During 2021-2022 fiscal year, the average selling price for large box cars is expected to be (1) $115 per car. The Large Box Car Division forecasts the following units of sales. Quarter First Second Third Fourth Box Car UNIT Sales (2-5) 65,000 60,000 57,000 60,000 The collection pattern for Accounts Receivable is as follows: 0 (6) 40 percent of all sales are collected within the quarter in which they are sold O (7) 60 percent of all sales are collected in the following quarter. o There are no bad debts/uncollectible accounts. Due to high demand last year, the Large Bax Car Division expects to have (8) zero finished box cars in Inventory on (35) July 1, 2021, the beginning of the first quarter of the new fiscal year (l.e. Beginning Finished Goods Inventory is (6) Zero). To avoid having that problem in the coming fiscal year, the Large Box Car Division would like to have the ending Inventory of Box Car at the end of each of the first three quarters equal to 25% of the budgeted sales for the next quarter. They would like to have (20) $ 15,000 finished Box Cars on hand on (35) June 30, 2022. Quarter First Second Third Fourth Ending FG Inventory of Box Cars as a % of the next quarter's budgeted 25% 25% 25% sales (9) Ending FG Inventory of Box Cars (10) ? ? 7 15,000 Each large box car requires an average of (11) 6.0 feet of wood. The Large Box Car Division buys wood for (59) $3.00 per foot and they epect the price to remain constant throughout the year. They expect to have 250,000 feet of wood (RAW MATERIALS) on hand as of 5) July 2, 2021 (250,000 ( $3.00 = $150,000 - This is beginning Direct Material Inventory), the beginning of the first quarter of the fiscal year. At the end of each of the first three quarters, the Large Box Car Division would like to have their direct materials Inventory quantity to equal (45) 25 percent of the amount required for the following quarter's planned production. On 3) June 30, 2022, the end of the fiscal year, Large Box Car Division would like to have (16) 60,000 feet of wood on hand (This is ending Direct Material Inventory). Quarter First Second Third Fourth Ending DM Inventory as a % of the nect quarter's production 25% 25% 25% ? requirement 15) Ending DM Inventory In feet (16) ? 7 ? 60,000 The Large Bac Car Division buys its wood on account. It pays for 47) 25% of its purchases of direct materials in the quarter in which they were purchased and (5575% in the quarter after they were Focus Poved manufacturing overhead is estimated to total (22) $110,000 each quarter, with (3) $40,000 out of the total amount of 22) $110,000 representing depreciation on machinery, equipment and the factory. All other fixed manufacturing overhead expenses are paid in cash in the quarter they occur. The fixed manufacturing overhead rate will be computed by dividing the year's total foed manufacturing overhead by the year's budgeted direct labor hours. Round the fixed overhead rate to the nearest penny. Variable selling and administrative expenses are estimated to be (24) $15.00 per box car sold. Fixed selling and administrative expenses are expected to total (25) $90,000 each quarter, with (26) $40,000 out of the total amount of 25) $90,000 representing deprecation on the office space, fumiture and equipment. Other than depredation, all selling and administrative expenses are paid for in the quarter they occur. On (36) June 30, 2022, the last day of the quarter, the Large Bax Car Division plans to buy new machinery and equipment for 27) $500,000. The new machinery and equipment will be acquired at the very end of the fiscal year, so I will not be used in production and sales during the coming year and it will not be A deprecated until the following year. The Large Box Car Division expects to pay (28) 30% down in cash and finance the remaining (29 70% of the equipment cost with a note payable from a local bank with whom they do business with. No Interest payable will accrue on the equipment note payable until after 6) June 30, 2022 The Division must maintain a minimum cash balance of (30) $100,000. 1 after accounting for cash receipts and disbursements (including dividends) In the cash budget, the budgeted cash avalable cash falls below 30) $100,000 in any quarter, the Division will need to borrow cash. They have arranged a line of credit allowing it to borrow in $10,000 Increments (iethey can borrow $10,000 or $20,000 etc. but not an odd amount). Assume borrowing will take place at the beginning of any quarter in which the available cash would otherwise be below (30) $100,000 so that at no time during the quarter will the cash balance fall below (0) $100,000 (after payment of Interest). If there is extra cash at the end of the quarter and there is borrowing outstanding, the division should pay down prindpal (also in increments of $10,000). The bank charges the Division interest at the rate of 31% 4% per quarter. Interest accrued in the quarter will be paid the first day of the net quarter (eg, Q1's Interest is not paid in cash until Q2 and Q2's Interest will be paid In Q3). As a fully owned subsidiary, the Large Box Car Division does not pay Income