Answer questions i - j. Please show work

1 (22 points). Jango Fett Inc., produces wiring harness assemblies used in the production human robotics. The wiring harness assemblies are sold to various robotic manufacturers around the world. Projected sales in units for the coming five months are given below. January 10,000 February 10,500 March 13,000 April 16,000 May 18,500 The following data pertain to production policies and manufacturing specifications used by Jango Fett: 1. Finished goods inventory on January 1 is 900 units. The desired ending inventory for each month is 20 percent of the next month's sales. 2. The data on materials used are as follows: Direct Material Per-Unit Usage Unit Cost Part #R2-D2 Part #C-3PO Inventory policy dictates that sufficient materials be on hand at the beginning of the month to satisfy 30 percent of the next month's production needs. This is exactly the amount of material on hand on January 1. 3. The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20. 4. Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.) Fixed Cost Component Variable Cost Component Supplies $ - $1.00 Power 0.20 Maintenance 12,500 1.10 Supervision 14,000 Depreciation 45,000 Taxes 4,300 Other 86,000 1.60 1.60 5. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.) Fixed Costs Variable Costs Salaries $ 88,500 Commissions $1.40 Depreciation 25,000 Shipping 3.60 Other 137,000 6. The unit selling price of the wiring harness assembly is $110. 7. In February, Jango Fett plans to purchase land for future expansion. The land costs $68,000. 8. All sales and purchases are for cash. The cash balance on January 1 equals $62,900. The firm wants to have an ending cash balance of at least $25,000. If a cash shortage develops, sufficient cash is borrowed to cover the shortage and provide the desired ending balance. Any cash borrowed must be borrowed in $1,000 increments and is repaid the following month, as is the interest due. The interest rate is 12 percent per annum. Required: Prepare a monthly operating budget for the first quarter with the following schedules: a. Sales budget b. Production budget c. Direct materials purchases budget d. Direct labor budget e. Overhead budget f. Selling and administrative expense budget g. Ending finished goods inventory budget h. Cost of goods sold budget i. Budgeted income statement (ignore income taxes) j. Cash budget (See Chapter 6 Appendix) 3 A. Sales Budget For First Quarter 8 Expected Sales Value Unit Selling Price Budgeted Sales in Dollars January February March 100001 10500 13000 $110 $110 $110 $1,100,000 $1,155,000 $1,430,000 Total Quarter First | 33500 $110 $3,685,000 10 12 13 B. Production Budget 18500 15 16 17 18 19 32001 Budgeted bats to be sold Desired Ending Inventory (Plus) Total Needs Estimated Begining Inventory (Less) Budgeted Units to be Produced January February March 10000 10500 21001 2600 12100 131001 900 2100 11200 11000 Working Total Quarter First April May 13000 33500 16000 3200 3700 16200 367001 19700 2600 3200 13600 35800 16500 9001 . 25 112001 26 27 28 29 30 Direct Materials Budget Part # R2-D2 January February March Budgeted Units to be Produced 11200 1 1000 Direct materials per unit in pounds Direct materials needed for production 224001 2 20001 Desired Raw Material Ending Inventory (Plus) 66001 8160 Total direct materials needed 29000 30160 Estimated Beginning Inventory (Less) 6720 6600 Budgeted Raw Materials purchases in units 22280 23560 Direct materials cost per unit Budgeted cost of direct materials 89120 94240 Part # C-3PO T otal Quarter First January February March Total Quarter First Gross Total 13600 110001 13600 313 272001 33600 33000 40800 9900 9900 12240 148501 37100 43500 45240 55650 8160 10080 9900 12240 28940 334201 353401 43410 7 115760 2 99120 233940 247380 303870 785190 1084310 31 4 32 33 D. 36 Direct Labor Budget 38 Budgeted Bats to be produced 39 Direct Labor hour needed per unit Direct labor hours needed for production 41 Hourly Rate 42 Budgeted Direct Labor Costs 1.5 Total Quarter First 35800 1.5 53700 January February March 11200 11000 13600 1.5 1.5 16800 16500 20400 20 336000 330000 408000 20/ 20 20 1074000 44 45 E. Overhead Budget Total Quarter First 48 49 50 51 52 53 Budgeted units to be produced Labor Hours (1.5 per unit) Variable: (Supplies) Power (0.2) Maintenance (1.1) Other (1.6) Fixed: (Maintenance) Supervision Depreciation Taxes Other Total Overheads Per Unit January February March 11200 1 1000 1 3600 16800 16500 20400 16800 16500 20400 33601 3300 4080 18480 18150 22440 26880 26400 32640 125001 12500 12500 140001 14000 14000 45000 45000 45000 43001 4300 4300 860001 86000 86000 227320 226150 241360 20.30 20.56 17.75 55 56 57 58 59 694830 Selling and Administrative Expense Budget Total Quarter First Budgeted units to be produced Variable: (Comissions: 1.4) Shipping (3.6) Other (1.6) Fixed: (Salaries) Depreciation Other Total Per Unit January February March 11200 11000 13600 15680 15400 19040 40320 39600 48960 17920 17600 21760 88500 88500 88500 25000 25000 25000 137000 137000 137000 324420 323100 340260 28.97 29.37 25.02 987780 G. Ending Finished Goods Inventory Budget 8 30 Direct Material per unit (R2-D2) Direct Material per unit (C-3PO) Direct Labor per unit Total Overhead per unit Total Cost per unit Desired ending inventory Amount January February March Total Quarter First 8 81 21 21 301 30 20.3 20.56 17.75 79.3 79.56 76.75 2100 2600 3200 166530 206856 245600 618986 H. Cost of Goods Sold Budget Total Quarter First Beginning Inventory Direct Material R2-D2 Direct Material C-3PO Direct Labor Total Overhead Ending Inventory (less) Cost of Goods Sold January February March 71370 166530 206856 89120 942401 115760 233940 247380 303870 3360001 330000 408000 227320 226150 241360 166530 206856 245600 791220 857444 1030246 2678910