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 2021. The yearly budget is broken into quarters. The year end is 31st December 2021. Your group has been requested to compile a master budget for the fiscal year 2021. 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 360,000 and 500 units from P200 at the end of the following quarters budgeted sales in units 200 units for 1200 8 persatt Additional details Fine Office Company produces to products P100 and P200 Sales price per 100 is Sales price per P200 is There are 300 units from P100 in finished goods inventory at the end of 2020 with a value of 5 of 2020 valve 300.000 At the end of each warter Fine Office Company requires ending inventory to be equal to The required ending inventory for Dec 31, 2021 are 600 units for P100 and Each P100 unit uses It of steel during the manufacturing process. The cost of sted for 2021 estimated to be Each 200 unit uses 9. ft. of steel during the manufacturing process Fine Office Company currently has 30,000 sq.ft of steel in the beginning inventory. At the end of each quarter Fine Oifice company wants to have ofending ventory Each product requires machine hours and direct labourhs to produce Direct Labour costs per direct labour hour Fine Ottice Company allocates manufacturing overhead costs based on the estimated machine hours. Estimated manufacturing overhead cost for 2021 are 5 and are all variable for each quarter, it is estimated that 40 X of sales will be cash and will be credit sales of the credit sales, so pay in the quarter of the sale and 20% pay in the following quarter. Credit sales from 2020 were $1,300.000 Direct labour costs and manufacturing overhead costs are paid for in cathin the quarter they occurred Assume operating expenses occur evenly throughout the year and are all paid in cash . For each quarter 70 of material purchases are paid for in cash in the quarter of the purchase and 30 are paid in the following quarter. Purchases of materials from 04 2021 wr 3150 60 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 are: P100 Q1 K Q2 L Q3 M P200 Q1 O Q2 Q3 Selling and Administration expenses for the budgeted year are as follows: Variable Cost: Delivery costs are based on $ 0.3 per sales unit Commissions are based on 0.1% of sales value. Q4 Q4 z loc P lo R Fixed Costs: Accounting & professional services Administrative & Sales Salaries Advertising Computer costs Depreciation Office Supplies Printing Insurance Property taxes Rent Utilities Total Fixed Costs $ 3600 140000 20000 9000 70000 5000 3000 4000 2000 40000 3400 300000 Fine Office Company will purchase a new machine on 1/1/2021 worth $ 700000 and will make two equal payments. The first payment will be in Q2 and the second in 04. Assume the machine was purchased at the beginning of the year. Taxation is 30% on taxable income and paid at the end of Q4 each year. Balance sheet information as at 31st December 2020 is as follows: PPE $100,000 Accumulated Depreciation $100,000 Common Stock $580,000 Retained Earnings $145,000 - 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. Sales Budget Quarter 1 2 3 4 Year P100 Expected Sales units Selling Price Total Sales P100 P200 Expected Sales units Selling Price Total Sales P200 Total Sales Test: Production Budget Quarter 1 2 3 4 Year Expected Sales Units P100 Add desired ending of Inventory P100 Total needs P100 Less beginning of Inventory P100 P100 Required Production: Units Expected Sales Units P200 Add desired ending of Inventory P200 Total needs P200 Less beginning of Inventory P200 P200 Required Production: Units Direct Materials Budget 1 2 3 4 Year Quarter P100 Production units Materials per unit P100 Total material needs/Used P200 Production units Materials per unit P200 Total material needs/Used Total Material needs for P100 and P200 Add desired ending of Inventory Total needs Less beginning of Inventory Materials to be purchased: Units Unit price Materials to be purchased: $ Test: Cost of Ending Inventory of Direct materials 31st december 2021: Direct Labour Budget 3 Year Quarter Production Units Labour per unit Total labour needs Labour Rates Paid Total Direct Labour cost: $ Test Manufacturing Overhead Budget 2 3 4 Year Budeted Production units Machine hours per unit Total Budeted Machine hours Budgeted Manufacturing Overhead Test: Predetermined Overhead Rate: Estimated Manufacturing Overhead Machine