3 4 Objective: This assignment is intended to give you experience in preparing a Master Budget and will help you understand the relationship between the Operation Budget and the Financial Budget. Use only the information provided in the text and the excel schedules from the Master Budget Student Data File. Required: Complete the following schedules: Income Statement - Exhibit (H) Contribution Margin Exhibit (K): Compute the contribution margin and ratio for each of the three products. Using a weighted average CM, compute the Break Even point for the full year 2015. Explain how managers can use this data. Cash Flow - Exhibit (G) Balance Sheet (0) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Notes On Student Data: All the assumptions stated in the problem have been summarized for you in Exhibit 1 of the Student Data The sales plan, production plan, flexible resources, AR, materials and staffing are complete and correct, there are no tricks. The Income Statement, Cash Flow statement and Balance Sheet contain the correct balancing numbers. No further computations are required in the line of credit on the cash flow, Assumes that everything produced is sold. No Inventory is required! Hints on Specific Master Budget Computations: To compute depreciation for the income statement, read the following: The capital investment policy is to purchase, each January and July, $5,000 of machinery and equipment per carpenter employed during that month. Judd's recognizes depreciation at the rate of 10% of the year end balance of the machinery and equipment account To compute the new AR Balance, consider the following: Judd's Reproductions recognizes the expense of cash discounts, credit card fees, and bad debts in the month of the sale. Use the sales amounts on the AR schedule and the applicable type of sales. For example, bad debts is based only Export Sales only. Read this paragraph carefully. Further the total of the bad debts, credit card fees and cash discounts are considered non-collectible and therefore reduce the amount of the receivable balance and effect the balance sheet calculations. Re rent: Judd's pays rent quarterly beginning January 1 of each year...If you compute rent monthly your cash flow balances will not reconcile. Interest income and interest expense are correct on the Cash Flow schedule, however, Assignment Background Data Salesplan (A) Prodplan (B) DL staff FlexResourc(D)S + 86 MONTH 243 Projected Unit Sales - DEMAND 2015 CHAIRS TABLES 1,020 200 1,191 237 1,179 1,195 250 252 1,204 255 1,194 242 1,199 253 1,222 243 1,219 248 1,207 244 1.192 255 January February March April May Pune July August September October November December 1,200 CABINETS 109 120 119 126 122 125 123 121 127 126 126 119 Planners project the Judd's Reproductions balance sheet at January 1, 2015, to be as follows: Judd's Reproductions Balance Sheet lanuary 1, 2015 350,000 Ballon so Accounts recevable 575,008 Machinery (netbook value) 360.000 Shareholder's equity 98500g Total 5985. Total 5985.00 The information and data provided in Parti and Part I was the first attempt by Judd's for setting an annual Master Budget. However, they have yet to establish an ongoing process of collecting the actual monthly financial results for comparing to the monthly budget, compute variances and take corrective actions. In Part of the student data we can see as a company Judd's prepares and sets standards for direct material and direct labor on each of the three products produced. Refer to Schedule A Judies has begun to use this information to investigate possible issues in productivity, material price and wage rate issues. To date, these efforts have been very informal conversations between finance and operations. There is no monthly report or variance analysis prepared to shine the light on the standard cost variances or is there responsibility assigned for investigating and correcting them Product and purchasing managers have not been involved in any of these variance discussions Further, because they have not find their budget process they have never used or investigated the post of using a fele budget. As a result they do not take full advantage of the expected standards in terms of assessing price and quantity/efficiency variances arising from actual costs to hide performance problems. For the purposes of this case we have compiled the actual cost w that you must to compare to the pre determined material and labor andards for each of the products 8,024 8,290 6,962 8,010 To Be Completed HOW TO... chedule AR Change Note: The balance sheet must show the annual changes in the AR account: Sales - collections. We must adjust for uncollectible accounts..bad debts, credit card fees and cash discounts are considered non-collectible and therefore reduce the amount of the receivable balance and effect the balance sheet calculations. The net change in the AR goes to the Data Salesplan (A) Prodplan (B) DL staff(C) FlexResourc(D) SalesExp(E) ARC 86 Where PROTECTID VW Bee C 0 F Jude's Reproduction Annual Budget AR Acc Recerca Pan 2015 (3) 2015 JA Aug Se May O Ape Nov Dec Total Dec Feb 2014 O Na Sales Collections uns Uncolectable = terrat Mun Eshot BAD 1 Canon - Create "Net Change in AR To ty Comed Being a HOW TO... - Bence Ending Balance 45 46 47 To Be the Det from referenced the Calotation Required Range Thebesheet must how the charge the count: So we mattenweide We are not und die and therefore the amount of the unded the balance sheet Calcio There can in the north > 91 3 14 ST 0 3 $ 4 & 7 2 5 6 B W E R T Y U s G H K Z C V B N M Page Layout Formu Data View Tell me what you want to do other cances you need to editor to stay in hotected PROTECTED VIEWS GO Just's Reproductos Complete the 12012015 lance loral Four account A Budget Compare aware Set 2015 IED 1412095 Annual 2012015 Soute From the AONE 11 Cash 2 13 Acte 14 UPPAE Total Compte 20 Bank Loan 23 Bahadur Ei 1995.00 1400 the Androwym Desting to where |Calculata) 70 20 14 3 1 41 51 BI EX Dil di 5 : $ 3 5 W 1 P B Judd's Reproductions 2 Annual Budget CM Product Mix Contribution Margin Tables 900.00 Chairs 200.00 Source: Sales Price 5 Cabinets 1 000.00 Variable Direct Costa Direct labor Camp Direct Labor Helper Drectes 5 5 3 24005 14.00 $ 30.005 9.80 8.40 30 00 Labor hours per charron Praction Tab Ways to Death Labor hours per charbo Proton Pa Tab Wage from www Material per charrom Produto Plan Tob Marl Cerro 13 14 5 1500 12.00 200 12.10 Other Variable Packaging van by product) Sting (Vares by product Supplies (15 per Carp Hour Support (520 per Carp Maintenance 515 per carp Hr) Total Variable Costs Per und from Datab Per und from Darat Hours Production Plan, percharSupples CouperChar Data Ta Hos Produto Purper sur Support Cost per Cara our Production Paper threat per a 8.00 6.00 19 21 91.00 How do managers cata? 23 Contribution Margin CMS 109.00 55% 703 18.07 Units Sold Sold of Total 14222 78.43 2922 15701 5 8331 5 of mag 5 83.31 Weighted Average CM :945592-9? CM Sport : + o BI Pris 11 il de 3 4 Objective: This assignment is intended to give you experience in preparing a Master Budget and will help you understand the relationship between the Operation Budget and the Financial Budget. Use only the information provided in the text and the excel schedules from the Master Budget Student Data File. Required: Complete the following schedules: Income Statement - Exhibit (H) Contribution Margin Exhibit (K): Compute the contribution margin and ratio for each of the three products. Using a weighted average CM, compute the Break Even point for the full year 2015. Explain how managers can use this data. Cash Flow - Exhibit (G) Balance Sheet (0) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Notes On Student Data: All the assumptions stated in the problem have been summarized for you in Exhibit 1 of the Student Data The sales plan, production plan, flexible resources, AR, materials and staffing are complete and correct, there are no tricks. The Income Statement, Cash Flow statement and Balance Sheet contain the correct balancing numbers. No further computations are required in the line of credit on the cash flow, Assumes that everything produced is sold. No Inventory is required! Hints on Specific Master Budget Computations: To compute depreciation for the income statement, read the following: The capital investment policy is to purchase, each January and July, $5,000 of machinery and equipment per carpenter employed during that month. Judd's recognizes depreciation at the rate of 10% of the year end balance of the machinery and equipment account To compute the new AR Balance, consider the following: Judd's Reproductions recognizes the expense of cash discounts, credit card fees, and bad debts in the month of the sale. Use the sales amounts on the AR schedule and the applicable type of sales. For example, bad debts is based only Export Sales only. Read this paragraph carefully. Further the total of the bad debts, credit card fees and cash discounts are considered non-collectible and therefore reduce the amount of the receivable balance and effect the balance sheet calculations. Re rent: Judd's pays rent quarterly beginning January 1 of each year...If you compute rent monthly your cash flow balances will not reconcile. Interest income and interest expense are correct on the Cash Flow