I have a problem analyzing and solving the June and 2nd Quarter section of my work.

ACCT 2332 MANAGERIAL ACCOUNTING GROUP PROJECT - FALL 2017 REQUIRED: This project is worth 24 points. It is an opportunity to put together some of the things you have learned in different parts of this course. You can work in groups of three (maximum), two or individually. Read the case and answer the requirements below. The names, usernames and Peoplesoft numbers of the group members must be written clearly below. To receive credit you must write full answers, using the templates provided for each requirement. We must ask you to handwrite your answers and show any calculations you feel are needed. Hand your project in to the accounting lab 133MH during lab hours on or before Wednesday Nov 15 at 3 PM. (Syllabus says 3 pm so Lab can close at \"normal\" time) 1) GROUP MEMBERS: NAME Blackboard Username YOUR RECEIPT NUMBER Peoplesoft Number (lab assistants will give you this) PROJECT FACTS Manny Fold owns a factory that specializes in making titanium valves for high performance engines on a just in time basis. Thus, Manny produces what he sells in a particular month. There are no inventories of finished goods or work in process. However, Manny does require that an inventory of direct raw materials equal to 20% of next month's production requirement be available at the end of each month. To build his business and gain new customers Manny has extended generous credit terms to his customers. While Manny is confident about the fundamentals of his business, he is concerned about the possible income and cash flow implications. The variable costs of producing a valve are budgeted at $7.20 per valve for direct materials (3/4 pound of titanium alloy costing $9.60 per pound), $2.80 per valve for direct labor, and $5.50 per valve for variable manufacturing overhead. Fixed manufacturing overhead is budgeted at $74,700 per month during the 2nd quarter. The detailed components of variable and fixed overhead are as listed below. For variable overhead, electric power is budgeted at $2.30 per unit, indirect labor is budgeted at $2.50 per unit, and supplies are budgeted at $.70 per unit. For fixed overhead depreciation is budgeted at $10,000 per month, Supervision and other factory salaries are budgeted at $40,000 per month, property tax and insurance combined are budgeted at $8,000 per month (which have been paid in advance through June 15 - see below), maintenance is budgeted at $7,000 per month, licensing fees and permits to use proprietary technology are budgeted at $3,400 per month, and other miscellaneous fixed overhead expenses are budgeted at $6,300 per month. Manny's customers drive a hard bargain because they can easily switch suppliers. They all do pay eventually, but many of them take their time about doing so and Manny is reluctant to get tough with them for fear they will take their business elsewhere. He tells you that all his sales are on credit (no cash sales). He typically collects only 10% of sales in the month of the sale, 30% of sales in the month after the sale and 60% of sales two months later (for example 10% of June sales would be collected in June, 30% in July and 60% in August). On the other hand, he must pay for 70% of his materials purchases in the same month of the purchase and 30% in the month after. Cash costs of labor and overhead other than depreciation, property taxes and insurance are paid in the same month they are incurred. Property taxes and insurance are paid in advance through June 15. The amount due for the next 6 months (starting June 16) must be paid in early June. All of the selling and administrative expenses are fixed. Monthly fixed selling and administrative costs, other than interest, amount to $43,600, of which $6,000 is depreciation. These operating costs, excepting depreciation, are paid in cash in the month incurred. Manny has large tax loss carry forwards from a previous unsuccessful business venture. Therefore, he does not expect to pay any income taxes this year. (In other words you may ignore income taxes). Manny