Hours $ per machine hour Total Ending Finished Goods Inventory Budget P100 Cost Element Quantity Cost Direct Materials + Direct Labour + Manufacturing Overhead = Product Cost Per Unit X Ending Inventory in Units Ending Finished Goods Inventory Total Ending Finished Goods Inventory Budget P200 Cost Element Quantity Cost Direct Materials + Direct Labour + Manufacturing Overhead = Product Cost Per Unit X Ending Inventory in Units Ending Finished Goods Inventory $ Cost of Goods Sold Direct materials Used Direct labour costs Manufacturing Overhead Costs Total Costs of Manufacture: Beginning Finished Goods Inventory Less: Ending Finished Goods Inventory Cost of Goods Sold Year Selling and Administrative Expense Budget Quarter 1 Quarter 2 Quarter 3 Quarter 4 Budgeted Sales in units: Budgeted Sales value: Variable Cost: Delivery costs Commissions Total Variable Costs: Fixed Costs: Accounting & professional services Administrative and sales salaries Advertising Computer costs Depreciation Office Supplies Printing Insurance Property taxes Rent Utilities Total Fixed Costs: Total costs: Test: Cash Total per quarter: Note: Deduct Depreciation. Test: $ Income Statement for year ended 31st December 2021 $ Sales Cost of goods sold Gross profit Selling and Administration expenses Operating Income Interest expense Net Income before taxation Taxation Net Income After taxation Alternatively: $ $ Cost of Goods Sold Direct materials Used Direct labour costs Manufacturing Overhead Costs Total Costs of Manufacture: Beginning Finished Goods Inventory Less: Ending Finished Goods Inventory Cost of Goods Sold COGS using the unit cost method: Rounding difference: CVP Income Statement for year ended 31st December 2021 $ Sales Less: Variable Costs Direct materials Direct Labour Manufacturing Variable Overhead costs Selling & Administration variable costs Adjustment for Finished Inventory Beginning Finished Goods Inventory Less: Ending Finished Goods Inventory Total Contribution Margins Less: Fixed costs Selling & Administration fixed costs Interest costs Income Tax Net Income after taxation Check result with Income Statement: 3 4 Year CASH BUDGET for the year ending 31st December 2021 1 2 Beginning cash balance Add: Receipts Collections from Customers Total receipts: Total available cash: Less: Disbursements Direct Materials Direct Labour Manufacturing Overhead Selling and Administrative expenses Purchase of a Machine Income Tax expense Dividends Total disbursements: Excess (deficiency) of available cash over cash disbursements Financing Add: Borrowings Less: Repayments (including interest) Ending cash balance Notes: Minimum cash balance: $10,000 Interest on loans to be paid in Quarter 4 Taxation amount taken from the Income Statement Schedule of receipts from customers 2022 Qtr 1 Cash Sales Credit Sales Receipts by Quarter Qtr 2 Qtr 3 Qtr 1 Qtra Accounts Receivable - 31st Dec 2020 First Quarter Second Quarter Third Quarter Fourth Quarter Total Payments Cash Sales Credit Sales Collection of credit sate in the quarter of the sale Collection of Credit sale in the following quarter Schedule of expected payments for Direct materials Payments by Quarter Qtr 2 atr 3 2022 Qtr 1 Purchases Qtr 1 Qtr 4 Accounts Payable 31 Dec 2020 First quarter Second Quarter Third Quarter Fourth Quarter Total Payments Purchases paid in cash in the same quarter Purchases paid in the following quarter 3 Balance Sheet at 31st December 2021 Assets Current Assets Cash Accounts receivable Finished goods inventory Raw materials inventory Total Current Assets Property. Plant & equipment Less: Accumulated depreciation Total assets: Liabilities and Shareholders Equity Liabilities Accounts payable Bank loan Shareholders Equity Common Stock Retained Earnings Total Shareholders Equity Total Liabilities and Shareholders (quity Test: Statement of Retained Earnings as at 31st December 2021 Opening balance Net Income Less Dividends Closing balance $ $ Recreated from information provided: Balance Sheet at 31st December 2020 Assets Current Assets Cash Accounts receivable Finished goods inventory Raw materials inventory Total Current Assets: Property, Plant & equipment Less: Accumulated depreciation Total assets: Liabilities and Shareholders Equity Liabilities Accounts payable Shareholders Equity Common Stock Retained Earnings Total Shareholders Equity: Total Liabilities and Shareholders Equity 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 2021. The yearly budget is broken into quarters. The year end is 31st December 2021. Your group has been requested to compile a master budget for the fiscal year 2021. 