Beginning$-$of$-$year balances

Cash $$10,000$

Accounts receivables $($previous fourth quarter's sales$)$ $$61,200$

Raw materials $653$ Kits

Finished Goods $510$ Units

Accounts payable$($purchases made in previous fourth quarter$)$ $$33,255$

Desired end$-$of$-$year inventory balances

Raw materials $500$ kits

Finished goods $270$ units

Desired end$-$of$-$quarter balances

Raw materials as a portions of the following quarter's production $18\%$

Finished goods as a portion of the following quarter's sales $14\%$

Manufacturing costs other than raw materials are paid in quarter incurred unless it is an noncash expense

Variable Standard cost per unit Unit of input Unit price per input Total cost per unit

Raw materials $1$ kit $$44$ $$44\mathrm{.}00$

Direct labor hours at rate $0\mathrm{.}6$ hour $$18$ $$10\mathrm{.}80$

Variable overhead$/$labor hour $0\mathrm{.}6$ hour $$4$ $$2\mathrm{.}40$

Total Variable Standard cost per unit $$57\mathrm{.}20$

Fixed overhead cost per quarter used cash $$18,000$

Manufacturing Depreciation per quarter $$2,000$

Selling and administrative costs are paid in quarter incurred unless it is an noncash expense

Variable cost per unit $$2$

Fixed selling and administrative cost per quarter used cash $$23,100$

Selling and administrative depreciation per quarter $$2,200$

Portion of sales collected

Collected in the quarter of sale $67\%$

Subsequent quarter $32\%$

Bad debts $1\%$

Portion of purchases paid

Paid in the quarter of purchases $66\%$

Subsequent quarter $34\%$

Unit selling price $$120$

Sales forecast

Quarter First Second Third Fourth

Unit sales $3,0002,5002,7003,200$

Required: Prepare and answer the following. Make sure you use cell referencing

Hint: Please note that the annual total, does not necessarily mean that you should add across, for example, review exhibit $22\mathrm{.}13$ since desired ending inventory

is the inventory at the end of the period and beginning inventory is the beginning inventory at the beginning of the period.

$1.$ A sales budget for each quarter and the year.

$2.$ A production budget for finished goods of units each quarter and the year.

$3.$ A purchases budget for raw material of kits each quarter and the year.

$4.$ A manufacturing cost budget for each quarter and the year.

$5.$ A selling and administrative expense budget for each quarter and the year.

$6.$ A cash budget for each quarter and the year.

$7.$ A pro$-$forma contribution income statement for each quarter and the year.

Hint: You will need to compute Variable Cost of Goods Sold for each quarter, which is unit sold times total Variable Standard cost per unit.

$8.$ Using your information from #$7,$ compute the annual contribution margin, the breakeven in dollars for the year, and the margin of safety in dollars for the year.

Make sure you are using cell references. Comment on your results.

$9.$ What if the company is able to lower the fixed Manufacturing overhead costs that uses cash per quarter from $$18,000$ to $$14,000.$ Which budgets will change and what will be the new annual income?

You should only have to change the fixed manufacturing overhead costs that uses cash on this worksheet and all the appropriate budgets will change on the solution worksheet if you have

set up your cell references correctly. $.$Budqets Sales Units from Budqet #$1$

Budqets Sales Dollars from Budqet #$1$

Variable selling and admin. expenses:

Bad Debts

Variable selling and admin. expenses

Total variable selling and admin. Expenses

Fixed Selling and administrative Expenses

Total selling and administrative expenses

Budget $$

Cash Balance, Beqinning

Collection on sales:

Collected in current quarter

Collected in subsequent quarter

Total collection on sales

Cash available for operations

Cash Disbursements:

Purchases:

Paid in Current quarter

Paid in subsequent quarter

Direct labor

Variable Manufacturinq Dverhead

Fined Manufacturinq Duerhead

Variable selling and administrative expenses

Fixed selling and administrative expenses

Total Disbursements

Cash Balance, Ending

Budget $$7$ Hint: You will need to compute Yariable Cost of Goods Sold for each quarter, which is unit sold times total Yariable Standard cost per unit.

Sales Revenue