ACCT-5012 - CASE STUDY Fine Office Company Fine Office Company makes office furniture for offices. They are in the process of preparing a Master Budget including the Operating budget, Cash Statement, Income Statement and Balance Sheet for 2021. The yearly budget is broken into quarters. The year end is 31st December 2021. Your group has been requested to compile a master budget for the fiscal year 2021. Package is to include the following budgets; 1. Sales budget for each quarter and for the year 2. Production budget for each quarter and for the year 3. Purchasing Budget for each quarter and for the year 4. Direct labour budget for each quarter and for the year 5. Manufacturing overhead budget for each quarter and for the year 6. Selling and Administration budget 7. Work sheets for Collections and Disbursements 8. Budgeted Income Statement 9. CVP Income Statement 10. Budgeted Cash Statement 11. Budgeted Balance Sheet Additional details: Fine Office Company produces two products P100 and P200 Sales price per P100 is A Sales price per P200 is B There are 800 units from P100 in finished goods inventory at the end of 2020 with a valu of 2020 value 300,000. At the end of each quarter, Fine Office Company requires ending invento The required ending inventory for Dec. 31, 2021 are 600 units for P100 and Each P100 unit uses D sq. ft. of steel during the manufacturing process. The cost o Each P200 unit uses sq. ft. of steel during the manufacturing process. Fine Office Company currently has 30,000 sq.ft. of steel in the beginning inventory. At the end of each quarter, Fine Office Company wants to have sq. ft. inventory. Each product requires G machine hours and TH direct labour hrs to pro Direct Labour costs $ per direct labour hour. Fine Office Company allocates manufacturing overhead costs based on the estimated machine hours. Estimated manufacturing overhead cost for 2021 are $ and are all For each quarter, it is estimated that 40 % of sales will be cash and will be credit sales. Of the credit sales, 80% pay in the quarter of the sale and 20% pay in the following quarter. Credit sales from Q4 2020 were $1,300,000 Direct labour costs and manufacturing overhead costs are paid for in cash in the quarter they occurred. Assume operating expenses occur evenly throughout the year and are all paid in cash. For each quarter, 70 % of material purchases are paid for in cash in the quarter o the purchase and 30% are paid in the following quarter. Purchases of materials f Q4 2020 were $1,500,000 Fine Office Company Additional details continued: Fine Office Company will pay $60,000 in dividends in Q4 Currently, the cash balance in the bank is $15,000. Fine Office Company wants to maintain a minimum cash balance of $10,000 in the bank for each quarter. Budgeted sales volumes are: P100 Q1 IK Q2 Q3 M 04 P200 Q1 02 Q3 Q Q4 Selling and Administration expenses for the budgeted year are as follows; Variable Cost: Delivery costs are based on $ 0.3 per sales unit. Commissions are based on 0.1 % of sales value. Fixed Costs: Accounting & professional services Administrative & Sales Salaries Advertising Computer costs Depreciation Office Supplies Printing Insurance Property taxes $ 3600 140000 20000 90001 70000 5000) 3000 40001 2000 40000 3400 300000 Rent Utilities Total Fixed Costs Fine Office Company will purchase a new machine on 1/1/2021 worth $ 700000 and will mi payments. The first payment will be in Q2 and the second in 04. Assume the machine was purchased at the beginning of the year. Taxation is 30% on taxable income and paid at the end of Q4 each year. Balance sheet information as at 31st December 2020 is as follows; PPE $100,000 Accumulated Depreciation $100,000 Common Stock $580,000 Retained Earnings $145,000 For Cost of goods sold (COGS); Add total costs of production + Beginning Finished goods - Ending Finished goods Inventory. Interest of $ 9000 on loans paid in total at the end of the year and is a fixed cost. Marking Rubric Tab Sales Production Dir. Materials Dir. Labour Manufacturing OH Cost of Ending Finished Inv. COGS Selling & Admin I/S CVP I/S Cash Cash Worksheets B/S Total Max. Points Group Points 7 0 10 0 13 0 5 0 18 0 12 0 14 0 17 0 18 0 16 0 32 0 0 14 24 0 200 0 e of $ 360,000 and 500 units from P200 at the end ry to be equal to C of the following quarter's budgeted sales in units. 400 units for P200 if steel for 2021 is estimated to be $ 8 per sq. ft. of ending duce. I variable. 60 f rom N ake two equal ACCT-5012 - CASE STUDY Fine Office Company Fine Office Company makes office furniture for offices. They are in the process of preparing a Master Budget including the Operating budget, Cash Statement, Income Statement and Balance Sheet for 2021. The yearly budget is broken into quarters. The year end is 31st December 2021. Your group has been requested to compile a master budget for the fiscal year 2021. Package is to include the following budgets; 1. Sales budget for each quarter and for the year 2. Production budget for each quarter and for the year 3. Purchasing Budget for each quarter and for the year 4. Direct labour budget for each quarter and for the year 5. Manufacturing overhead budget for each quarter and for the year 6. Selling and Administration budget 7. Work sheets for Collections and Disbursements 8. Budgeted Income Statement 9. CVP Income Statement 10. Budgeted Cash Statement 11. Budgeted Balance Sheet Additional details: Fine Office Company produces two products P100 and P200 Sales price per P100 is A Sales price per P200 is B There are 800 units from P100 in finished goods inventory at the end of 2020 with a valu of 2020 value 300,000. At the end of each quarter, Fine Office Company requires ending invento The required ending inventory for Dec. 31, 2021 are 600 units for P100 and Each P100 unit uses D sq. ft. of steel during the manufacturing process. The cost o Each P200 unit uses sq. ft. of steel during the manufacturing process. Fine Office Company currently has 30,000 sq.ft. of steel in the beginning inventory. At the end of each quarter, Fine Office Company wants to have sq. ft. inventory. Each product requires G machine hours and TH direct labour hrs to pro Direct Labour costs $ per direct labour hour. Fine Office Company allocates manufacturing overhead costs based on the estimated machine hours. Estimated manufacturing overhead cost for 2021 are $ and are all For each quarter, it is estimated that 40 % of sales will be cash and will be credit sales. Of the credit sales, 80% pay in the quarter of the sale and 20% pay in the following quarter. Credit sales from Q4 2020 were $1,300,000 Direct labour costs and manufacturing overhead costs are paid for in cash in the quarter they occurred. Assume operating expenses occur evenly throughout the year and are all paid in cash. For each quarter, 70 % of material purchases are paid for in cash in the quarter o the purchase and 30% are paid in the following quarter. Purchases of materials f Q4 2020 were $1,500,000 Fine Office Company Additional details continued: Fine Office Company will pay $60,000 in dividends in Q4 Currently, the cash balance in the bank is $15,000. Fine Office Company wants to maintain a minimum cash balance of $10,000 in the bank for each quarter. Budgeted sales volumes are: P100 Q1 IK Q2 Q3 M 04 P200 Q1 02 Q3 Q Q4 Selling and Administration expenses for the budgeted year are as follows; Variable Cost: Delivery costs are based on $ 0.3 per sales unit. Commissions are based on 0.1 % of sales value. Fixed Costs: Accounting & professional services Administrative & Sales Salaries Advertising Computer costs Depreciation Office Supplies Printing Insurance Property taxes $ 3600 140000 20000 90001 70000 5000) 3000 40001 2000 40000 3400 300000 Rent Utilities Total Fixed Costs Fine Office Company will purchase a new machine on 1/1/2021 worth $ 700000 and will mi payments. The first payment will be in Q2 and the second in 04. Assume the machine was purchased at the beginning of the year. Taxation is 30% on taxable income and paid at the end of Q4 each year. Balance sheet information as at 31st December 2020 is as follows; PPE $100,000 Accumulated Depreciation $100,000 Common Stock $580,000 Retained Earnings $145,000 For Cost of goods sold (COGS); Add total costs of production + Beginning Finished goods - Ending Finished goods Inventory. Interest of $ 9000 on loans paid in total at the end of the year and is a fixed cost. Marking Rubric Tab Sales Production Dir. Materials Dir. Labour Manufacturing OH Cost of Ending Finished Inv. COGS Selling & Admin I/S CVP I/S Cash Cash Worksheets B/S Total Max. Points Group Points 7 0 10 0 13 0 5 0 18 0 12 0 14 0 17 0 18 0 16 0 32 0 0 14 24 0 200 0 e of $ 360,000 and 500 units from P200 at the end ry to be equal to C of the following quarter's budgeted sales in units. 400 units for P200 if steel for 2021 is estimated to be $ 8 per sq. ft. of ending duce. I variable. 60 f rom N ake two equal