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 360,000 and 500 units from P200 at the end of the following quarters budgeted sales in units 200 units for 1200 8 persatt Additional details Fine Office Company produces to products P100 and P200 Sales price per 100 is Sales price per P200 is There are 300 units from P100 in finished goods inventory at the end of 2020 with a value of 5 of 2020 valve 300.000 At the end of each warter Fine Office Company requires ending inventory to be equal to The required ending inventory for Dec 31, 2021 are 600 units for P100 and Each P100 unit uses It of steel during the manufacturing process. The cost of sted for 2021 estimated to be Each 200 unit uses 9. ft. of steel during the manufacturing process Fine Office Company currently has 30,000 sq.ft of steel in the beginning inventory. At the end of each quarter Fine Oifice company wants to have ofending ventory Each product requires machine hours and direct labourhs to produce Direct Labour costs per direct labour hour Fine Ottice Company allocates manufacturing overhead costs based on the estimated machine hours. Estimated manufacturing overhead cost for 2021 are 5 and are all variable for each quarter, it is estimated that 40 X of sales will be cash and will be credit sales of the credit sales, so pay in the quarter of the sale and 20% pay in the following quarter. Credit sales from 2020 were $1,300.000 Direct labour costs and manufacturing overhead costs are paid for in cathin the quarter they occurred Assume operating expenses occur evenly throughout the year and are all paid in cash . For each quarter 70 of material purchases are paid for in cash in the quarter of the purchase and 30 are paid in the following quarter. Purchases of materials from 04 2021 wr 3150 60 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 are: P100 Q1 K Q2 L Q3 M P200 Q1 O Q2 Q3 Selling and Administration expenses for the budgeted year are as follows: Variable Cost: Delivery costs are based on $ 0.3 per sales unit Commissions are based on 0.1% of sales value. Q4 Q4 z loc P lo R Fixed Costs: Accounting & professional services Administrative & Sales Salaries Advertising Computer costs Depreciation Office Supplies Printing Insurance Property taxes Rent Utilities Total Fixed Costs $ 3600 140000 20000 9000 70000 5000 3000 4000 2000 40000 3400 300000 Fine Office Company will purchase a new machine on 1/1/2021 worth $ 700000 and will make two equal payments. The first payment will be in Q2 and the second in 04. Assume the machine was purchased at the beginning of the year. Taxation is 30% on taxable income and paid at the end of Q4 each year. Balance sheet information as at 31st December 2020 is as follows: PPE $100,000 Accumulated Depreciation $100,000 Common Stock $580,000 Retained Earnings $145,000 - 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. Sales Budget Quarter 1 2 3 4 Year P100 Expected Sales units Selling Price Total Sales P100 P200 Expected Sales units Selling Price Total Sales P200 Total Sales Test: Production Budget Quarter 1 2 3 4 Year Expected Sales Units P100 Add desired ending of Inventory P100 Total needs P100 Less beginning of Inventory P100 P100 Required Production: Units Expected Sales Units P200 Add desired ending of Inventory P200 Total needs P200 Less beginning of Inventory P200 P200 Required Production: Units Direct Materials Budget 1 2 3 4 Year Quarter P100 Production units Materials per unit P100 Total material needs/Used P200 Production units Materials per unit P200 Total material needs/Used Total Material needs for P100 and P200 Add desired ending of Inventory Total needs Less beginning of Inventory Materials to be purchased: Units Unit price Materials to be purchased: $ Test: Cost of Ending Inventory of Direct materials 31st december 2021: Direct Labour Budget 3 Year Quarter Production Units Labour per unit Total labour needs Labour Rates Paid Total Direct Labour cost: $ Test Manufacturing Overhead Budget 2 3 4 Year Budeted Production units Machine hours per unit Total Budeted Machine hours Budgeted Manufacturing Overhead Test: Predetermined Overhead Rate: Estimated Manufacturing Overhead Machine