Hello I have some questions that need to be clarified. You helped me on the master budget about two weeks ago and there are some parts I do not know where you got the answer. So could you help me please. Along with this message is the excel spreadsheet with the answers so you can look back. Here are the questions:

For line A 28 and 29, how did you come with the desired ending inventory and beginning inventory

For line A 69, how did you get the total fixed S&A expenses for each one.

For line A 81, how did you get 25/DLH for fixed overhead?

For line A 159, how did you get 2000000 for new equipment.

Hope you could help me explain questions above. Thank you.

Innovate Company Schedule 1: Sales Budget For Year Ended December 31, 20XX Qtr. 1 Qtr. 2 Qtr. 3 6000 8000 8000 650 650 650 3900000 5200000 5200000 Qtr. 4 9000 650 5850000 Year 31000 650 20150000 Sales (in units) Add: Desired Ending inventory Total needs Less: Beginning Inventory Required Production (in units) Innovate Company Schedule 2: Production Budget For Year Ended December 31, 20XX Qtr. 1 Qtr. 2 Qtr. 3 6000 8000 8000 1300 1500 2000 7300 9500 10000 0 1300 1500 7300 8200 8500 Qtr. 4 9000 1000 10000 2000 8000 Year 31000 1000 32000 0 32000 Qtr. 4 Production (in units) x Materials/unit Production needs Add: Desired Ending Inventory Total needs Less: Beginning Inventory Required Purchases x Cost per unit Cost of Purchases Innovate Company Schedule 3: Direct Materials Budget For Year Ended December 31, 20XX Qtr. 1 Qtr. 2 Qtr. 3 7300 8200 8500 3 3 3 21900 24600 25500 4920 5100 4800 26820 29700 30300 6750 4920 5100 20070 24780 25200 80 80 80 1605600 1982400 2016000 Year 32000 3 96000 6750 102750 6750 96000 80 7680000 Production (in units) x Hours per unit Hours needed x Cost per hour Total Direct Labor Cost Innovate Company Schedule 4: Direct Labor Budget For Year Ended December 31, 20XX Qtr. 1 Qtr. 2 Qtr. 3 7300 8200 8500 5 5 5 36500 41000 42500 10 10 10 365000 410000 425000 Sales in Units x Unit Price Total Sales Revenue Budget Hours x Variable OH Rate Total Budget Variable OH Cost Budgeted Fixed OH Cost: Lease Expense Utility Expense Salaries Expense Total Budget Fixed OH Cost Total OH Cost Sales (in units) x Variable Selling & Admin. Rate Total Variable S. & A. Expense Total Fixed S. &. Expense Total Selling & Admin. Expense 8000 5 40000 10 400000 Year 32000 5 160000 10 1600000 Qtr. 4 40000 6 240000 Year 160000 6 960000 650000 50000 300000 1000000 1255000 650000 50000 300000 1000000 1240000 2600000 200000 1200000 4000000 4960000 Innovate Company Schedule 6: Selling & Adminstrative Expense Budget For Year Ended December 31, 20XX Qtr. 1 Qtr. 2 Qtr. 3 6000 8000 8000 10 10 10 60000 80000 80000 250000 250000 250000 310000 330000 330000 Qtr. 4 9000 10 90000 250000 340000 Year 31000 10 310000 1000000 1310000 Innovate Company Schedule 5: Overhead Budget For Year Ended December 31, 20XX Qtr. 1 Qtr. 2 Qtr. 3 36500 41000 42500 6 6 6 219000 246000 255000 650000 50000 300000 1000000 1219000 650000 50000 300000 1000000 1246000 Innovate Company Schedule 7: Ending Finished Goods Inventory Budget For Year Ended December 31, 20XX Unit Cost Comparison Direct materials (3 units @ $80) Direct labor (5 hrs @ $10) Overhead: Variable (5 DLH @ $6/DLH) Fixed (5 DLH@ 25/DLH) 8000 3 24000 6750 30750 4800 25950 80 2076000 240 50 30 125 Qtr. 4 Total Unit Cost 445 Units Finished Goods Cost per unit Total Amount 1000 445 445000 Innovate Company Schedule 8: Ending Finished Goods Inventory Budget For Year Ended December 31, 20XX 7680000 1600000 4960000 14240000 Direct materials used (Sch. 3) Direct labor used (Sch. 4) Overhead (Sch. 5) Budgeted manufacturing cost Add: Beginning finished goods Goods available for sale Less: Ending finished goods (Sch. 7) Budgeted cost of goods sold Beginning Cash bal. Add Collections: Credit Sales: Current Quarter Prior Quarter Total Cash Available Less Disbursements: Direct Materials: Current Quarter Prior Quarter Direct Labor Overhead Selling and Admin. Dividends Equipment Total Cash Needs Ending Cash Balance Sales (Sch. 1) Less: Cost of Good Sold (Sch 8) Gross Margin Less: Selling & Admin. Expense (Sch 6) Bad Debt Expense Operating income before taxes 0 14240000 445000 13795000 Innovate Company Cash Budget For Year Ended December 31, 20XX Qtr. 1. Qtr. 2 Qtr. 3 607000 1036650 2311650 4420000 585000 6041650 4420000 780000 7511650 4972500 780000 9254950 17127500 2681250 20415750 802800 724800 365000 1219000 260000 50000 991200 802800 410000 1246000 280000 1008000 991200 425000 1255000 280000 50000 1038000 