MANAGERIAL ACCOUNTING - Fourth Edition Solutions Manual

WASATCH MANUFACTURING
Master Budget

Sales Budget
December January February March April
Unit Sales 8445 8900 9900 9200 9500
Price Per Unit $ 9 $ 9 $ 9 $ 9 $ 9
Sales Revenue $ 76,000 $ 80,100 $ 89,100 $ 82,800 $ 85,500

Cash Collections Budget

January February March Quarter
Cash Sales $ 20,025 $ 22,275 $ 20,700 $ 63,000
Credit Sales $ 60,075 $ 66,825 $ 62,100 $ 189,000

Total Cash Collections $ 80,100 $ 89,100 $ 82,800 $ 252,000

Production Budget
January February March Quarter
Unit Sales 8900 9900 9200 28000
Plus: Desired Ending Inventory 1485 1380 1425 1425
Total Needed 10385 11280 10625 29425
Less: Beginning Inventory 1335 1485 1380 1335

Units to Produce 9050 9795 9245 28090

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Direct Materials Budget

January February March Quarter
Units to be Produced 9050 9795 9245 28090
Multiply by: Quantity of DM needed per
unit (lbs.) 2 2 2 2
Quantity of DM for production (lbs) 18100 19590 18490 56180
Plus: Dsired Ending Inv of DM 1959 1849 1873 1873
Total Quantity of DM needed (lbs) 20059 21439 20363 58053
Less: Beginning Inventory of DM 1810 1959 1849 1810
Quantity of DM to Purchase 18249 19480 18514 56243
Multiply by: Cost per pound $1.50 $1.50 $1.50 $1.50

Total Cost of DM Purchases $27,374 $29,220 $27,771 $84,365

Cash Payments for Direct Material Purchases Budget

January February March Quarter
December Purchases (from A/P) $18,788 $0 $0 $18,788
January Purchases $8,212 $19,161 $0 $27,374
February Purchases $0 $8,766 $20,454 $29,220
March Purchases $0 $0 $8,331 $8,331

Total Cash Payments $27,000 $27,927 $28,785 $83,713

Cash Payments for Direct Labor Budget

January February March Quarter
Units Produced 9050 9795 9245 28090
Multiply by: Hours per Unit 0.03 0.03 0.03 0.03
Direct Labor Hours 271.5 293.85 277.35 842.7
Multiply by: DL Rate per Hour $13 $13 $13 $13
Direct Labor Cost $3,530 $3,820 $3,606 $10,955

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Cash Payments for Manufacturing Overhead Budget

January February March Quarter
Rent (fixed) $ 6,500 $ 6,500 $ 6,500 $ 19,500
Other MOH (fixed) $ 2,100 $ 2,100 $ 2,100 $ 6,300
$ 1.40 $ 1.40 $ 1.40 $ 1.40
Variable Manufacuring Overhead Costs $ 12,670 $ 13,713 $ 12,943 $ 39,326

Cash Pmts for MOH $ 21,271 $ 22,314 $ 21,544 $ 65,127

Cash Payments for Operating Expenses Budget

January February March Quarter
Variable Operating Expenses $ 10,680 $ 11,880 $ 11,040 $ 33,600
Fixed Operating Expenses $ 1,400 $ 1,400 $ 1,400 $ 4,200

Cash Pmts for Operating Exp $ 12,080 $ 13,280 $ 12,440 $ 37,800

Combined Cash Budget

January February March Quarter
Cash Balance, Beginning $ 6,000 $ 7,219 $ 12,177 $ 6,000
Plus: Cash Collections $ 80,100 $ 89,100 $ 82,800 $ 252,000
Total Cash Available $ 86,100 $ 96,319 $ 94,977 $ 258,000
Less Cash Payments:
DM Purchases $27,000 $27,927 $28,785 $83,713
Direct Labor $3,530 $3,820 $3,606 $10,955
MOH Costs $ 21,271 $ 22,314 $ 21,544 $ 65,127
Operating Expenses $ 12,080 $ 13,280 $ 12,440 $ 37,800
Tax Payment $ 10,800 $ 10,800
Equipment Purchases $ 15,000 $ 6,000 $ 4,000 $ 25,000
Total Cash Payments $78,881 $84,142 $70,375 $233,395
Ending Cash before Financing $ 7,219 $ 12,177 $ 24,602 $ 24,605
Financing:

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MANAGERIAL ACCOUNTING - Fourth Edition Solutions Manual

Borrowings
Repayments
Interest Payments
Total Financing

Cash Balance, Ending $ 7,219 $ 12,177 $ 24,602 $ 24,605

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Budgeted Manufacturing Cost per Unit

Direct Materials Cost per Unit $3.02
Direct Labor Cost per Unit $0.39
Variable Manufacturing Overhead per Unit $ 1.40
Fixed Manufacturing Overhead per Unit $ 0.60

Cost of Manufacturing Each Unit $5.41

Budgeted Income Statement

Sales Revenue $ 252,000
Less: Cost of Goods Sold $151,611
Gross Profit $ 100,389
Less: Operating Expenses $ 37,800
Less: Depreciation Expense $ 5,200
Operating Income $ 57,389
Less: Interest Expense
Less: Income Tax Expense $ 10,800

Net Income $ 46,589

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May
8600
$ 9
$ 77,400

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