5 ABC Company makes steel tool cabinets for offices. They are in the process of preparing 6 a Master Budget including the Operating budget. Cash Statement, Income Statement 7 and Balance Sheet for 2020. The yearly budget is broken into quarters. The year endis 8 31st December 2020. Your group has been requested to compile a master budget for the 9 fiscal year 2020 10 Package is to include the following budgets; 11 1. Sales budget for each quarter 12 2. Production budget for each quarter 13 3. Purchasing Budget for each quarter 14 4. Direct labour budget for each quarter 15 5. Manufacturing overhead budget for each quarter 16 6. Selling and Administration budget 17 7. Work sheets for Collections and Disbursements 18 8. Budgeted Income Statement 19 9. CVP Income Statement 2010. Budgeted Cash Statement 21 11. Budgeted Balance Sheet 22 Additional details: 23 Sales price per filing cabinet is A 24. There are 800 tool cabinets in finished goods inventory at the end of 2019 with a 25 value of $ 360,000. At the end of each quarter, ABC Company requires to have B 26 units in finished goods inventory. 27 Each cabinet uses sq. ft. of steel during the manufacturing process. The cost of 28 steel for 2020 is estimated to be $ 8 per sq. ft. 29. ABC Company currently has 30,000 sq. ft. of steel in the beginning inventory. At 30 the end of each quarter, ABC Company wants to have D of ending 31 inventory 32 Each cabinet requires E machine hours and F direct labour hrs to produce. 33 Direct Labour costs $ per direct labour hour. 34 ABC Company allocates manufacturing overhead costs based on the estimated machine 35 hours. Estimated manufacturing overhead cost for 2020 are | and are all variable. 36 . For each quarter, it is estimated that 40 % of sales will be cash and 60 37 % will be credit sales. Of the credit sales, 80% pay in the quarter of the sale and 20% pay in the 38 following quarter. Credit sales from Q4 2019 were $1,300,000 39. Direct labour costs and manufacturing overhead costs are paid for in cash in the quarter they 40 occurred. 41 Assume operating expenses occur evenly throughout the year and are all paid in cash. 42 For each quarter, 70% of material purchases are paid for in cash in the quarter of 43 the purchase and 30% are paid in the following quarter. Purchases of materials from 44 Q4 2019 were $1,500,000 sq.ft 45 0 6 -6 ABC Company -7 8 Additional details continued: -9. ABC Company will pay $60,000 in dividends in Q4 0 Currently, the cash balance in the bank is $15,000. ABC Company wants to maintain a 1 minimum cash balance of $10,000 in the bank for each quarter. 2 Budgeted sales volumes are: 13 Q1 Q2 J Q3 | Q4 L 14 Selling and Administration expenses for the budgeted year are as follows: 5 Variable Cost: Delivery costs are based on $ 0.3 per sales unit. 17 Commissions are based on 0.1% of sales value. 18 19 Fixed Costs: Accounting & professional services 1800) Administrative & Sales Salaries 77000) -2 Advertising 9000 -3 Computer costs 4200 -4 Depreciation 35000 5 Office Supplies 2300 6 Printing 1400 -7 Insurance 1200 Property taxes 500 9 Rent 20000 0 Utilities 3000 Total Fixed Costs 155400 2 3. ABC Company will purchase a new machine on 192020 worth $700,00 and will make two equal -4 payments. The first payment will be in Q1 and the second in Q3. Assume the machine was 5 purchased at the beginning of the year. 6 . Taxation is 30% on taxable income and paid at the end of Q4 each year, 7 Balance sheet information as at 31st December 2019 is as follows: 8 PPE $100,000 Accumulated Depreciation $100,000 19 Common Stock $280,000 Retained Earnings $145,000 0 For Cost of goods sold (COGS); 1 Add total costs of production + Beginning Finished goods - Ending Finished goods Inventory. 2 Interest of $ 9000 on loans is paid in total at the end of the year and is a fixed cost. 00 1 Year Selling and Administrative Expense Budget Quarter 1 Quarter 2 Quarter 3 Quarter 4 Budgeted Sales in units: Budgeted Sales value: Variable Cost: Delivery costs Commissions Total Variable Costs: Fixed Costs: Accounting & professional services Administrative and sales salaries Advertising Computer costs Depreciation Office Supplies Printing Insurance Property taxes Rent Utilities Total Fixed Costs: Total costs: Test: Cash Total per quarter: $ Note: Deduct Depreciation. Test: 3 Schedule of receipts from customers 4 Receipts by Quarter Qtr 2 Qtr 3 2021 Qtr 1 Credit Sales Qtr 1 Qtr 4 U 40 % 60 % 0.8 0.2 Cash Sales 5 Accounts Receivable - 31st Dec 2019 7 First Quarter 3 Second Quarter Third Quarter 0 Fourth Quarter 1 Total Payments:- 2 3 Cash Sales 4 Credit Sales 5 Collection of Credit sale in the quarter of the sale 6 Collection of Credit sale in the following quarter 7 8 Schedule of expected payments for Direct materials 9 0 1 Accounts Payable - 31st Dec 2019 2 First Quarter 3 Second Quarter 4 Third Quarter 5 Fourth Quarter 6 Total Payments:- 7 8 Purchases paid in cash in the same quarter 9 Purchases paid in the following quarter 2021 Payments by Quarter Qtr 2 Qtr 3 Purchases Qtr 1 Qtr 4 Qtr 1 70 % 30% 