Bettys Beautiful Baskets

Bettys Beautiful Baskets, a manufacturing business that sells baskets, wants a master budget prepared for the first three months of this year (January, February and March).

The managers of the different departments have provided the following information: The Sales Manager has projected the following sales:

o January: 5000 units o February: 4,000 units o March: 6,000 units o April: 5,000 units o May: 11,250 units o Projected selling price is $35.00/unit

Your Production Manager gave the following information: o Ending Inventory is to be 20% of next months production needs o Aprils Projected Sales 5,000 units o December 20X5 Ending Inventory was 1,000 units and December unit cost was $23.50.

The Manufacturing Manager has estimated the following: o Each unit will require 4 grams of material o Material in Ending Inventory is 20% of next months needs o Decembers Ending Material Inventory was 4,800 g o Projected cost of material: $2.50/gram

The Personnel Manager has estimated that Direct Labor will be projected at: o 0.75 hours of Direct Labor per unit

o Direct Labor Cost: $8.50/hour

The Facilities Manager has estimated that the Manufacturing Overhead will be projected at:

o Variable Overhead Rate to be $8 per Direct Labor hours o Fixed Overhead Rate to be $3,000 per month

The Accounting Department Manager has provided the following information:

Selling and Administrative Expenses are projected to be a monthly cost of:

o Salaries: $6000 o Rent: $1500 o Advertising: $1,100

o Telephone: $300

o Other:$500

Cash Receivable: o Decembers Sales were $150,000

o 80% of sales is collected in the month in which they were made o 20% of sales collected in the following month in which they were made o Bad Debts is negligible

Accounts Payable: o 80% of Payables is paid for in the current month o 20% of Payables is paid for in the following month o Decembers purchases were $50,000

Federal Income Tax is estimated at 22% average.

Bettys Beautiful Baskets

o has a $20,000 cash balance for the beginning of January o pays Dividends of $8,000 to be paid in March o pays projected Federal Income tax in March o depreciation on the building is $150 per month

o does not carry any WIP inventory

o uses FIFO inventory costing

From the beginning Balance Sheet: o Land = $150,000

o Building = $45,000 o Depreciation (Building) = $11,250 o Retained Earnings = $58,780 o Capital Stock = $200,470

Prepare the following:

A Budgeted Balance Sheet for each month: Jan, Feb, March

Betty's Beautiful Baskets Sales Budget First Quarter, 2018 Jan Feb March Quarter Budgeted Sales in Units Selling Price Projected Sales Revenue 5000 $35 $175,000 4000 S35 $140,000 6000 S35 $210,000 15000 S35 $525,000 Betty's Beautiful Baskets Expected Cash Collections First Quarter, 2018 Jan Feb March Quarter Accts Receivable: Beginning Bal: Jan Sales Feb Sales March Sales Total Cash Collections $ 30,000.00 $ 30,000.00 175,000.00 $28,000 140,000.00 168,000 168,000.00 170,000.00 $17,000.00 $ 196,000.00 513,000.00 $140,000 $35,000 $112,000 Betty's Beautiful Baskets Production Budget First Quarter, 2018 Jan Feb March Quarter ril Budgeted unit sales Add: Desired Finished Goods Inv Total Needs Less: Beg. Inventory Required Production 800 5800 1000 4800 1200 5200 800 4400 15000 1000 16000 1000 15000 2250 7250 1000 6250 1000 1200 5800 Betty's Beautiful Baskets Direct Materials Budget First Quarter, 2018 Jan Feb March Quarter ril Required Production (units) Raw Materials per Unit Production Needs (grams) Add: Desired End Inv. (grams raw mat.) Total Needs (grams) Less Beg. Inv. Raw Materials (grams Raw Materials to be Purchased Cost: Raw Materials per gram Cost of Raw Materials to be Purchased 15000 6250 23200 5000 28200 4640 23560 $2.50 25000 19200 3520 22720 4800 17920 $2.50 17600 4640 22240 3520 18720 $2.50 13160 73160 5000 68160 $2.50 44,800.00 46,800.00 $58,900.00 $170,400.00 Betty's Beautiful Baskets Schedule of Cash Payments for Purchases First Quarter, 2018 Jan Feb March Quarter Accounts Payable: Beginning Balance First-Quarter Purchases Second-Quarter Purchases Third-Quarter Purchases Total Cash Disbursements $10,000 35,840.00 $10,000 $44,800 $46,800 $47,120 $148,720 $8,960.00 37,440.00 $9,360.00 $47,120.00 $56,480 $45,840 $46,400 Betty's Beautiful Baskets Direct Labor Budget First Quarter, 2018 Jan Feb March Quarter Units Of Production Direct Labor Time Per Unit Labor Hours Required Hourly Wage Rate Total Direct Labor Costs 4800 0.75 3600 $8.50 $30,600.00 15000 0.75 11250 $8.50 $28,050.00 $36,975.00 $95,625.00 4400 0.75 3300 $8.50 5800 0.75 4350 $8.50 Betty's Beautiful Baskets Manufacturing Overhead Budget First Quarter, 2018 Jan Feb March Quarter Budgeted Direct Labor Hours Var. Mfg. OH Rate Var. Mfg. OH Costs Fixed Mfg. OH Costs Total Mfg. OH Costs 3600 $8.00 $28,800.00 $3,000 $31,800.00 3300 4350 11250 $8.00 $26,400.00 $34,800.00 $90,000.00 $9,000 $29,400.00 $37,800.00 $99,000.00 $8.00 $8.00 $3,000 $3,000 Betty's Beautiful Baskets Selling and Administrative Expense Budget First Quarter, 2018 Jan Feb March Quarter Fixed S&A Expenses Total S&A Expenses $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $28,200 $28,200 Betty's Beautiful Baskets Cost of Goods Sold Budget First Quarter, 2018 Jan Feb March Jan March Beginning Inventory Units Cost Per Unit Beginning Inventory Dollars Cost of Goods Manufactured Goods Available for Sale Less Ending Inventory Cost of Goods Sold 1000 800 1200 Cost of Goods Manufactured $23.50 S $23,500.00 $ 23.00 $ 23.06 18,400.00 27,668.18 $110,400.00101,450.00 132,775.00 133,900.00119,850.00 160,443.18 27,668.18 22,892.24 92,181.82 137,550.94 Beginning DM Inventory 12000 8800 Materials Purchased 44,800.00 46,800.00 $58,900.00 Less Ending DM Inventory Cost of Direct Mat. Used Direct Labor Overhead Total Manufacturing Costs 8800 11600 125 48,000.00 44,000.00 58,000.00 28,050.00 $31,800.00 $ 29,400.00 37,800.00 $30,600.00 $ 18,400.00 $ $115,500.00 $ $110,400.00 101,450.00 132,775.00 Cost per unit Jan Feb March Direct materials Direct labor Variable 10.00 $ 6.38 $ 6.00 10.00 6.38 6.00 22.38 $22.38 10.00 $ 6.38 6.00 Total variable costs $22.38 $ $3,000.00 $ Fixed costs Units produced Fixed cost per unit 3,000.00 3,000.00 5800 0.52 4800 4400 0.63 $ 0.68 $ Total cost per unit $23.00 23.06 $22.89 Betty's Beautiful Baskets Cash Budget First Quarter, 2018 Jan Feb March Quarter Beginning Cash Balance Add: Cash Collections Total Cash Available Less: Cash Disbursements $20,000.00 $72,360.00 $106,110.00 $20,000.00 147,000.00 196,000.00 513,000.00 $219,360.00 $302,110.00 $533,000.00 $170,000.00 $ $190,000.00 Materials$45,840 Direct Labor $30,600.00 Manufacturing OH$31,800.00 $9,400 0 0 56,480 $148,720.00 $36,975.00 $95,625.00 37,800.00 $99,000.00 9,400$28,200.00 $0.00 $8,000$8,000.00 33,245.79 $33,245.79 $181,900.79 $412,790.79 $106,110.00 $120,209.21 $120,209.21 $46,400 $28,050.00 $29,400.00 $9,400 0 0 Selling and Admin Expenses Equipment Purchase Dividend Taxes $117,640.00 $72,360.00 Total Disbursements $113,250.00 Excess (Deficiency) of Cash Finanacing Borrowing Repayment Interest 0 0 0 0 0 0 Total Financing Ending Cash Balance $72,360.00 $106,110.00 120,209.21 $120,209.21