Administrative Bldg. Utilities Sales Bldg. Depreciation Repair & Maint. 12,000 8,000 45,000 All expenses are paid monthly, unless otherwise indicated. Insurance is paid on an annual basis, in June of each year and is divided equally between the factory, sales office and administration office. Rent is also divided evenly between the factory, sales office and administrative offices. Allocated depreciation is split evenly between factory equipment and sales equipment, Repair & maintenance expenses are allocated with 80% to the factory and 10% each to sales and administration. The company plans to purchase $36,000 in new equipment during May and $75,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $25,000 each quarter, payable in the first month of the following quarter. A listing of the company's ledger accounts as of March 31 is given below Assets Cash Accounts receivable (RM purchases) Inventory Prepaid insurance Property and equipment (net) 60,000 2,316,600 276,890 38,000 950,000 Total assets 3,641,490 Liabilities and Stockholders' Equity Accounts payable Dividends payable Short-term loan payable Common stock Retained earnings 495,000 25,000 40,000 2,036,000 1,045,490 Total liabilities and stockholders 3,641,490 equity The company maintains a minimum cash balance of $60,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month. The company has an agreement with a bank that allows the company to borrow in increments of $5,000 at the beginning of each month. The interest rate on these loans is 2% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $5,000), while still retaining at least $40,000 in cash. The company's current loan amount (as shown on the balance sheet above) is $25,000 Part l: Operating & Cash Budgets/Income Statement & Contribution Income Statement. Prepare all budgets and statements as directed below using good form using MS Excel for the three-month period ending June 30th (each month plus quarterly totals) using one tab per budget. Include the following a. A sales budget, by month and quarterly total b. A production budget, by month and quarterly total c. A direct materials budget, by month and quarterly total d. A direct labor budget, by month and quarterly total e. A manufacturing overhead budget, by month and quarterly total f. A schedule showing the per unit production cost for the jewelry f. A selling expense budget, by month and quarterly total g. An administrative budget, by month and quarterly total h. A cash receipts schedule, by month & in total i. A cash disbursements schedule, by month and quarterly total j. A cash budget, by month and quarterly total Part 2: Flexible Budget and Variance analysis Pretend the following income statement was your budgeted income statement in part i of the above problem (PLEASE NOTE IT IS NOTI) Use the ratios from your contribution income statement to create a CMIS for the budgeted income statement above at 70,000 units (ratios from part 1, information from part 2) UTI Budgeted Income Statement For April Net Sales (70,000 units) Cost of Goods Sold 4,550,000 2,105,600 2,444,400 532,625 17,000 1,894,775 Gross Profit Selling Expenses Administrative Expenses Operating Income The actual April results are as follows: UTI Actual Income Statement For April Net Sales (72,000 units) 4,250,000 2,405,000 1,854,000 600,200 18,000 1,235,000 Cost of Goods Sold Gross Profit Selling Expenses Administrative Expenses Operating Income a. Create a CMIS for the initial April budget at the 70,000 unit level, using the ratios developed in part 1, and budgeted income numbers from part 2 b. Prepare a flexible budget at 72,000 units for JTI using the CMIS you created in the previous step. Compare the flexible budget to the actual results. c. Identify the dollar amount of the variances, and indicate if they are favorable or unfavorable. For each variance identified, give more than one reason the variance might exist. Identify where you might go to investigate each variance You were hired as a new management trainee by lewel Tree, Inc (JTI), a distributor of fine jewelry to various retail located in shopping malls across the country. In the past, the company has done very little in the way certain times of the year has experienced a shortage of cash. of budgeting and at Since you are well trained in budgeting, you have been tasked with preparing com second quarter in order to show management the benefits that can be gained from an integr this end, you have below prehensive budgets for the upcoming ated budgeting program. To worked with the financial accounting department and other areas to gather the information assembled The company sells many styles of bracelets, but all sell for the same price: $45 per piece. Actual sales for the last three months and budgeted sales for the next six months follow (in number of bracelets): January (actual) 20,000 June (budget) 48,000 February (actual) 24,000 July (budget) March (actual) 42,000 August (budget) 28,000 April (budget) 88,000 September (budget) 27,000 May (budget)1 43,000 105,000 The concentration of sales before and during May is due to the Mother's Day holiday in the U.S. You decide that sufficient finished goods should be on hand at the end of each month to supply 25% of the bracelets sold in the following month. March started with 2,000 bracelets in inventory; at the end of the month, there are 8,000 bracelets in inventory. Each bracelet requires two ounces (2 oz.) of metal and 10 colored jewels. Metal is $15 per pound and colored jewels are $215 per pound; there are 250 colored jewels per pound. There are 20 pounds of metal and 10 pounds of colored jewels in raw materials inventory on hand at both the beginning and the end of March. After discussions with the production area and purchasing, you decide to develop raw materials requirements also. The materials requirement for metal is to have 20% of the next month's needs on hand and the materials requirement for jewels is 40% of the next month's needs. ITI assembles the bracelets by twisting the metal into shape and attaching the jewels. The average labor rate to assemble the bracelets is $15 per hour. It takes 20 minutes to design and assemble each bracelet One-half of each month's purchases (both metal & jewels) are paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. The company has found only 30% of each month's sales are collected in the month of sale. Of the remaining sales to be collected, 70% is collected in the following month, and 26% is collected in the second month following sale. Other expenses for the company are given below: Other Variable Expenses: S% of sales Sales commissions MOH 1.50/DUH Annual Fixed Expenses: Advertising Rent Administrative Salaries Factory Supervisor Salaries Factory Utilities Sales Office Utilities Insurance Allocated Depreciation s 192,000 45,000 160,000 96,000 65,000 10,000 3,000 25,000 Administrative Bldg. Utilities Sales Bldg.-Depreciation Repair & Maint. 12,000 8,000 45,000 All expenses are paid monthly, unless otherwise indicated. Insurance is paid on an annual basis, in June of each year and is divided equally between the factory, sales office and administration office. Rent is also divided evenly between the factory sales office and administrative offices. Allocated depreciation is split evenly between factory equipment and sales equipment, Repair & maintenance expenses are allocated with 80% to the factory and 10% each to sales and administration. The company plans to purchase $36,000 in new equipment during May and $75,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $25,000 each quarter, payable in the first month of the following quarter. A listing of the company's ledger accounts as of March 31 is given below: Assets Cash Accounts receivable (RM purchases) Inventory Prepaid insurance Property and equipment (net) 60,000 2,316,600 276,890 38,000 950,000 Total assets 3,641,490 Liabilities and Stockholders' Equity Accounts payable Dividends payable Short-term loan payable Common stock Retained earnings 495,000 25,000 40,000 2,036,000 1,045,490 Total liabilities and stockholders equity 3,641,490 The company maintains a minimum cash balance of $60,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month. The company has an agreement with a bank that allows the company to borrow in increments of $5,000 at the beginning of each month. The interest rate on these loans is 2% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $5,000), while still retaining at least $40,000 in cash. The company's current loan amount (as shown on the balance sheet above) is $25,000. Part I: Operating & Cash Budgets/income Statement & Contribution Income Statement. Prepare all budgets and statements as directed below using good form using MS Excel for the three-month period ending June 30h (each month plus quarterly totals) using one tab per budget. Include the following