You are on page 1of 41

KALOGRIDIS CORP. manufactures industrial dye.

the company is preparing 2014 master budget with the following data:

task: prepare master budget for each month of the first quarter of 2014 and pro forma FS as of the en
a. PROJECTED DEC 31, 2013 BALANCE SHEET:
ASSETS
CASH
ACCOUNTS RECEIVABLE

5,080.00
26,500.00

RAW MATERIAL INVENTORY


FINISHED GOODS INVENTORY
PREPAID INSURANCE
BUILDING

800.00
2,104.00
1,200.00
300,000.00

ACCUM. DEPRECIATION

-20,000.00

TOTAL ASSETS

280,000.00
315,684.00

b. Accounts Receivable Balance at 12/31/13 represents the remaining balances of November and Dec
Sales were $70,000 and $ 65,000, respetively, in those two months.
c. Estimated sales in gallons of dye for January through May 2014 are as follows:
January
8,000.00
February
10,000.00
March
15,000.00
April
12,000.00
May
11,000.00
each gallon of dye sells for

12.00

d. The collection pattern for accounts receivable is as follows:


in the month of sale
70%
first month after sale
20%
second month after sale
10%
the company expects no bad debts and gives no cash discounts

e. Each gallon of dye has the following standard quantities and costs for direct material and direct lab
1.2 gallons of direct material (some
evaporation occurs during processing) x
0.80 per gallon
0.96
0.5 hour of direct labor x $ 6 per hour
3.00
f. Variable overhead (VOH) is applied to the product on a a mchine-hour basis.
Processing on gallon of dye takes five hours of machine time

The variable overhead rate is 0.06 per machine hour;


VOH consists entirely of utility costs.
Total annual fixed overhaed is 120,000; it is applied at $1 per gallon based on an expected annual ca
Fixed overhead per year is composed of the following costs:
Salaries
78,000.00
Utilities
12,000.00
Insurance -factory
2,400.00
Depreciation - factory
27,600.00
Fixed overhad is incurred evenly throughout the year.

g. There is no beginning Work in Process Inventory. All WIP is completed in the period in which it is sta
Raw Material Inventory at the beginning of the year consists of 1,000 gallons of direct material at a s
There are 400 gallons of dye in Finished Goods Inventory at the beginning of the year carried at a sta
Direct material
0.96
direc labor
3.00
VOH
0.30
FOH

1.00
5.26
h. Accounts Payable relates solely to raw material and is paid
in the month of purchase
60%
in the month after purch
40%
no discounts are received for prompt payment
i. Dividend will be pad in January 2014
j. a new piece of equipment will be purchased on March 1, 2014
cost
9,000.00
payment in march
80%
payment in april
20%
useful life
3 yrs
no salvage value
will be place into service on march 1
k. Notes payable interest rate

12% interest is paid at the end of each month


prinicipal of the note is repaid as cash is available

l. Management set minimum cash balance of


5,000.00
investments and borrowings are made in even $100 amounts
Interest on any borrowings is expected to be 12% per year
investments will earn 4% per year
m. Ending Finished Goods Inventory should include 5% of the next month's sales

This situation will not be true at the beginning of 2014 due to miscalculation in sales for December
the ending inventory of Raw materials also should be 5% of next month's needs
n. Selling and administrative costs per month are as follows:
salaries
25,000.00
rent
7,000.00
utilities
o. the company's tax rate

800.00
32,800.00
35%

llowing data:

arter of 2014 and pro forma FS as of the end of the first quarter for 2014.

LIABILITIES & EQUITY


NOTES PAYABLE
ACCOUNTS PAYABLE

25,000.00
2,148.00

DIVIDENDS PAYABLE
TOTAL LIABILITIES
COMMON STOCK
PAID-IN-CAPITAL

100,000.00
50,000.00

RETAINED EARNINGS

128,536.00

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY

e remaining balances of November and December credit sales.


o months.

y 2014 are as follows:

sh discounts
and costs for direct material and direct labor:

mchine-hour basis.

