Fine Office Company

Fine Office Company makes office furniture for offices. They are in the process of preparing

a Master Budget including the Operating budget, Cash Statement, Income Statement

and Balance Sheet for 2023. The yearly budget is broken into quarters. The year end is

31st December 2023. Your group has been requested to compile a master budget for the

fiscal year 2023.

Package is to include the following budgets;

1. Sales budget for each quarter and for the year

2. Production budget for each quarter and for the year

3. Purchasing Budget for each quarter and for the year

4. Direct labour budget for each quarter and for the year

5. Manufacturing overhead budget for each quarter and for the year

6. Selling and Administration budget

7. Work sheets for Collections and Disbursements

8. Budgeted Income Statement

9. CVP Income Statement

10. Budgeted Cash Statement

11. Budgeted Balance Sheet

Additional details:

Fine Office Company produces two products P100 and P200

Sales price per P100 is

$165

Sales price per P200 is

$315

There are

units from P100 in finished goods inventory at the end of 2022 with a value of $

360,000

and

units from P200 at the end

of 2022 value

300,000

. At the end of each quarter, Fine Office Company requires ending inventory to be equal to

10%

of the following quarter's budgeted sales in units.

The required ending inventory for Dec. 31, 2023 are

600

units for P100 and

400

units for P200

Each P100 unit uses

3

sq. ft. of steel during the manufacturing process. The cost of steel for 2023 is estimated to be $

8

per sq. ft.

Each P200 unit uses

4

sq. ft. of steel during the manufacturing process.

Fine Office Company currently has

3,000

sq. ft.

of steel in the beginning inventory.

At the end of each quarter, Fine Office Company wants to have

1,000

sq. ft.

of ending inventory

Each product requires

4

machine hours and

3

direct labour hours to produce.

Direct Labour costs $

$21

per direct labour hour.

Fine Office Company allocates manufacturing overhead costs based on the estimated machine hours

Estimated variable manufacturing overhead cost for 2023 are

30,000

and the fixed manufacturing overhead is

$ 100,000

per year

For each quarter, it is estimated that

20%

of sales will be cash and

80%

will be credit sales.

Of the credit sales, 25% pay in the quarter of the sales and 50% pay in the following quarter, and 25% pay in the next quarter

Credit sales from Q4 2022 were

$1,300,000

Direct labour costs and manufacturing overhead costs are paid for in cash in the quarter they

occurred.

Assume operating expenses occur evenly throughout the year and are all paid in cash.

For each quarter,

40%

of material purchases are paid for in cash in the quarter of

the purchase and

60%

are paid in the following quarter. Purchases of materials from

Q4 2022 were

$150,000

Fine Office Company

Additional details continued:

Fine Office Company will pay

$60,000

in dividends in Q4

Currently, the cash balance in the bank is $15,000. Fine Office Company wants to maintain a

minimum cash balance of $10,000 in the bank for each quarter.

Budgeted sales volumes year 2024 Q1:

P100

Q1

7800

P200

Q1

8500

Budgeted sales volumes year 2023 are:

P100

Q1

7800

Q2

6700

Q3

5000

Q4

5000

P200

Q1

8000

Q2

8000

Q3

7000

Q4

6500

Selling and Administration expenses for the budgeted year are as follows;

Variable Cost:

Delivery costs are based on $

3

per sales unit.

Commissions are based on

1%

of sales value.

Fixed Costs:

$

Accounting & professional services

3600

Administrative & Sales Salaries

100000

Advertising

25000

Computer costs

9000

Depreciation

80000

Office Supplies

5000

Printing

5000

Insurance

4000

Property taxes

5000

Rent

40000

Utilities

13400

Total Fixed Costs

290000

Fine Office Company will purchase a new machine on 1/1/2023 worth $

500000

and will make two equal

payments. The first payment will be in Q1 and the second in Q4. Assume the machine was

purchased at the beginning of the year.

Taxation is

30%

on taxable income and paid at the end of Q 4 each year. Ignore calculate taxes for negative net income

Balance sheet information as at 31st December 2022 is as follows:

PPE

$100,000

Accumulated Depreciation

$100,000

Common Stock

$580,000

Retained Earnings

$145,000

Accounts Receivable

$520,000

Accounts Payable

$494,000

For Cost of goods sold (COGS);

Add total costs of production + Beginning Finished goods - Ending Finished goods Inventory.

Interest of $

9000

on loans is paid in total at the end of the year and is a fixed cost.

Based on the data I need a production budget, Direct materials budget, Direct labor budget, Manufacturing overhead budget, Cost of ending finished, cost of goods sold, selling and administration budget.