Exercise 8-3 (Algo) Direct Materials Budget (L08-4) Two grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the musk oil is $1.60 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: Year 2 Year 3 First Second Third Fourth First Budgeted production, in bottles 76,000 106,000 166,000 116,000 86,000 The Inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 30,400 grams of musk oil will be on hand to start the first quarter of Year 2. Required: Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. Mink Caress Direct Materials Budget - Year 2 First Quarter Second Quarter 76.000 106.000 2 2 152,000 212,000 Year Third Quarter 168,000 2 Fourth Quarter 116,000 2 232,000 464,000 2 928,000 332,000 Required production in units of finished goods Units of raw materials needed per unit of finished goods Units of raw materials needed to meet production Add: Desired units of ending raw materials inventory Total units of raw materials needed Less: Units of beginning raw materials inventory Units of raw materials to be purchased Unit cost of raw materials Cost of raw materials to purchased $ 1.60 $ 1.60 $ 1.60 $ 1.60 $ 1.60 Problem 8-19 (Algo) Cash Budget; Income Statement; Balance Sheet (LO8-2, LO8-4, LO8-8, LO8-9, LO8- 10) Minden Company is a wholesale distributor of premium European chocolates. The company's balance sheet as of April 30 is given below: Minden company Balance Sheet April 30 Assets Cash Accounts receivable Inventory Duildings and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Note payable Common stock Retained earnings Total liabilities and stockholders' equity $ 9,200 76,250 49,750 228,000 $363,200 $ 63,750 23,900 180,000 95.550 $363,200 The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $227,000 for May. Of these sales, $68,100 will be for cash; the remainder will be credit sales. One-half of a month's credit dales are collected in the month the sales are made, and the remainder is collected in the following month. All of the April 30 accounts receivable will be collected in May. b. Purchases of Inventory are expected to total $159,000 during May. These purchases will all be on account. Forty percent of all purchases are paid for in the month of purchase, the remainder are paid in the following month. All of the April 30 accounts payable to suppliers will be paid during May. c. The May 31 inventory balance is budgeted at $87,500 d. Selling and administrative expenses for May are budgeted at $79,500, exclusive of depreciation. These expenses will be paid in e. The note payable on the April 30 balance sheet will be paid during May, with $105 in interest (All of the Interest relates to May.) 9. During May, the company will borrow $25,100 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year. Required: 1. Calculate the expected cash collections from customers for May 2. Calculate the expected cash disbursements for merchandise purchases for May 3. Prepare a cash budget for May. 4. Prepare a budgeted income statement for May 5. Prepare a budgeted balance sheet as of May 31. Required: 1. Calculate the expected cash collections from customers for May 2. Calculate the expected cash disbursements for merchandise purchases for May. 3. Prepare a cash budget for May. 4. Prepare a budgeted income statement for May 5. Prepare a budgeted balance sheet as of May 31. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Req 4 Reqs Prepare a cash budget for May. (Cash deficiency, repayments and interest should be indicated by a min 223,800 223,800 Minden Company Cash Budget For the Month of May Beginning cash balance Add collections from customers Total cash available Less cash disbursements: Purchase of inventory Selling and administrative expenses Purchases of equipment Total cash disbursements Excess of cash available over disbursements Financing Borrowing-note Repayments-note Interest Total financing Ending cash balance 11,800 11,800 212,000 25,100 (105) 24.995 $ 236.995 Required: 1. Calculate the expected cash collections from customers for May. 2. Calculate the expected cash disburements for merchandise purchases for May. 3. Prepare a cash budget for May 4. Prepare a budgeted income statement for May. 5. Prepare a budgeted balance sheet as of May 31. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Req 4 Reg 5 Prepare a budgeted income statement for May. Minden Company Budgeted Income Statement For the Month of May Sales Cost of goods sold (Gross margin Selling and administrative expenses Net operating income Interest expense Net Income 0 $ Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 Reg 4 Reg 5 Prepare a budgeted balance sheet as of May 31. Minden Company Budgeted Balance Sheet May 31 Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Note payable Common stock (Retained earnings Total liabilities and stockholders' equity $