GROUP ASSIGNMENT

BUDGETING FOR OPERATIONS IN MANUFACTURING FIRM

DTN Boat Company is a manufacturing company that makes fishing boat. The boats are made of

fiberglass and wood and DTN only make one type $-$ a $15-$foot fishing boat. Subids actual balance sheet for

$2023$ is shown in the table $1$ below:

Notes:

${?}^1$ Composed of $600$ board feet of lumber and $400$ feet of fiberglass

${?}^2$ Composed of $10$ finished boats.

${?}^3$ Expected to be paid in the first quarter of $2024$

DTN Boat company has projected $2024$ sales to be $100$ boats. The anticipated sales price for each

boat is $$10,000.$

DTN Boat company projects its boat sales on a quarterly basis.

The marketing department has effectively researched all the relevant variables in order to predict

the number of boats that will be sold each quarter. The data of sales volume is show in table $2$

below:

Based on past experience, DTN is able to collect approximately $80\%$ of revenue from customers in

the quarter in which the sale took place, with the remaining $20\%$ collected in the following quarter.

DTN Boat Company has determined that its desired ending inventory for each quarter should be

approximately $50\%$ of projected sales for the next quarter. The fourth quarter's ending inventory is

$15$ boats, which is $50\%$ of the next quarter's $($first quarter of $2025)$ expected sales.

DTN$\text{'}$s engineers estimate that the standard amounts of wood and fiberglass needed per boat are as

follows:

an accounts payable balance.

DTN $\text{'}$s policy is to pay for $75\%$ of its raw materials purchases in the current quarter, and the

remaining $25\%$ in the subsequent quarter.

The direct labor budget for DTN is based on an average hourly wage rate of $$20$ per hour for

production workers and $80$ labor hours to make a $15-$foot boat. The $$20$ per$-$hour wage rate includes

fringe benefits $($i$.$e$.,$ the cost of sick leave, vacation pay, insurance, etc.$)$ and payroll taxes. Assume

that DTN$\text{'}$s budgeted labor costs for each quarter are all paid in that same quarter.

Assume that volume of direct labor hour is a good predictor of variable manufacturing overhead

cost for DTN$,$ and that DTN uses direct labor hours to allocate these costs to each quarter.

Total fixed costs are simply allocated evenly across the four quarters. The information about

variable and fix MOH is list in table below:

Asgume total estimated delivery expense for $2024$ is $$50,000.$ Sales Commission fee is $15\%$ of the

selling price each boat. The information of fixed selling and administrative expense is as follow:

DTN Boat Company desired to maintain at least $$100,000$ cash balance at the end of each quarter.

The interest rate of $2024$ is $10\%.$ DTN plans to declare dividends of $$30,000$ in the first quarter of

$2024,$ which is expected to pay in the third quarter. DTN intends to purchase an equipment at the

end of $2024.$

Requirement:

Task $1$: Prepare the sales budget for DTN Boat Company following the form below: