all the answers here are correct but I don't know their solutions. I would be very happy if you could write ans show all the solutions one by one. thank you so much.
P9-60B Comprehensive budgeting problem (Learning Objectives 2 & 3) Presidio Manufacturing is preparing its master budget for the first quarter of the upcom ing year, The following data pertain to Presidio Manufacturing's operations: Current assets as of December 31 (prior year) Cash........... $4,600 Accounts receivable, net $50,000 Inventory ................. $ 15,000 Property, plant, and equipment, net..... $120,000 Accounts payable............ $ 43,000 Capital stock............. $126,000 Retained earnings..... $ 23,200 2. Actual sales in December were 571,000. Selling price per unit is projected to remain stable at $12 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows: January... $ 99,600 February... 5118,800 March $115,200 April... $108,000 May..... 5103,200 b. Sales are 35% cash and 65% credit. All credit sales are collected in the month follow ing the sale. c. Presidio Manufacturing has a policy that states that each month's ending inventory of finished goods should be 10% of the following month's sales (in units). d. Of each month's direct materials purchases, 20% are paid for in the month of pure chase, while the remainder is paid for in the month following purchase. Three pounds of direct material is needed per unit at $2.00 per pound. Ending inventory of direct materials should be 20% of next month's production needs. .. Most of the labor at the manufacturing facility is indirect, but there is some direct labor incurred. The direct labor hours per unit is 0.05. The direct labor rate per hour is $9 per hour. All direct labor is paid for in the month in which the work is performed. The direct labor total cost for each of the upcoming three months is as follows: January ...... $3,807 February $4,442 March ...... $4,293 f. Monthly manufacturing overhead costs are $5,500 for factory rent, $2,900 for other fixed manufacturing expenses, and $1.10 per unit for variable manufacturing over head. No depreciation is included in these figures. All expenses are paid in the month in which they are incurred. g. Computer equipment for the administrative offices will be purchased in the upcom- ing quarter. In January, the company will purchase equipment for $5,000 (cash), while February's cash expenditure will be $12,200 and March's cash expenditure will be $16,600. h. Operating expenses are budgeted to be $1.25 per unit sold plus fixed operating expenses of $1,800 per month. All operating expenses are paid in the month in which they are incurred i. Depreciation on the building and equipment for the general and administrative offices is budgeted to be $4,600 for the entire quarter, which includes depreciation on new acquisitions. Presidio Manufacturing has a policy that the ending cash balance in each month must be at least $4,000. The company has a line of credit with a local bank. It can borrow in increments of $1,000 at the beginning of each month, up to a total out- standing loan balance of $160,000. The interest rate on these loans is 1% per month simple interest (not compounded). The company would pay down on the line of credit balance in increments of $1,000 if it has excess funds at the end of the quar. ter. The company would also pay the accumulated interest at the end of the quarter on the funds borrowed during the quarter. k The company's income tax rate is projected to be 30% of operating income less interest expense. The company pays $10,000 cash at the end of February in esti- mated taxes. Req. 1 Cash sales (35%) Credit sales (65%) Total collections Cash Collections January February $34,860 $41,580 $46,150 $64,7406 $81.010 $106.320 March $40,320 $77,220 $117.540 Quarter $116,760 $188, 110 $304,870 December credit sales: $71,000 x 65% January credit sales: $99,600 x 65% February credit sales: $118,800 x 65% Req. 2 Unit sales* Plus: Desired ending inventory Total needed Production Budget January 8,300 990 9,290 February 9,900 960 10,860 March 9,600 900 10,500 Quarter 27,800 900 28,700 (830 8.460 Less: Beginning inventory Units to produce *Hint: Unit sales - Sales in dollars + Selling price per unit (990) 9.870 (960) 2.540 (830) 27.870 Reg. 3 Direct Materials Budget January February Units to be produced 8,460 9,870 Multiply by: Quantity of DM needed per unit x 3.0 X 3.0 Quantity of DM needed for production 25,380 29,610 Plus: Desired ending inventory of DM 5,922 5,724 Total quantity of DM needed 31,302 35,334 Less: Beginning inventory of DM (5,076) (5,922) Quantity of DM to purchase 26,226 29,412 Multiply by: Cost per pound * $2.00 * $2.00 Total cost of DM purchases $52,452 $58.824 March 9,540 x 3.0 28,620 5,376 33,996 (5,724) 28,272 x $2.00 $56,544 Quarter 27,870 x 3.0 83,610 5,376 88,986 (5,076) 83,910 * $2.00 $167.820 Req. 4 Quarter $43,000 December purchases (From AP) January purchases February purchases March purchases Total payments Cash payments for Direct Material Purchases Budget January February March $43,000 $10,490 $41,962 $11,765 $47,0590 $11,309 $53,490 $53, 727 $58,368 $52,452 $58,824 $11,309 165,585 Req. 5 Cash Payments for Direct Labor Budget January February March $3,807 $4,442 $4,293 Quarter $12,542 Direct labor Req. 6 Cash Payments for Manufacturing Overhead Costs January February March $5,500 $5,500 $5,500 $2,900 $2,900 $2,900 Quarter $16,500 8,700 Rent (fixed) Other MOH (fixed) Variable manufacturing overhead costs Total disbursements $9,306 $10,857 $10.494 $30,657 $17.706 $19.257 $18.994 $55,857 March $12,000* $1,800 $13,800 Quarter $34,750 $5,400 $40,150 March $4,951 117,540 122,491 Quarter $4,600 304,870 309,470 Req. 7 Cash Payments for Operating Expenses January February Variable operating expenses $10,375 $12,375* Fixed operating expenses $1,800 $1,800 Total disbursements $12,175 $14.175 * Hint: Units sold Variable operating expenses per unit sold ($1.25) Req. 8 Combined Cash Budget January February Cash balance, beginning $4,600 $4,432 Plus: cash collections (req. 1) 81,010 106,320 Total cash available 85,610 110.752 Less cash disbursements: DM purchases (req 4) 53,490 53,727 Direct labor costs (regs) 3,807 4,442 MOH costs (reg 6) 17,706 19,257 Operating expenses (reg 7) 12,175 14,175 Tax payment 10,000 Equipment purchases 5,000 12.200 Total Cash payments 92.178 113,801 Ending cash before financing (6 568) 3,049) Financing: Borrowings 11,000 8,000 Repayments Interest Total financing 11,000 8,000 Cash balance, ending $4.432 $4.951 58,368 4,293 18,894 13,800 165,585 12,542 55,857 40,150 10,000 33,800 317,934 (8,464 16,600 111,955 10,536 (6,000) (490) 16,490) $4,046 19,000 (6,000) (490) 12,510 $4,046 Reg. 9 Budgeted Manufacturing Cost per Unit Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead costs Fixed MOH Cost of manufacturing each unit $6.00 0.45 1.10 0.70 $9.25 Req. 10 Presidio Manufacturing Budgeted Income Statement For the Quarter Ended March 31 Sales Less: Cost of goods sold Gross profit Less: Operating expenses Less: Depreciation expense Operating income Less: Interest expense Less: pincome tax expense @ 30% Net income $333,600 229,350 104,250 40,150 4.600 59,500 490 17.703 $41.302