schedule, however, Assignment Background Data Salesplan (A) Prodplan (B) DL staff FlexResourc(D)S + 86 MONTH 243 Projected Unit Sales - DEMAND 2015 CHAIRS TABLES 1,020 200 1,191 237 1,179 1,195 250 252 1,204 255 1,194 242 1,199 253 1,222 243 1,219 248 1,207 244 1.192 255 January February March April May Pune July August September October November December 1,200 CABINETS 109 120 119 126 122 125 123 121 127 126 126 119 Planners project the Judd's Reproductions balance sheet at January 1, 2015, to be as follows: Judd's Reproductions Balance Sheet lanuary 1, 2015 350,000 Ballon so Accounts recevable 575,008 Machinery (netbook value) 360.000 Shareholder's equity 98500g Total 5985. Total 5985.00 The information and data provided in Parti and Part I was the first attempt by Judd's for setting an annual Master Budget. However, they have yet to establish an ongoing process of collecting the actual monthly financial results for comparing to the monthly budget, compute variances and take corrective actions. In Part of the student data we can see as a company Judd's prepares and sets standards for direct material and direct labor on each of the three products produced. Refer to Schedule A Judies has begun to use this information to investigate possible issues in productivity, material price and wage rate issues. To date, these efforts have been very informal conversations between finance and operations. There is no monthly report or variance analysis prepared to shine the light on the standard cost variances or is there responsibility assigned for investigating and correcting them Product and purchasing managers have not been involved in any of these variance discussions Further, because they have not find their budget process they have never used or investigated the post of using a fele budget. As a result they do not take full advantage of the expected standards in terms of assessing price and quantity/efficiency variances arising from actual costs to hide performance problems. For the purposes of this case we have compiled the actual cost w that you must to compare to the pre determined material and labor andards for each of the products 8,024 8,290 6,962 8,010 To Be Completed HOW TO... chedule AR Change Note: The balance sheet must show the annual changes in the AR account: Sales - collections. We must adjust for uncollectible accounts..bad debts, credit card fees and cash discounts are considered non-collectible and therefore reduce the amount of the receivable balance and effect the balance sheet calculations. The net change in the AR goes to the Data Salesplan (A) Prodplan (B) DL staff(C) FlexResourc(D) SalesExp(E) ARC 86 Where PROTECTID VW Bee C 0 F Jude's Reproduction Annual Budget AR Acc Recerca Pan 2015 (3) 2015 JA Aug Se May O Ape Nov Dec Total Dec Feb 2014 O Na Sales Collections uns Uncolectable = terrat Mun Eshot BAD 1 Canon - Create "Net Change in AR To ty Comed Being a HOW TO... - Bence Ending Balance 45 46 47 To Be the Det from referenced the Calotation Required Range Thebesheet must how the charge the count: So we mattenweide We are not und die and therefore the amount of the unded the balance sheet Calcio There can in the north > 91 3 14 ST 0 3 $ 4 & 7 2 5 6 B W E R T Y U s G H K Z C V B N M Page Layout Formu Data View Tell me what you want to do other cances you need to editor to stay in hotected PROTECTED VIEWS GO Just's Reproductos Complete the 12012015 lance loral Four account A Budget Compare aware Set 2015 IED 1412095 Annual 2012015 Soute From the AONE 11 Cash 2 13 Acte 14 UPPAE Total Compte 20 Bank Loan 23 Bahadur Ei 1995.00 1400 the Androwym Desting to where |Calculata) 70 20 14 3 1 41 51 BI EX Dil di 5 : $ 3 5 W 1 P B Judd's Reproductions 2 Annual Budget CM Product Mix Contribution Margin Tables 900.00 Chairs 200.00 Source: Sales Price 5 Cabinets 1 000.00 Variable Direct Costa Direct labor Camp Direct Labor Helper Drectes 5 5 3 24005 14.00 $ 30.005 9.80 8.40 30 00 Labor hours per charron Praction Tab Ways to Death Labor hours per charbo Proton Pa Tab Wage from www Material per charrom Produto Plan Tob Marl Cerro 13 14 5 1500 12.00 200 12.10 Other Variable Packaging van by product) Sting (Vares by product Supplies (15 per Carp Hour Support (520 per Carp Maintenance 515 per carp Hr) Total Variable Costs Per und from Datab Per und from Darat Hours Production Plan, percharSupples CouperChar Data Ta Hos Produto Purper sur Support Cost per Cara our Production Paper threat per a 8.00 6.00 19 21 91.00 How do managers cata? 23 Contribution Margin CMS 109.00 55% 703 18.07 Units Sold Sold of Total 14222 78.43 2922 15701 5 8331 5 of mag 5 83.31 Weighted Average CM :945592-9? CM Sport : + o BI Pris 11 il de