eBook Operating Budget, Comprehensive Analysis Allison Manufacturing produces a subassembly used in the production of jet aircraft engines. The assembly is sold to engine manufacturers and aircraft maintenance facilities Projected sales in units for the coming 5 months follow January 40,000 February 50,000 March 60.000 April 60,000 May 62,000 The following data pertain to production policies and manufacturing specifications followed by Allison Manufacturing: . Finished goods inventory on January 1 is 32,000 units, each costing $166.06. The desired ending inventory for each month is 80% of the next month's sales b. The data on materials used are as follows: Direct Material Per-Unit Usage DM Unit Cost ($) Metal 10 lbs. Components Inventory policy dictates that sufficient materials be on hand at the end of the month to produce 50% of the next month's production needs. This is exactly the amount of material on hand on December 31 of the prior year. C. The direct labor used per unit of output is 3 hours. The average direct labor cost per hour is $14.25. d. Overhead each month is estimated using a flexible budget formula. (Note: Activity is measured in direct labor hours.) Fixed-Cost Variable-Cost Component ($) Component ($) Supplies 1.00 0.50 Maintenance 0.40 30,000 16,000 Supervision Print item Taxes 12,000 Other 80,000 0.50 e. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Note: Activity is measured in units sold.) Fixed Variable Costs ($) Costs (5) Salaries 50,000 Commissions 2.00 Depreciation 40,000 Shipping 1.00 Other 20,000 0.60 f. The unit selling price of the subassembly is $205. 9. All sales and purchases are for cash. The cash balance on January 1 equals $400,000. The firm requires a minimum ending balance of $50,000. If the firm develops a cash shortage by the end of the month, sufficient cash is borrowed to cover the shortage. Any cash borrowed is repaid at the end of the quarter, as is the interest due cash borrowed at the end of the quarter is repaid at the end of the following quarter). The interest rate is 12% per annum. No money is owed at the beginning of January Required: 1. Prepare a monthly operating budget for the first quarter with the following schedules. (Note: Assume that there is no change in work-in-process inventories.) a. Schedule 1: Sales Budget. Do not include a multiplication symbol as part of your answer. Allison Manufacturing Sales Budget For the Quarter Ended March 31 January March Units Selling price $ 40,000V 20 February 50,000 205 60,000 205 150,000 205 $ f. Schedule 6: Selling and Administrative Expenses Budget. If required, round amounts to the nearest cent. Do not include a multiplication symbol as part of your answer Allison Manufacturing Selling and Administrative Expenses Budget January February March Planned sales Variable selling and administrative expenses per units Total variable expense Fixed selling and administrative expenses DODOO DODE Salaries Depreciation Other Total fixed expenses Total selling and administrative expenses g. Schedule 7: Ending Finished Goods Inventory Budget. round amounts to the nearest cent. Allison Manufacturing Ending Finished Goods Inventory Budge For the Quarter Ended March 31 Unit cost computation: Direct materials: Metal Metal O Components Direct labor Overhead: Variable Fixed Total unit cost Finished goods inventory h. Schedule 8: Cost of Goods Sold Budget. Allison Manufacturing Cost of Goods Sold Budget For the Quarter Ended March 31 Direct materials Metal Components Direct labor used Overhead Budgeted manufacturing costs Add: Beginning finished goods Cost of goods available for sale Less: Ending finished goods Budgeted cost of goods sold i. Schedule 9: Budgeted Income Statement. Use a minus sign to indicate a negative amount. Allison Manufacturing Budgeted Income Statement For the Quarter Ended March 31 Sales Less: Cost of goods sold Gross margin JOJOJ Less: Selling and administrative expenses Income before taxes Feedback Check My Work j. Schedule 10: Cash Budget. If an amount is zero, enter "0". Use a minus sign to enter a negative amount. Allison Manufacturing Cash Budget For the Quarter Ended March 31 January February March Beginning balance Cash receipts Cash available Less Disbursements: Purchases Direct labor QUIDQUIDO QUIDQUI O | QOQ Quddddddd Overhead Selling & admin Total Tentative ending balances Borrowed/repaid Interest paid Ending balance