Hours $ per machine hour Total Ending Finished Goods Inventory Budget P100 Cost Element Quantity Cost Direct Materials + Direct Labour + Manufacturing Overhead = Product Cost Per Unit X Ending Inventory in Units Ending Finished Goods Inventory Total Ending Finished Goods Inventory Budget P200 Cost Element Quantity Cost Direct Materials + Direct Labour + Manufacturing Overhead = Product Cost Per Unit X Ending Inventory in Units Ending Finished Goods Inventory $ Cost of Goods Sold Direct materials Used Direct labour costs Manufacturing Overhead Costs Total Costs of Manufacture: Beginning Finished Goods Inventory Less: Ending Finished Goods Inventory Cost of Goods Sold Year Selling and Administrative Expense Budget Quarter 1 Quarter 2 Quarter 3 Quarter 4 Budgeted Sales in units: Budgeted Sales value: Variable Cost: Delivery costs Commissions Total Variable Costs: Fixed Costs: Accounting & professional services Administrative and sales salaries Advertising Computer costs Depreciation Office Supplies Printing Insurance Property taxes Rent Utilities Total Fixed Costs: Total costs: Test: Cash Total per quarter: Note: Deduct Depreciation. Test: $ Income Statement for year ended 31st December 2021 $ Sales Cost of goods sold Gross profit Selling and Administration expenses Operating Income Interest expense Net Income before taxation Taxation Net Income After taxation Alternatively: $ $ Cost of Goods Sold Direct materials Used Direct labour costs Manufacturing Overhead Costs Total Costs of Manufacture: Beginning Finished Goods Inventory Less: Ending Finished Goods Inventory Cost of Goods Sold COGS using the unit cost method: Rounding difference: CVP Income Statement for year ended 31st December 2021 $ Sales Less: Variable Costs Direct materials Direct Labour Manufacturing Variable Overhead costs Selling & Administration variable costs Adjustment for Finished Inventory Beginning Finished Goods Inventory Less: Ending Finished Goods Inventory Total Contribution Margins Less: Fixed costs Selling & Administration fixed costs Interest costs Income Tax Net Income after taxation Check result with Income Statement: 3 4 Year CASH BUDGET for the year ending 31st December 2021 1 2 Beginning cash balance Add: Receipts Collections from Customers Total receipts: Total available cash: Less: Disbursements Direct Materials Direct Labour Manufacturing Overhead Selling and Administrative expenses Purchase of a Machine Income Tax expense Dividends Total disbursements: Excess (deficiency) of available cash over cash disbursements Financing Add: Borrowings Less: Repayments (including interest) Ending cash balance Notes: Minimum cash balance: $10,000 Interest on loans to be paid in Quarter 4 Taxation amount taken from the Income Statement Schedule of receipts from customers 2022 Qtr 1 Cash Sales Credit Sales Receipts by Quarter Qtr 2 Qtr 3 Qtr 1 Qtra Accounts Receivable - 31st Dec 2020 First Quarter Second Quarter Third Quarter Fourth Quarter Total Payments Cash Sales Credit Sales Collection of credit sate in the quarter of the sale Collection of Credit sale in the following quarter Schedule of expected payments for Direct materials Payments by Quarter Qtr 2 atr 3 2022 Qtr 1 Purchases Qtr 1 Qtr 4 Accounts Payable 31 Dec 2020 First quarter Second Quarter Third Quarter Fourth Quarter Total Payments Purchases paid in cash in the same quarter Purchases paid in the following quarter 3 Balance Sheet at 31st December 2021 Assets Current Assets Cash Accounts receivable Finished goods inventory Raw materials inventory Total Current Assets Property. Plant & equipment Less: Accumulated depreciation Total assets: Liabilities and Shareholders Equity Liabilities Accounts payable Bank loan Shareholders Equity Common Stock Retained Earnings Total Shareholders Equity Total Liabilities and Shareholders (quity Test: Statement of Retained Earnings as at 31st December 2021 Opening balance Net Income Less Dividends Closing balance $ $ Recreated from information provided: Balance Sheet at 31st December 2020 Assets Current Assets Cash Accounts receivable Finished goods inventory Raw materials inventory Total Current Assets: Property, Plant & equipment Less: Accumulated depreciation Total assets: Liabilities and Shareholders Equity Liabilities Accounts payable Shareholders Equity Common Stock Retained Earnings Total Shareholders Equity: Total Liabilities and Shareholders Equity