Anchor Manufacturing has forecasted sales of 5,000 units of its product at $75 each for the next
Question:
Three grams of materials are required per unit of product manufactured. Each unit also requires two hours of direct labour time. Materials cost $0.50 per gram, and labour is paid $15 per hour. Forecasted overhead is $20,000 plus $2 per unit manufactured. Sales commissions are paid at the rate of $1 per unit, and administrative costs are estimated to be $15,000 for the month.
The firms customers usually pay 25% of their bill in the month of the sale and 73% in the next month (the other 2% are generally uncollectible). The firm pays its materials suppliers 70% in the month of purchase and 30% in the following month. Labourers, sales personnel, administrators, and all overhead purchases are paid in the month that services are received. Overhead costs include $5,000 of depreciation on plant and equipment. Sales last month were $240,000, and direct materials purchases were $6,000. A partially complete balance sheet as of the beginning of the month is given here.
Required:
A. Complete the beginning balance sheet.
B. Prepare a master budget, including budgeted financial statements, for next month.
C. Analyze the income statement, cash budgets, and balance sheetparticularly the changes in receivables and inventory. What changes would you suggest to improve Anchors performance?
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Cost Management Measuring, Monitoring And Motivating Performance
ISBN: 1601
3rd Canadian Edition
Authors: Leslie G. Eldenburg, Susan K. Wolcott, Liang Hsuan Chen, Gail Cook