Husky Co$.$ above

Trial Balance

Dec. $312020$

Debit Credit

Cash $5,909$

Savings Account $2,000$

Accounts Receivable $210,000$

Inventory $121,927$

Fixed Assets$-$Mfg $2,400,000$

Fixed Assets$-$SG&A $200,000$

Accum Depreciation$-$Mfg $60,000$

Accum Depreciation$-$SG&A $5,000$

Accounts Payable $53,546$

Loans Payable $0$

Income Tax Payable $($Benefit$)6387$

Capital Stock $300,000$

Additional Paid in Capital $2,500,000$

Retained Earnings $14,904$

Totals $2,939,8372,939,837$

The budgeting process begins with a projection of sales. Management provides the following estimates for $2021$ and the first two quarters of $2022$:

Projected Sales in Units at $$60$ Selling Price:

$20212022$

Q$17,0007,000$

Q$28,0008,000$

Q$312,000$

Q$416,000$

Prepare Budgets for Sales, Production, Direct Materials and Direct Labor for $2021,$ using the following information and templates:

Sales Budget Q$1$ Q$2$ Q$3$ Q$4$ Annual

Units $7,0008,00012,00016,00043,000$

Price $$60$ $$60$ $$60$ $$60$ $$60$

Sales $$420,000$ $$480,000$ $$720,000$ $$960,000$ $$2,580,000$

Production Budget Inputs:

Beginning inventory Q$1$: $7,000$ Units

Desired ending inventory $=20\%$ of the following quarter's sales

Production Budget

Q$1$ Q$2$ Q$3$ Q$4$ Annual

Sales $7,0008,00012,00016,00043,000$

Ending Inv $1,6002,4003,2001,4001,400$

Req Units $8,60010,40015,20017,40044,400$

Beg Inv $14001600240032001400$

Req Production $7,2008,80012,80014,20043,000$

Direct Materials Inputs:

Each unit requires $2\mathrm{.}3$ pounds costing $$1\mathrm{.}45$ per pound

DM Budget Q$1$ Q$2$ Q$3$ Q$4$ Annual

Units to Produce $7,2008,80012,80014,20043,000$

DM per unit $2\mathrm{.}32\mathrm{.}32\mathrm{.}32\mathrm{.}32\mathrm{.}3$

Total pounds DM $16,56020,24029,44032,66098,900$

$+$End Inv $4,0485,8886,5323,3123,312$

$-$Beg Inv $3,3124,0485,8886,5323,312$

DM Required $17,29622,08030,08429,44098,900$

Cost per pound $$1\mathrm{.}45$ $$1\mathrm{.}45$ $$1\mathrm{.}45$ $$1\mathrm{.}45$ $$1\mathrm{.}45$

Total Cost of DM $$25,079$ $$32,016$ $$43,622$ $$42,688$ $$143,405$

Direct Labor Inputs:

Each unit requires $45$ minutes at a rate of $$17$ per hour

DL Budget Q$1$ Q$2$ Q$3$ Q$4$ Annual

Units Produced $7,2008,80012,80014,20043,000$

DLH per unit $0\mathrm{.}750\mathrm{.}750\mathrm{.}750\mathrm{.}750\mathrm{.}75$

Total DLH required $5,4006,6009,60010,65032,250$

Labor Cost per Hr $$17$ $$17$ $$17$ $$17$ $$17$

Total DL Cost $$91,800$ $$112,200$ $$163,200$ $$181,050$ $$548,250$

OH Budget Q$1$ Q$2$ Q$3$ Q$4$ Annual

VOH $$2,310$ $$2,640$ $$3,960$ $$5,280$ $$14,190$

FOH $$270,000$ $$270,000$ $$270,000$ $$270,000$ $$1,080,000$

Total $$272,310$ $$272,640$ $$273,960$ $$275,280$ $$1,094,190$

Selling General & Administrative Budget Inputs:

Variable SG&A $=$ $$2\mathrm{.}00$ per unit $+1\%$ Sales

Fixed SG&A $=$ $$90,000$ per quarter

SG&A Budget Q$1$ Q$2$ Q$3$ Q$4$ Annual

VSGA $$18,200$ $$20,800$ $$31,200$ $$41,600$ $$111,800$

FSGA $$90,000$ $$90,000$ $$90,000$ $$90,000$ $$360,000$

Total SGA $$108,200$ $$110,800$ $$121,200$ $$131,600$ $$471,800$

MASTER BUDGET PROJECT: BUDGETED INCOME STATEMENT BY QUARTER

ACCT $5362|$ Accounting Principles

Using the previous budgets developed, prepare a Budgeted Income Statement by Quarter for $2021$ using the following template:

Husky Co$.$

Budgeted Income Statement by Quarter

For the Year Ended Dec $31,2021$

Q$1$ Q$2$ Q$3$ Q$4$ Annual

Sales

Cost of Goods Sold

Gross Profit

SG&A Expenses

Operating Profit $$323,645$

Interest Expense

Taxable Income

Income Tax

Net Income