McMillan Toys is a worldwide toy manufacturer who is considering expanding into new markets and developing new
Question:
McMillan Toys is a worldwide toy manufacturer who is considering expanding into new markets and developing new toys over the next year. Michael Dorsey, the CEO of McMillian Toys hired you as a cost accountant. He would like you improve the budgeting process but doesn't know how. You suggest implementing Excel spreadsheets so that when management makes last-minute changes to sales and other forecasts, all the other numbers will automatically update.
Michael Dorsey agrees with your recommendation and gave you the project to prepare the master budget for the first quarter of the upcoming year along with a budgeted income statement. He reminded you that a complete master budget has the following budgets included:Sales Budget, Production Budget, Direct Materials Purchases Budget, Direct Labor Budget, Manufacturing Overhead Budget, Selling & Administrative Expense Budget,andCost of Goods Manufactured Budget. He also requested a budgeted income statement and informed you that the income tax expense is 30%.
You have been working with various departments to gather financial data to assemble all eight budgets into a master budget using Excel so that you can connect all the budgets together.
Preparation:
- Review the data provided in the word file titled Budget Project Background, found atthis linkDownload this link. (THIS INFO IS BELOW)
- Download the Excel templates you will use to prepare the master budget found atthis linkDownload this link. (THIS INFO IS BELOW)
The Project
M5A3: Part 1 of the Budget Project:
This part of the project is due at the end of Module 5.
- Starting with the sales budget, use the data provided to determine total sales forthe entire quarter (including any additional months necessary to compute first quarter sales).
- Using data provided, completefirst four budgets onlyfor the first quarter.(Production Budget, Direct Materials Purchases Budget and Direct Labor Budget). The remaining budgets will be completed in Part 2 during Module 6.
- Use Excel formulas to perform calculations and integrate each budget so changes to one particular budget are automatically updated in the remaining budgets.
BUDGET PROJECT BACKGROUND INFORMATION WE HAVE TO USE TO COMPLETE THE BUDGETS
Budget Project Background:
McMillan Toys is a worldwide toy manufacturer who is considering expanding into new markets and developing new toys over the next year. Michael Dorsey, the CEO of McMillian Toys hired you as a cost accountant. He would like you improve the budgeting process but doesn't know how. You suggest implementing Excel spreadsheets so that when management makes last-minute changes to sales and other forecasts, all the other numbers will automatically update.
Michael Dorsey agrees with your recommendation and gave you the project to prepare the master budget for the first quarter of the upcoming year along with a budgeted income statement.He reminded you that a complete master budget has the following budgets included: Sales Budget, Production Budget, Direct Materials Purchases Budget, Direct Labor Budget, Manufacturing Overhead Budget, Selling & Administrative Expense Budget,and Cost of Goods Manufactured Budget. He also requested a budgeted income statement and informed you that the income tax expense is 30%
You have been working with various departments to gather financial data to assemble all eight budgets into a master budget using Excel so that you can connect all the budgets together.
Budget Data:
Each department provided you with the following information:
Each unit is sold for $12 per unit. Expected sales (in units) are as follows:
January......8,400 units April...............10,100 units
February....8,800 units May................11,200 units
March........9,700 units
The production manager's policy is that each month's ending finished goods inventory is 25% of the next month's budgeted sales.
The purchasing manager informed you that each unit takes 3 pounds of direct materials at a cost of $1.50 dollars per pound. The purchasing manager would like to have 20% of next quarter's budgeted production needs for ending direct materials inventory.
The labor manager determined that each unit will take 0.2 labor hour to manufacture at a cost of $7 per labor hour.
You also gathered the following variable and fixed overhead and selling and administrative costs:
Variable Overhead Costs (per unit) | Fixed Overhead Costs Per month | ||
Factory supplies: | $0.10 | Depreciation (machinery) | $1,200 |
Employee benefits | $0.30 | Factory Rent | $3,100 |
Inspection | $0.25 | Supervision | $1,800 |
Maintenance & repair | $0.20 | Maintenance & repair | $1,400 |
Utilities | $0.25 | Other overhead expenses | $900 |
Selling and administrative costs are as follows:
Variable Selling & Administrative Costs (per unit) | Fixed Selling & Administrative Costs Per Month | |||
Delivery Expenses | $0.25 | Sales Salaries | $3,100 | |
Sales Commissions | $0.30 | Depreciation (office equipment) | $1,550 | |
Accounting | $0.20 | Taxes & Insurance | $1,900 | |
Other Administrative expenses | $0.15 |
Using the Excel templates provided, prepare the required budgets to form the master budget. Also prepare a budgeted income statement.
Use Excel formulas to perform your calculations and carry forward calculations from each respective worksheet to ensure all worksheets update appropriately if changes to any individual budget figures are performed.
EXCEL TEMPLATES THAT NEED TO BE COMPLETED
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr