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 o February o March o April o May 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 o Rent o Advertising o Telephone o Other

$6,000 $1,500 $1,100

$300 $500

5,000 units 4,000 units 6,000 units

5,000 units 11,250 units

Bettys Beautiful Baskets Page 2

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:

Selling & Administrative Expenses Budget

Bettys check figures Total March sales, $210,000 Total February cash collections, $147,000 Total February units to produce, 4,400 Total March direct materials purchase, $58,900 Total February cash disbursements for raw materials, $46,400 Total January direct labor, $30,600 Total March overhead, $37,800 Total January selling & admin, $9,400 Total February cost of goods sold, $92,182 Total March cost per unit, $22.89 Total March cost of goods manufactured, $132,775 Total January 1 Assets, $269,250 Ending cash, March 31, $120,209 Net income, February, $29,849 Total Assets, March, $380,901