1008000 400000 1240000 290000 3840000 3526800 1600000 4960000 1110000 100000 2000000 17136800 3278950 3421600 1036650 3730000 2311650 Innovate Company Pro-Forma Income Statement For Year Ended December 31, 20XX 20150000 13795000 6355000 1310000 8775 5036225 Assets: Liabilities and Equity: Current Liabilities: Accounts Payable Stockholder's Equity: Capital Stock Retained Earnings Total Liabilities and Equity Calculations: Beginning P&E Add: New Equipment Less: Depreciation Expense Ending P&E Year 607000 3315000 536250 4458250 Innovate Company Pro-Forma Balance Sheet For Year Ended December 31, 20XX Cash Account Receivables Less: Allowance for Doubtful Accounts Inventory: Direct Materials Finished Goods Plant and equipment Total Assets Qtr. 4 3502450 3278950 877500 8775 525600 445000 868725 970600 29110950 34229225 1038000 20197000 12994225 27310950 2000000 200000 29110950 33191225 34229225 4009200 3502450 2000000 5976000 3278950 Beginning RE Add: Net Income Less Dividends Paid Ending RE 8058000 5036225 100000 12994225 ACC 311 Master Budget Problem Spring Semester - 2016 Innovate Company is a highly-progressive organization that produces Netbook computers. The design of Innovate's system is unique and represents the latest breakthrough in touch-screen portable computers. The company is preparing to build its master budget for the coming year (20XX). The annual budget is segmented into detail for each quarter's activity and for the year in total. The master budget will be based on the following information: a. Fourth quarter sales from the prior year are 5,500 units. b. Unit sales by quarter (for 20XX) are projected as follows: First quarter Second quarter Third quarter Fourth quarter 6,000 8,000 8,000 9,000 The selling price is $650 per unit. All sales are on credit. Innovate collects 85 percent of all sales within the quarter in which they are realized; the other 15 percent are collected in the following quarter. Innovate will start recording bad debt expense this year. The company estimates that 1 percent of the balance of accounts receivable will be uncollected and will make an adjustment entry at the end of the year (it will not affect the cash account for the current year, but it will affect certain income statement and balance sheet accounts). c. There is no beginning inventory of finished goods. Innovate is planning the following ending finished goods inventories for the quarter: First quarter Second quarter Third quarter Fourth quarter 1,300 units 1,500 units 2,000 units 1,000 units d. Innovate leases machines used in production. Per terms of the capital lease, the company has the right to use the machines, but must pay maintenance on the machines. At current capacity, Innovate's expense due to leasing will be $650,000 per quarter. The fixed utility cost is $50,000 per quarter and the salaries of factory supervisors and staff will be $300,000 per quarter. e. Variable overhead consists primarily of machine maintenance and the costs incurred to run the machines. From past experience, Innovate estimates machine maintenance expense to be $1 per direct labor hour (DLH) and the cost of utilities and labor to run the machines is $5 per DLH. Overhead is allocated based on direct labor hours used in production. All overhead expenses are paid for in the quarter incurred. f. The selling and administrative staff is based in a separate building from where the Netbook computers are produced. Rent expense for the administrative building is $40,000 per month, the fixed portions of telephone and utility expenses averages $20,000 per month, and the fixed fee for technical support is $20,000 every three months. Depreciation expense is $50,000 per quarter. g. Variable selling and administration expenses consist of billing expenses of $1 per unit sold, sales commissions $7 per unit, and the variable portion of telephone and utility expenses is $2 per unit sold. All selling and administrative expenses are paid for in the quarter incurred. h. Each Netbook computer unit assembly require five hours of direct labor and three items of direct materials. Workers are paid $10 per hour, and although the items of direct materials are different (case, motherboard, and peripheral package), each item of materials average cost is $80. i. There are 6,570 items of direct materials in beginning inventory as of January 1, 20XX. At the end of each quarter, Innovate plans to have 20 percent of the direct materials needed for next quarter's unit sales. Innovate will end the year with the same level of direct