ACC 212 Complete Master Budget

Manufacturing: Preparation of a complete master budget.

The management of MD Manufacturing prepared the following estimated balance sheet for March 2015:

To prepare a master budget for April, May and June of 2015, management gathers the following information:

a. Sales for March total 20,500 units. Forecasted sales in units are as follows:

i. April 20,500

ii. May 19,500

iii. June 20,000

iv. July 20,500

Sales of 240,000 units are forecasted for the entire year. The products selling price is $23.85 per unit and its total product cost is $19.85 per unit.

b. Company policy calls for a given months ending raw materials inventory to equal 50% of the next months materials requirements. The March 31 raw materials inventory is 4,925 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,000 units. Raw materials cost $20 per unit. Each finished unit required 0.50 units of raw materials.

c. Company policy calls for a given months ending finished goods inventory to equal 80% of the next months expected unit sales. The March 31 finished goods inventory is 16,400 units, which complies with the policy.

d. Each finished unit requires 0.50 hours of direct labor at a rate of $15 per hour.

e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $2.70 per direct labor hour. Deprecation of $20,000 per month is treated as a fixed factory overhead.

f. Sales representatives commission are 8% of sales and are paid in the month of sales. The sales managers monthly salary is $3,000.

g. Monthly general and administrative expenses include $12,000 administrative salaries and 0.9% monthly interest on the long term note payable.

h. The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale(none is collected in the month of sale)

i. All raw materials purchases are on credit, and no payables arise from any other transactions. One months raw materials purchases are fully paid in the next month.

j. The minimum ending cash balance for all months is $40,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance.

k. Dividends of $10,000 are to be declared and paid in May.

l. No cash payments of income taxes are to be made during the second calendar quarter, income tax will be assessed at 35% in the quarter and paid in the third calendar quarter.

m. Equipment purchases of $130,000 are budgeted for the last day of June.

Required:

Prepare the following budgets and other financial information as required. All budgets and other financial information should be prepared for the second calendar quarter, except as otherwise noted below. Round calculations up to the nearest whole dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.

1. Budgeted income statement for the entire second quarter (not for each month separately)

2. Budgeted balance sheet as of the end of the second calendar quarter.

All submissions must be submitted in a excel spreadsheet. Each budget and other financial information must be entered in a separate tab. A template of the spreadsheet is available for your use.

MD's Manufacturing Estimated Balance Sheet March 31, 2015 Assets Liabilities and Equity Cash Accounts Receivable Raw Materials Inventory Finished goods inventory Total current assets Equipment, gross Accumulated depreciation Equipment, net Total assets $40,000 342,248 98,500 325,540 806,288 600,000 150,000) 450,000 Accounts Payable Short-term notes payable Total current liaiblities Long-term notes payable Total liabilities Common stock Retained earnings Total Stockholders' equity Total liabilities & equity $200,500 12,000 212,500 500,000 712,500 335,000 208,788 543,788