plans to buy new equipment costing $80,000 during the month of June. This equipment will be ready for use starting in July. The budgeted selling price of valves for April, May, and June is $23 per valve. Because of market competition there is not much flexibility to adjust the price and the price is expected to be stable during the 2nd quarter. Manny budgeted sales in units for April at 17,000 units. For May he expects to sell only 18,500 units. He has projected sales of 20,000 units for June and 18,000 units for July. Manny requires a minimum cash balance of $10,000 at the end of each month. If the budgeted month end cash balance will fall below this level Manny plans to borrow enough cash at the beginning of that same month to keep his ending balance up to the minimum level. Manny's bank charges him interest at the rate of % per month on the balance outstanding during that month. Manny's bank charges him interest at the rate of % per month on the balance outstanding during that month. Manny pays the 2 interest at the beginning of the following month and plans to repay as much as he can at the beginning of that month without letting his budgeted cash balance go below $10,000 at month end. (On the budgeted income statement round interest expense to the nearest dollar) 3 The company's managerial accountant has resigned unexpectedly before the 2nd quarter budget could be completed. You have been contracted to complete the master budget for June and for the 2nd quarter (including some missing numbers from May). Balances as of March 31 for all relevant accounts have already been calculated by this accountant together with some of the amounts for April and May. You may assume that these balances and amounts shown in the tables below are correct. REQUIREMENTS: (To Equal 24 project points) - Round all numbers & $ amounts to the nearest whole number or dollar. 1) Construct Manny's budgeted income statement for June and the total for the 2nd quarter. April and May have already been provided. Complete the template provided below. Show your calculations where indicated on the extra page provided. (7 points) 2) Using the same forecast as in requirement 1 construct Manny's budget for raw materials purchases in June and the total for the 2nd quarter (You will also have to complete the budget for May) Complete the template provided which already has information for April and May. (2 points) 3) Using the same forecast as you used in requirement 1 construct Manny's cash budgets for June and the total for the 2nd quarter (You will also have to provide the missing number for May payments for purchases). Complete the templates provided below which already have information for April and May. Show your calculations where indicated on the extra page provided. (3 points) 4) Using the same forecast as you used in requirement 1 construct Manny's budgeted balance sheet at the end of June. Complete the template provided which already has the March 31 balances. (3 points) 5) During March Manny actually produced and sold 16,500 valves. Actual sales revenues were $381,950. Actual costs and the original March budget based on 16,000 valves were as detailed in the table below. Complete the table by constructing a flexible budget based on 16,500 valves and determining the variances for the performance report. Use the template provided below for your answer. (7 points) 6) Write a brief report explaining some possible reasons why Manny's profits were different from the amount projected in the master budget for March (2 points). REQUIREMENT 1 Budgeted Income Statement April May SALES REVENUES $391,000 $425,500 DIRECT MATERIALS USED ($122,400) ($133,200) DIRECT LABOR ($47,600) ($51,800) VARIABLE OVERHEAD ($93,500) ($101,750) CONTRIBUTION MARGIN $127,500 FIXED OVERHEAD ($74,700) ($74,700) FIXED OPERATING EXPENSES ($43,600) ($43,600) OPERATING INCOME $ 9,200 INTEREST EXPENSE NET INCOME June 2nd Quarter $0 $9,200 SHOW CALCULATIONS FOR JUNE AMOUNTS ON THE NEXT PAGE JUNE - Req. No. 1 SALES REVENUES DIRECT MATERIALS USED DIRECT LABOR Show Calculations for all items not marked NA VARIABLE OVERHEAD CONTRIBUTION MARGIN FIXED OVERHEAD FIXED OPERATING EXPENSES OPERATING INCOME NA - ADDITION/SUBTRACTION ONLY NA - ADDITION/SUBTRACTION ONLY INTEREST EXPENSE NET INCOME NA - ADDITION/SUBTRACTION ONLY REQUIREMENT #2 BUDGETED PURCHASES OF TITANIUM ALLOY (direct material) April May June Valves to be produced 17,000 18,500 20,000 X Pounds per unit 0.75 Titanium to be used 12,750 Desired ending inventory (20%) 2,775 Pounds of Titanium Needed 15,525 Less: Beginning Inventory Pounds to be purchased 2,550 Cost per pound $9.60 Cost of Purchases $124,560 2nd Quarter 0.75 13,875 2,775 12,975 REQUIREMENT #3 COMPUTATION OF CASH COLLECTIONS (Use this to calculate March & Feb sales) April May Sales Made 2 Months Ago $213,900 $220,800 Sales Made 1 Month Ago $110,400 $117,300 Sales Made this Month $39,100 Total Cash Collections Show Calculation for June Total Cash Collections $42,550 $363,400 $380,650 June 2nd Quarter REQUIREMENT #3 (CONTINUED) COMPUTATION OF CASH PAYMENTS - SHOW CALCULATIONS ON NEXT PAGE April Payments for purchases of materials May June 2nd Quarter $122,184 (used to calculate March purchases) Payments for direct Labor $47,600 $51,800 Payments for Variable Overhead $93,500 $101,750 Payments for Fixed Overhead $56,700 $56,700 Payments for Property Taxes and Insurance $0 $0 Payments for other operating expenses $37,600 $37,600 Capital Expenditures $0 $0 Total Cash Payments $357,584 COMBINED CASH BUDGET- SHOW CALCULATIONS ON NEXT PAGE April May Beginning Balance of Cash $10,324 $16,140 Cash Collections $363,400 $373,724 $380,650 $396,790 Total cash available Less: Cash Payments Ending Cash Balance Before Financing: Borrowings $357,584 Repayments $0 Interest Payments End Cash Balance $0 $16,140 $0 $16,140 June 2nd Quarter Req. No. 3 Show Calculations for all items not marked NA Payments for purchases of materials for MAY Payments for purchases of materials for JUNE Payments for direct Labor Payments for Variable Overhead Payments for Fixed Overhead Payments for Property Taxes and Insurance Payments for other operating expenses Capital Expenditures Total Cash Payments Req. No. 3 NA - ADDITION/SUBTRACTION ONLY Show Calculations for all items May items not marked NA June Beginning Balance of Cash NA- Amounts Already Provided Cash Collections NA- Amounts Already Provided Total cash available NA- Amounts Already Provided NA - Addition/Subtraction Only NA- Amounts Already Provided NA - Addition/Subtraction Only NA - Addition/Subtraction Only NA - Addition/Subtraction Only Less: Cash Payments Ending Cash Balance Before Financing: Borrowings Repayments Interest Payments End Cash Balance REQUIREMENT #4: BUDGETED BALANCE SHEET FOR JUNE 30 March 31 June 30 ASSETS: Current Assets Cash $10,324 Accounts Receivable $545,100 Inventory (raw materials) $24,480 Prepaid Insurance and Property Taxes Total Current Assets $20,000 Equipment and Furniture Accumulated Depreciation $599,904 $880,000 ($540,000) Equipment & Furniture (net) $340,000 Total Assets $939,904 LIABILITIES AND EQUITY Liabilities (all current) Accounts Payable $34,992 Interest Payable 0 Bank Loans Payable 0 Total Liabilities $34,992 Owner's Equity (Net income increases this) Total Liabilities and Equity $904,912 $939,904 Actual Costs and Template for Requirement #5 Use this page to answer this requirement. Performance Report for March Cost Item Actual results Sales Revenues $381,950 $368,000 Direct Materials used $118,720 $115,200 Direct Labor $45,600 $44,800 Electric Power $38,454 $36,800 Indirect Labor $49,360 $40,000 Supplies $16,686 $11,200 Supervision and other salaries $37,858 $40,000 Maintenance $8,925 $7,000 Insurance and property tax $8,000 $8,000 Permits and license fees $3,400 $3,400 Factory depreciation $10,000 $10,000 Other Overhead expenses $8,650 $6,300 Total Production Expenses ? $322,700 Total Selling & Administrative Expenses $39,867 $43,600 Total Expenses ? $366,300 Operating Income ? $1,700 Flexible Budget Variance Flexible Budget for 16,500 units Sales Volume Variance Static Master Budget for 16,000 units REQUIREMENT 6 (SPACE FOR REPORT)