materials found in this year's beginning inventory. j. Innovate buys direct materials on account. One-half of the purchases are paid for in the quarter of acquisition, and the remaining half is paid for in the following quarter. Direct labor wages are paid on the fifteenth and thirtieth of each month. k. The trial-balance as of December 31, of the prior year is as follows: _____________________Assets_____________________ Cash $ 607,000 Inventory 525,600 Accounts receivable 536,250 Plant and equipment 27,310,950 Total Assets $28,979,800 ____________Liabilities and Equity_____________________ Accounts payable $ 724,800 Capital stock 20,197,000 Retained earnings 8,058,000 Total liabilities and equity $28,979,800 Innovate will pay dividends of $50,000 in the first and third quarter. At the end of the fourth quarter, $2 million of equipment will be purchased. REQUIRED: Prepare a master budget for Electra Company for each quarter of 20XX and for the year in total. The following component budgets must be included: a. b. c. d. e. f. g. h. i. j. k. Sales budget Production budget Direct materials purchases budget Direct labor budget Overhead budget Selling and administration expense budget Ending finished goods inventory budget Costs of goods sold budget Cash budget Pro forma income statement (using absorption costing) Pro forma balance sheet Innovate Company Schedule 1: Sales Budget For Year Ended December 31, 20XX Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year Qtr 4 Year Qtr 4 Year Sales in Units x Unit Price Total Sales Revenue Innovate Company Schedule 2: Production Budget For Year Ended December 31, 20XX Qtr 1 Qtr 2 Qtr 3 Sales (in units) Add: Desired ending inventory Total needs Less: Beginning inventory Required Production (in units) Innovate Company Schedule 3: Direct Materials Budget For Year Ended December 31, 20XX Qtr 1 Qtr 2 Production (in units) x Materials/unit Production needs Add: Desired ending inventory Total needs Less: Beginning inventory Required Purchases x Cost per unit Cost of Purchases Innovate Company Qtr 3 Schedule 4: Direct Labor Budget For Year Ended December 31, 20XX Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year Qtr 4 Year Qtr 4 Year Production (in units) x Hours per unit Hours needed x Cost per hour Total Direct Labor Cost Innovate Company Schedule 5: Overhead Budget For Year Ended December 31, 20XX Qtr 1 Qtr 2 Qtr 3 Budgeted hours x Variable OH Rate Total Budgeted Variable OH Cost Budgeted Fixed OH Cost: Lease Expense Utility Expense Salaries Expense Total Budgeted Fixed OH Cost Total OH Cost Innovate Company Schedule 6: Selling & Administration Expense Budget For Year Ended December 31, 20XX Qtr 1 Qtr 2 Qtr 3 Sales (in units) x Variable Selling & Admin. Rate Total Variable S. & A. Expense Total Fixed S. & A. Expense Total Selling & Admin. Expense Innovate Company Schedule 7: Ending Finished Goods Inventory Budget For Year Ended December 31, 20XX Unit cost comparison Direct materials (3 units @ $80) Direct labor (5 hours @ $10) Overhead: Variable (5 DLH @ $6/DLH) Fixed (5 DLH @ ?/DLH) Total unit cost Units Cost per unit Finished Goods: Innovate Company Total Amount Schedule 8: Cost of Goods Sold Budget For Year Ended December 31, 20XX Direct materials used (Sch 3) Direct labor used (Sch 4) Overhead (Sch 5) Budgeted manufacturing cost Add: Beginning finished goods Goods available for sale Less: Ending finished goods (Sch 7) Budgeted cost of goods sold Innovate Company Cash Budget For Year Ended December 31, 20XX Qtr 1 Beginning cash bal. Add Collections: Credit Sales: Current quarter Prior quarter Total cash available Less Disbursements: Direct Materials: Current quarter Prior quarter Direct labor Overhead Selling and admin. Dividends Equipment Total cash needs Ending cash balance Qtr 2 Qtr 3 Qtr 4 Year Innovate Company Pro Forma Income Statement For Year Ended December 31, 20XX Sales (Sch 1) Less: Cost of Goods Sold (Sch 8) Gross Margin Less: Selling & Admin expenses (Sch 6) Bad Debt Expense Operating income before taxes Innovate Company Pro Forma Balance Sheet At Year Ended December 31, 20XX Assets: Cash Accounts Receivable Less: Allowance for Doubtful Accounts Inventory: Direct Materials Finished Goods Plant and equipment Total Assets Liabilities and Equity: Current Liabilities: Accounts Payable Stockholder's Equity: Capital Stock Retained Earnings Total Liabilities and Equity Calculations: Beginning P&E Add: New Equipment Less: Depreciation Expense Ending P&E Beginning RE Add: Net Income Less: Dividends Paid Ending RE