taxes. All income taxes are charged to Tommy's Bar Car's, the parent company. Large Bax Car Division will pay dividends of $70,000 each quarter to its corporate parent, Tommy's Box Car's. The dividends must be paid, even if the Large Box Car Division has to borrow on its line of credit to make the payment The budgeted balance sheet for the Large Box Car Division on June 30, 2021 (which is the same as the budgeted balance sheet at the beginning of business (5) July 1, 2021) is presented below. Tommy's Box Cars owns 100% of the Capital Stock of the Large Box Car Division DAN LARGE BOX CAR DIVISION - TOMMY'S BOX CARS BUDGETED BALANCE SHEET (30) JUNE 30, 2021 ASSETS Cash Accounts Receivable Raw Material Inventory (19) Plant and Equipment $1,850,000 2,900,000 150,000 9.600.000 LIABILITIES & EQUITY Accounts Payable $800,000 Notes Payable 0 Capital Stock 3,500,000 Retained Earnings 10.200.000 TOTAL ASSETS $14.500.000 TOTAL LIAB. & SE $14.500.000 Q1 03 04 Year Total Item Units Sold Selling Price Per Unit Total Budgeted Sales Revenues Production Budget Q1 Q2 Q3 04 Year Total Item Budgeted Sales in Units Add: Desired Ending Invtory =Total Needed Less: Beginning Inventory Units to be produced Direct Materials Budget Q1 Q2 Q3 04 Year Total Item Total Production of Box Cars Wood Feet per Car Total Wood Required (feet) Add: Desired Ending Wood (feet) Total Needs (feet) Less: Beginning Inventory Total DM to be purchased (feet) Cost per foot Total cost of direct materials purchases Direct Labor Budget Q1 Q2 Q3 24 Year Total Item Total Production in Units X Direct Labor Hours per Unit Total Direct Labor Hous Required X Labor Wage Rate Total Direct Labor Costs Manufacturing Overhead Budget (MOH) Q1 02 Q3 Year Total Item Variable MFG Overhead: Total direct labor hours x Variable overhead rate per DL Hour Total Variable MFG Overhead Total Elved Manufacturing Overhead C O E Total Variable MFG Overhead Total Fixed Manufacturing Overhead - Total Manufacturing Overhead Lees: Depreciation (non-cash expense) - Cash Disbursements for MFG Overhead Pre-Determined Overhead Rate Calculation Hint: Recall from Chapter 2 how you calculated your Pre-Determined Overhead Rate Total Budgeting MOH + "Cost Driver MOH to be Applied Per Driver Unit Selling and Admin Budget (S & A) Q1 Q2 Q3 04 Year Total Item Variable Sales & Admin Expenses: Sales In Units X Variable Sales & Admin Rate per unit Variable Sales & Admin Expense + Total Fixed Sales & Admin Expense Total Sales & Admin Expenses Less: Depreciation (non-cash expense) - Cash Disbisbursements for S&A Exp's Schedule of Cash Collections (Receipts) Q1 Q2 2.900.000 23 Item Accts Rec Balance Forward First quarter sales Second quarter sales Third quarter sales Fourth quarter sales Total Cash Collections 04 Year Total Item Acets Payable Balance Forward First quarter Purchases Second quarter Purchases F in Form + Schedule of Cash Disbursements Q1 Q2 800.000 93 04 Year Total D Second quarter Purchases Third quarter Purchases Fourth quarter Purchases Total Cash Payments Cash Budget Q1 Q2 03 04 Year Total Item Beginning Cash Balance Add: Cash Collections Total Cash Available Less: Cash Disbursements Direct Materials Direct Labor Manufacturing Overhead Selling & Administrative Equipment Purchases Dividends Total Disbursements Escess (Oficiency) of cash wallable over disbursements Cash Budget (Financing & Repayment) Q1 Q2 Q3 94 Year Total Item Excess (deficiency) of cash available over disbursements - Interest Payments +Borrowing Cat Beginning of QUARTER) -Repayments at the End of QUARTER) Equip loan (at the end of the year) Total Financing Ending Cash Balance Loan Balance for Interest Calculation $ $ Ending Finished Goods Inventory (at Cost) Hint: Use the information previously calculated above (Le your PDOH) to determine the product cost of one unit. Once completed, multiple the unit cost by the number of unitsin ending Inventory Ending Finished Goods Inventory Budget Quantity Contrate) Total Cost Production per Box Car per boxca per unit Direct materials Det bor Manufacturing overhead Filt in Form per unit C D E Direct labor Manufacturing overhead Production Cost per Bax Car Ending finished goods Inventory: Box Cars Ending finished goods Inventory in dollars X Tommy's Box Cars - Large Pro Forma Income Statement For the Fiscal Year Ended June 30, 2022 Item Amount 8 Sales Cost of goods sold 0 Gross margin 1 Selling & administrative expenses 2 Net operating Income 3 Interest expense 34 Net Income 5 36 Tommy's Box Cars - Large 37 Pro Forma Balance Sheet 38 As of June 30, 2022 AND June 30, 2021 19 Assets June 30, 2022 50 Cash 31 Accounts receivable 12 Direct materials inventory 13 Finished Goods inventory (baxcals) 4 Plant and equipment KS Total assets 16 Llabilities and Stockholders' Equity June 30, 2022 7 Accounts payable 48 Notes payable - equipment 49 Letter of credit outstanding SO Capital stock 51 Retained Earnings 52 Total liabilities and stockholders equity 53 54 ACCOUNTING EQUATION OUT OF BALANCE $ 55 56 June 30, 2021 $ 1,850,000 $ 2,900,000 $ 150,000 $ $ 9.600.000 $ 14,500,000 June 30, 2021 $ 800,000 $ $ $ 3,500,000 10,200,000 $ 14 500,000 . $