5 ABC Company makes steel tool cabinets for offices. They are in the process of preparing 6 a Master Budget including the Operating budget. Cash Statement, Income Statement 7 and Balance Sheet for 2020. The yearly budget is broken into quarters. The year endis 8 31st December 2020. Your group has been requested to compile a master budget for the 9 fiscal year 2020 10 Package is to include the following budgets; 11 1. Sales budget for each quarter 12 2. Production budget for each quarter 13 3. Purchasing Budget for each quarter 14 4. Direct labour budget for each quarter 15 5. Manufacturing overhead budget for each quarter 16 6. Selling and Administration budget 17 7. Work sheets for Collections and Disbursements 18 8. Budgeted Income Statement 19 9. CVP Income Statement 2010. Budgeted Cash Statement 21 11. Budgeted Balance Sheet 22 Additional details: 23 Sales price per filing cabinet is A 24. There are 800 tool cabinets in finished goods inventory at the end of 2019 with a 25 value of $ 360,000. At the end of each quarter, ABC Company requires to have B 26 units in finished goods inventory. 27 Each cabinet uses sq. ft. of steel during the manufacturing process. The cost of 28 steel for 2020 is estimated to be $ 8 per sq. ft. 29. ABC Company currently has 30,000 sq. ft. of steel in the beginning inventory. At 30 the end of each quarter, ABC Company wants to have D of ending 31 inventory 32 Each cabinet requires E machine hours and F direct labour hrs to produce. 33 Direct Labour costs $ per direct labour hour. 34 ABC Company allocates manufacturing overhead costs based on the estimated machine 35 hours. Estimated manufacturing overhead cost for 2020 are | and are all variable. 36 . For each quarter, it is estimated that 40 % of sales will be cash and 60 37 % will be credit sales. Of the credit sales, 80% pay in the quarter of the sale and 20% pay in the 38 following quarter. Credit sales from Q4 2019 were $1,300,000 39. Direct labour costs and manufacturing overhead costs are paid for in cash in the quarter they 40 occurred. 41 Assume operating expenses occur evenly throughout the year and are all paid in cash. 42 For each quarter, 70% of material purchases are paid for in cash in the quarter of 43 the purchase and 30% are paid in the following quarter. Purchases of materials from 44 Q4 2019 were $1,500,000 sq.ft 45 0 6 -6 ABC Company -7 8 Additional details continued: -9. ABC Company will pay $60,000 in dividends in Q4 0 Currently, the cash balance in the bank is $15,000. ABC Company wants to maintain a 1 minimum cash balance of $10,000 in the bank for each quarter. 2 Budgeted sales volumes are: 13 Q1 Q2 J Q3 | Q4 L 14 Selling and Administration expenses for the budgeted year are as follows: 5 Variable Cost: Delivery costs are based on $ 0.3 per sales unit. 17 Commissions are based on 0.1% of sales value. 18 19 Fixed Costs: Accounting & professional services 1800) Administrative & Sales Salaries 77000) -2 Advertising 9000 -3 Computer costs 4200 -4 Depreciation 35000 5 Office Supplies 2300 6 Printing 1400 -7 Insurance 1200 Property taxes 500 9 Rent 20000 0 Utilities 3000 Total Fixed Costs 155400 2 3. ABC Company will purchase a new machine on 192020 worth $700,00 and will make two equal -4 payments. The first payment will be in Q1 and the second in Q3. Assume the machine was 5 purchased at the beginning of the year. 6 . Taxation is 30% on taxable income and paid at the end of Q4 each year, 7 Balance sheet information as at 31st December 2019 is as follows: 8 PPE $100,000 Accumulated Depreciation $100,000 19 Common Stock $280,000 Retained Earnings $145,000 0 For Cost of goods sold (COGS); 1 Add total costs of production + Beginning Finished goods - Ending Finished goods Inventory. 2 Interest of $ 9000 on loans is paid in total at the end of the year and is a fixed cost. 00 1 Year Selling and Administrative Expense Budget Quarter 1 Quarter 2 Quarter 3 Quarter 4 Budgeted Sales in units: Budgeted Sales value: Variable Cost: Delivery costs Commissions Total Variable Costs: Fixed Costs: Accounting & professional services Administrative and sales salaries Advertising Computer costs Depreciation Office Supplies Printing Insurance Property taxes Rent Utilities Total Fixed Costs: Total costs: Test: Cash Total per quarter: $ Note: Deduct Depreciation. Test: 3 Schedule of receipts from customers 4 Receipts by Quarter Qtr 2 Qtr 3 2021 Qtr 1 Credit Sales Qtr 1 Qtr 4 U 40 % 60 % 0.8 0.2 Cash Sales 5 Accounts Receivable - 31st Dec 2019 7 First Quarter 3 Second Quarter Third Quarter 0 Fourth Quarter 1 Total Payments:- 2 3 Cash Sales 4 Credit Sales 5 Collection of Credit sale in the quarter of the sale 6 Collection of Credit sale in the following quarter 7 8 Schedule of expected payments for Direct materials 9 0 1 Accounts Payable - 31st Dec 2019 2 First Quarter 3 Second Quarter 4 Third Quarter 5 Fourth Quarter 6 Total Payments:- 7 8 Purchases paid in cash in the same quarter 9 Purchases paid in the following quarter 2021 Payments by Quarter Qtr 2 Qtr 3 Purchases Qtr 1 Qtr 4 Qtr 1 70 % 30%