Chapter 8 Master Budget in-class Royal Company is preparing budgets for the quarter ending June 30th.

1. Sales forecast for the next five months are:

April 20,000 units

May 50,000 units

June 30,000 units

July 25,000 units

August 15,000 units

The selling price is $10 per unit. All sales are on account.

Royals collection pattern is:

70% collected in the month of sale,

30% collected in the month following sale,

The March 31st accounts receivable balance of $30,000 will be collected in full in April.

2. Prepare a sales budget, including schedule of cash collections for Royal. The management at Royal Company wants ending inventory to be equal to 20% of the following months budgeted sales in units. On March 31st, 4,000 units were on hand.

3. Prepare the production budget for Royal.

At Royal Company, five pounds of material are required per unit of product. Management wants materials on hand at the end of each month equal to 10% of the following months production. On March 31, 13,000 pounds of material are on hand. Material cost is $0.40 per pound. One-half of a months purchases is paid for in the month of purchase; the other half is paid in the following month. The March 31 accounts payable balance is $12,000

4. Prepare the direct materials budget including expected cash disbursements for Royal. DM Budget in pounds. Part 1 (convert from units to pounds) & 2 (convert from pounds to purchase dollars, including a schedule of cash disbursements) At Royal, each unit of product requires 0.05 hours (3 minutes) of direct labor. The labor can be unskilled because the production process is relatively simple and formal training is not required. Royal pays its workers at the rate of $10 per hour.

5. Prepare the direct labor budget.

At Royal, manufacturing overhead is applied to units of product on the basis of direct labor hours. The variable manufacturing overhead rate is $20 per direct labor hour. Fixed manufacturing overhead is $50,000 per month, which includes $20,000 of noncash costs (primarily depreciation of plant assets).

6. Prepare the manufacturing overhead budget and calculate the a total MOH per DLH including variable and fixed MOH

7. Prepare the finished goods inventory budget: At Royal, the selling and administrative expense budget is divided into variable and fixed components. The variable selling and administrative expenses are $0.50 per unit sold. Fixed selling and administrative expenses are $70,000 per month. The fixed selling and administrative expenses include $10,000 in costs (primarily depreciation) that are not cash outflows of the current month.

8. Prepare the companys selling and administrative expense budget showing total S&A expenses and expected cash disbursements.

Royal maintains a 16% open line of credit for $75,000, requires a minimum ending cash balance of $30,000i, borrows on the first day of the month and repays loans on the last day of the month. No loan payment was made in May. Royal pays a cash dividend of $49,000 in April, purchases $143,700 of equipment in May and $48,300 in June (both purchases paid in cash). Royal has an April 1 cash balance of $40,000. 9. Prepare the cash budget

10. Prepare a budgeted income statement

Royal reported the following account balances prior to preparing its budgeted financial statements:

(all April 1 balances) Land - $50,000 Common stock - $150,000 Retained earnings - $248,650 (April 1) Equipment - $175,000

11. Prepare a budgeted balance sheet.

I need question10 and 11 answered.