8,000

51,950
73,075
3,200
8,000

51,950
102,325
3,200
8,000

51,950
58,450
3,200
8,000

51,950
60,075
3,200
8,000

52,050
65,050
3,300
8,000

52,050
65,050
3,300
8,000

52,050
86,175
3,300
8,000

52,050
157,675
3,300
8,000

52,050
214,550
3,300
8,000

52,050
248,675
3,300
8,000

624,000
1,274,000
39,000
96,000

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

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
Units to be produced

Nov

Dec

10,000

20,000

16,250

38,750

5,000

6,250

10,000

10,000

26,250

81,250

125,000

151,250

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

Raw Materials needed per unit

Production needs

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Year
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

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

0.45

$ 1,125,000

ToyWorks Ltd.
Schedule of Expected Cash Disbursement for Purchases of Raw Material SAA
For the year ended December 31, 2008
Jan
Current month's purchases 20%

Prior month's purchases 45%

Two month's prior purchases 35%
Total cash disbursements for
purchases of raw material

Feb

6,300

Mar

8,325

Apr

11,363

May

11,363

Jun

2,475

Jul

3,488

Aug

4,500

Sep

7,425

Oct

21,713

Nov

44,438

Dec

60,975

42,638

Year
$

225,000

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

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

257,597

$ 1,056,150

157,809

79,397

41,119

51,497

47,925

28,941

16,678

23,653

46,294

106,284

198,956

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

A/P from December

73,153

56,897

6,300

14,175

11,025

8,325

18,731

14,569

11,363

25,566

19,884

11,363

25,566

19,884

2,475

5,569

4,331

3,488

7,847

6,103

4,500

10,125

7,875

7,425

16,706

12,994

21,713

48,853

37,997

44,438

99,984

77,766

222,188

60,975

137,194

198,169

Jan
Feb

78,356

Mar

130,050

Apr

31,500

May

41,625

Jun

56,813

Jul

56,813

Aug

12,375

Sep

17,438

Oct

22,500

Nov
Dec

157,809
208,406

79,397

41,119

51,497

47,925

28,941

16,678

###
23,653

46,294

106,284

37,125

108,563

42,638

42,638

198,956

257,597

1,056,150

106,706

95,934
74,616
277,256

ToyWorks Ltd.
Direct Labour Budget
For the year ended December 31, 2008

Jan
Units to be Produced
Direct Labour time per unit (hours)
Total hours of direct labour time
needed

Nov

Dec

10,000

Feb
20,000

Mar
16,250

Apr
38,750

May
5,000

Jun
6,250

Jul
10,000

Aug
10,000

Sep
26,250

Oct
81,250

125,000

151,250

Year
500,000

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

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
Budgeted sales in units

Feb

5,000

Mar

25,000

Apr

5,000

May

50,000

Jun

5,000

Jul

5,000

Aug

10,000

Sep

10,000

Oct

10,000

75,000

Nov

Dec

100,000

200,000

Year
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
Bad Debts
Warehouse rental
Total budgeted 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

250

1,250

250

2,500

250

250

500

500

500

3,750

5,000

10,000

25,000

20,000

20,000

20,000

20,000

80,000

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

939,960

Less: non-cash items

Bad debt expense

Variable rate per unit:

High
Low
Change

250

1,250

250

2,500

250

250

500

500

500

3,750

5,000

10,000

47,830

60,830

47,830

77,080

47,830

47,830

51,080

51,080

71,080

113,330

129,580

194,580

Total Costs

Units

$ 1,022,460

750,000

778,710

375,000

243,750

375,000

Variable rate per unit

0.6500

Fixed expenses per year

534,960

25,000

ToyWorks Ltd.
Ending Finished Goods Inventory Budget (Absorption Costing)
For the year ended December 31, 2008
Item
Production cost per unit:
Direct materials:
Direct Labour
Manufacturing overhead

Quantity

Cost/unit

Total

5.00
0.30

kg.
hr

0.45
9.00

2.25
2.70

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
Plus cost of goods manufactured

9,125
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
Production cost per unit:
Direct materials:
Direct Labour
Manufacturing overhead

Quantity

Cost/unit

Total

5.00
0.30

kg.
hr

0.45
9.00

2.25
2.70

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
Plus cost of goods manufactured
Less: ending inventory
Budgeted cost of goods sold in dollars:

7,565
3,125,000
7,813
3,124,753

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

Cash balance, beginning

Add receipts:
Collections from customers
Total cash available before financing
Less disbursements:
Direct materials
Direct labour
Manufacturing overhead
Selling and administrative expenses
Tax remittance
Tax payable
Prepaid insurance
Prepaid property and business tax
Capital asset purchases

Jan
83,365

Excess (deficiency) of cash available over

disbursements

Feb
425,876

Mar
472,299

Apr
$ 357,250

May
337,573

Jun
398,218

Jul
$ 268,498

Aug
207,139

Total financing
Cash balance, ending

Running total

Oct
20,758

Nov
20,868

Dec
20,732

Year
83,365

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

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

157,809
27,000
38,850
47,830
5,000
-

79,397
54,000
51,850
60,830
5,000
-

41,119
43,875
46,975
47,830
5,000
-

51,497
104,625
76,225
77,080
5,000
21,500
###

47,925
13,500
32,350
47,830
5,000
-

16,678
27,000
38,850
51,080
5,000
###
###

23,653
27,000
38,850
51,080
5,000
-

46,294
70,875
59,975
71,080
5,000
96,000

106,284
219,375
131,475
113,330
5,000
-

198,956
337,500
188,350
129,580
5,000
-

257,597
408,375
222,475
194,580
5,000
###
###

###

28,941
16,875
33,975
47,830
5,000
39,600
-

###

81,720

122,580

1,056,150
1,350,000
960,200
939,960
60,000
21,500
96,000
39,600
204,300

50,000

50,000

50,000

50,000

200,000

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

425,876

472,299

357,250

337,573

398,218

268,498

207,139

156,306 -

143,418 -

98,238

281,375

Financing:
Borrowing (at the beginning of the month)
Repayment (at the end of the month)
Interest expense (paid monthly)

Sep
156,306

619,000

Dividend payment
Total disbursements

165,000

97,707 -

120,000

120,345

121,000

406,000
259,000

259,000
$ 425,876

825

1,425

164,175

118,575

357,250

$ 337,573

268,498

$ 207,139

472,299

398,218

156,306

20,758

165,000

20,868

285,000

2,030
118,970 $

20,732

406,000

2,030

6,310

261,030

140,690

20,345

147,000

20,345

ToyWorks Ltd.
Budgeted Income Statement
For the year ended December 31, 2008
Sales
Cost of goods sold
Gross Margin
Less:
Selling & administrative expenses
Net operating income
Less: Interest expense
Net income before taxes
Income taxes
Net Income

5,000,000
3,748,753
1,251,248
964,960
286,288
6,310
279,978
69,994
209,983

ToyWorks Ltd.
Budgeted Statement of Retained Earnings
For the year ended December 31, 2008
Retained earnings beginning of year
Plus: Net Income
Sub-total
Less: Dividends declared
Retained earnings end of year

412,784
209,983
622,767
200,000
422,767

ToyWorks Ltd.
Budgeted Balance Sheet
December 31, 2008
Assets
Cash
Accounts Receivable
Inventory: Raw Materials
Inventory: Finished goods
Prepaid Insurance
Prepaid Property and Business Tax
Capital assets (net)
Total Assets
Liabilities and Shareholders' Equity
Liabilities
Bank Loan Payable
Accounts payable
Income taxes payable
Total Liabilities
Shareholders' Equity
Capital stock
Retained earnings
Total Shareholders' equity
Total Liabilities & Shareholders' Equity

20,345
985,000
9,000
9,373
64,000
19,800
749,500
1,857,018

147,000
277,256
9,994
434,251
1,000,000
422,767
1,422,767
1,857,018 $

ToyWorks Ltd.
Budgeted Income Statement
For the year ended December 31, 2008
Sales
Less: Variable costs
Variable cost of goods sold
Variable selling & admin expenses
Contribution Margin
Less: Fixed costs
Manufacturing overhead
Selling & administrative expenses
Net operating income
Less: Interest expense
Net income before taxes
Income taxes
Net Income

$
3,124,753
325,000

5,000,000

3,449,753
1,550,248

624,000
639,960

1,263,960
286,288
6,310
279,978
69,994
209,983