10,000.00
37,148.00

278,536.00
315,684.00
nov sale
dec sale

per gallon based on an expected annual capacity of 120,000 gallons

is completed in the period in which it is started.


sts of 1,000 gallons of direct material at a standard cost of $0.80 per gallon.
t the beginning of the year carried at a standard cost of $5.26 per gallon:

is paid at the end of each month


al of the note is repaid as cash is available to do so

the next month's sales

250.00
3,300.00

21,700.00

4,700.00

15.67

to miscalculation in sales for December


f next month's needs

70,000.00
65,000.00

7,000.00
13,000.00

6,500.00

217.00

Other Payments, Collections, and Cost Adjustments:


dividend
equipment
int. expense
int. received
selling and admin. Cost

JANUARY
10,000
250
32,800

FEBRUARY
###
217
###
32,800

MARCH
7,200
16
32,800

Accounts Receivable collections (70%, 20%, 10%):


Nov
Dec
Jan
Feb.
Mar
Total

JANUARY
7,000
13,000
67,200
87,200
A/R balance , end:

FEBRUARY
6,500
19,200
84,000
###
109,700

MARCH
9,600
24,000
126,000
159,600

66,000.00

Payment of Accounts Payable (60%, 40%):


Dec
Jan
Feb.
Mar
Total

JANUARY
2,148
4,481
6,629
A/P balance , end:

FEBRUARY
2,987
6,036
###
9,024
5,647

MARCH
4,024
8,470
12,494

ustments:

TOTAL-1st Quarter
10,000 cash payment
7,200 80% cash pmt
467
16
98,400

ctions (70%, 20%, 10%):


TOTAL
7,000
19,500
96,000
108,000
126,000
356,500

Payable (60%, 40%):


TOTAL
2,148
7,468
10,061
8,470
28,147

Kalogridis Corp
Cash Budget
For the First Quarter of 2014
Beginning cash balance
Add: Cash collection
Cash available

JANUARY
5,080
87,200
92,280

FEBRUARY
5,071
109,700
114,771

Cash Disbursements:
Purchases
DL
VOH
FOH
Selling & Admin.
Equipment
Total

6,629
24,300
2,430
7,500
32,800
73,659

9,024
30,750
3,075
7,500
32,800
###
83,149

Cash excess(deficiency)
Min. desired cash balance
Cash available

18,621
5,000
13,621

31,623
5,000
26,623

Financing:
borrowing (repayment)
issue (reacquire) C/S
sell(acquire)plan assets
receive(pay) dividends
receive(pay) interest
investment
total
ending balance

3,300 -

21,700

10,000
250 - 13,550 5,071

217
4,700
26,617
5,006

2014
MARCH
5,006
159,600
164,606

12,494
44,550
4,455
7,500
32,800
7,200
108,999

5,080
356,500
361,580
28,147
99,600
9,960
22,500
98,400
7,200
265,807

55,606
5,000
50,606

95,773
5,000
90,773

TOTAL

16 50,600 50,584 5,022

25,000
10,000
451
55,300
90,751
5,022

BUDGET
PREPARED BY
SALES BUDGET
Sales/Marketing Department
PRODUCTION BUDGET
PURCHASE BUDGET
Purchasing Dept
DIRECT LABOR BUDGET
VOH BUDGET
FOH BUDGET
CASH BUDGET
COST OF GOODS MANUFACTURED
Budgeted Income Statement
Budgeted Balance Sheet

OTHERS
DATA FROM PROBLEM #61

SOLUTION STRATEGIES
units of sales x SP per unit = dollar sales
unit sales + unit desired ending inventory - unit in beginning inventory = units to be produced

OTHER NOTES
demand driven, prepared in both units and dollars
for manufacturing only, prepared after sales budget; sales info is combined with beg and end FG inven
for direct and indirect materials

info is combined with beg and end FG inventory

Sales Budget for the Three Months and Quarter Ending March 31, 2014
JANUARY
FEBRUARY
MARCH
Sales in units
8,000.00
10,000.00
15,000.00
Selling price per unit
12.00
12.00
12.00
Sales in dollars

96,000.00

120,000.00

180,000.00

TOTAL-1st Quarter
33,000.00
12.00

APRIL
12,000.00
12.00

396,000.00

144,000.00

April computation necessary for


subsequent computation

Production Budget for the Three Months and Quarter Ending March 31, 2014
JANUARY
FEBRUARY
Sales in units (from sales budget)
8,000.00
10,000.00
Add: Desired ending inventory
500.00
750.00
Total neeeded
8,500.00
10,750.00
Less: Beginning inventory
400.00
500.00
Units to be produced
8,100.00
10,250.00

MARCH
15,000.00
600.00
15,600.00
750.00
14,850.00

Queen-A:
g
so if 400 ending inventory last decem , which will be the
for january, then 400/8000 is 5% of sales , thus for feb 5%
so on

