Course Project: Master Budget

Using Excel

Milo-Freeze Company

Description

This course contains a Course Project, where you will be required to submit the final completed project at the end of Week 7. Using the budgeting assumptions provided for Milo-Freeze Company, you will prepare a sales budget, a production budget, a direct materials budget and a schedule of expected cash payments for purchases of materials. An Excel template will be provided and required to use to complete and submit.

Budgeting Assumptions

Milo-Freeze Company manufactures and sells a product that has seasonal variations in demand, with peak sales coming in the third quarter. The following information concerns operations for Year 2- the coming year- and for the first two quarters of Year 3:

1. The companys single product sells for $10 per unit. Budgeted sales in units for the next six quarters are as follows:

	Year 2 Quarter				Year 3 Quarter
	1	2	3	4	1	2
Budgeted unit sales	40,000	60,000	100,000	50,000	70,000	80,000

2. Sales are collected in the following pattern: 75% in the quarter the sales are made, and the remaining 25% in the following quarter. On January 1, Year 2, the companys balance sheet showed $65,000 in accounts receivable, all of which will be collected by the end of first quarter. Bad debts are negligible and can be ignored.
3. The company desires an ending inventory of finished units on hand at the end of each quarter equal to 30% of the budgeted sales for the next quarter. On December 31, Year 1, the company had 12,000 units on hand.

4. Six pounds of raw materials are required to complete one unit of product. The company requires an ending inventory of raw materials on hand at the end of each quarter equal to 10% of the production needs of the following quarter. On December 31, Year 1, the company had 23,000 pounds of raw materials on hand.

5. The raw material costs $0.80 per pound. Purchases of raw material are paid for in the following pattern: 60% paid in the quarter the purchases are made, and the remaining 40% paid in the following quarter. On January 1, Year 2, the companys balance sheet showed $81,500 in accounts payable for raw material purchases, all of which will be paid for in the first quarter of the year.

Overall Requirements

Prepare the following budgets and schedules for the year, showing both quarterly and total figures:

1. A sales budget.
2. A cash collections budget.
3. A production budget.
4. A direct materials budget.
5. Cash payments for purchases of materials schedule.

Your final project should be completed and submitted as an Excel file.

Grade Information

The entire project will be graded by the instructor at the end of the final submission in Week 7, and one grade will be assigned for the entire project. The project will count for 20% of your overall course grade.

Category	Points	%	Description
Sales Budget	40	20.0%	A quality sales budget report will have correct calculations of sales. Supporting calculations must be shown, either as a formula, or as text typed into a different cell.
Cash Collections Budget	40	20.0%	A quality cash collections report will have correct calculations of cash collected on credit sales. Supporting calculations must be shown, either as a formula, or as text typed into a different cell.
Production Budget	40	20.0%	A quality production report will have correct calculations of how many units are required to produce. Supporting calculations must be shown, either as a formula, or as text typed into a different cell.
Direct Materials Budget	40	20.0%	A quality direct materials report will have correct calculations of the materials to be purchased. Supporting calculations must be shown, either as a formula, or as text typed into a different cell.
Cash Payments for Purchases	40	20.0%	A quality cash payments report will have correct calculations representing the cash disbursements for purchases. Supporting calculations must be shown, either as a formula, or as text typed into a different cell.
Total	200	100.0%	A quality report will meet or exceed all of the above requirements.