TOTAL-1st Quarter
33,000.00
600.00
33,600.00
400.00
33,200.00

ecem , which will be the beginning inventory


of sales , thus for feb 5% of 10000 is 500,

APRIL
12,000.00
550.00 Ending Finished Goods Inventory should include 5% of the next month's
12,550.00
600.00
11,950.00

e 5% of the next month's sales

Purchases Budget for the Three Months and Quarter Ending March 31, 2014
JANUARY
FEBRUARY
Units to be produced
8,100
10,250
Multiply: Gallon needed per unit
1.20
###
Total gallons needed
9,720
12,300
Add: Desired Ending inventory
615
891
Less: Beginning Inventory
1,000
615
Total gallons to purchase
9,335
12,576
Multiply: Price per gallon
0.80
###
Total cost of purchases

7,468

10,061

MARCH
14,850
1.20
17,820
717
891
17,646
0.80
14,117

TOTAL-1st Quarter
33,200
1.20
39,840
717
1,000
39,557
0.80
31,646

APRIL
11,950
1
14,340

the ending inventory of Raw materials also should be 5% of n

also should be 5% of next month's needs

Direct Labor Budget for the Three Months and Quarter Ending March 31, 2014
JANUARY
FEBRUARY
Units to be produced
8,100.00
10,250.00
Multiply: direct labor hour per unit
0.50
###
Total Direct Labor hours
4,050.00
5,125.00
Multiply: direct labor rate
6.00
###
Total Direct Labor cost

24,300.00

30,750.00

31, 2014
MARCH
14,850.00
0.50
7,425.00
6.00
44,550.00

TOTAL-1st Quarter
33,200.00
0.50 Standard hours allowed
16,600.00 Total hours allowed
6.00 Per hour DL cost
99,600.00

Variable Overhead Budget for the Three Months and Quarter Ending March 31, 2014
JANUARY
FEBRUARY
MARCH
Units to be produced
8,100.00
10,250.00
14,850.00
Multiply: machine hour per unit
5
###
5
Total machine hours
40,500.00
51,250.00
74,250.00
Multiply: variable overhead rate
0.06
###
0.06
Total VOH cost

2,430.00

3,075.00

4,455.00

TOTAL-1st Quarter
33,200.00
5
166,000.00
0.06
9,960.00

Fixed Overhead Budget for the Three Months and Quarter Ending March 31, 2014
JANUARY
FEBRUARY
Salaries
6,500.00
6,500.00
Utilties
1,000.00
1,000.00
Insurance
200.00
200.00
Depreciation
2,300.00
2,300.00
Total FOH cost
cash disbursements exc. Depr. And ins.

10,000.00

10,000.00

7,500.00

7,500.00

31, 2014
MARCH
6,500.00
1,000.00
200.00
2,550.00

TOTAL-1st Quarter
19,500.00
3,000.00
600.00
7,150.00

10,250.00

30,250.00

7,500.00

Queen-A:
increase in depreciation
expense due to newly
purchased equipment and
right away put in use in march
1
9,000/3= 3,000 annual
3,000/12= 250 monthly

Kalogridis Corp
Budgeted Schedule of Cost of Goods Manufactured
For the First Quarter of 2014
WIP, beginning
Raw material used:
Beginning
PurchaseS
Available for use
Ending inventory
Cost of raw material used
Direct labor
VOH
FOH
Total mfg. costs in process
WIP, ending
Cost of goods manufactured

COST OF GOODS MANUFACTURED

800
31,646
32,446
574
31,872
99,600
9,960
30,250

Manufactured
014
-

171,682
171,682
171,682

Kalogridis Corp
Budgeted Income Statement
For the First Quarter of 2014
Sales
COGS:

396,000
FG inventory, beginning
Add: CGM
CGAS

Less: FG inventory, beginning


Gross profit
Less:Selling & Admin exp
Operating income
Less: Other income and expenses:
int. exp
int. income
Income before tax
income tax
NI

2,104
171,682
173,786
3,156

170,630
225,370
98,400
126,970

467
16

451
126,519
44,282
82,237

ent
014

Kalogridis Corp
Budgeted Balance Sheet
March 31,2014
ASSETS
CASH
ACCOUNTS RECEIVABLE
RAW MATERIAL INVENTORY
FINISHED GOODS INVENTORY
PREPAID INSURANCE
INVESTMENT
BLDG. & MACHINERY
ACCUM. DEPRECIATION
TOTAL ASSETS

5,022
66,000
574
3,156
600
55,300
-

309,000
27,150

281,850
412,501

LIABILITIES & EQUITY


NOTES PAYABLE - EQUIPMENT
ACCOUNTS PAYABLE
INCOME TAX PAYABLE
TOTAL LIABILITIES
COMMON STOCK
PAID-IN-CAPITAL
RETAINED EARNINGS
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY

100,000
50,000
210,773

1,800
5,647
44,282
51,729

360,773
412,502

You might also like