Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
Jeffrey Vaughn, president of Frame - It Company, was just concluding a budget meeting with his senior staff. It was November of 2 0 x
Jeffrey Vaughn, president of FrameIt Company, was just concluding a budget meeting with his senior staff. It was November of x and the group was discussing preparation of the firms master budget for xIve decided to go ahead and purchase the industrial robot weve been talking about. Well make the acquisition on January of next year, and I expect it will take most of the year to train the personnel and reorganize the production process to take full advantage of the new equipment. In response to a question about financing the acquisition, Vaughn replied as follows: The robot will cost $ Well finance it with a oneyear $ loan from Shark Bank and Trust Company. Ive negotiated a repayment schedule of four equal installments on the last day of each quarter. The interest rate will be percent, and interest payments will be quarterly as well. With that the meeting broke up and the budget process was on FrameIt Company is a manufacturer of metal picture frames. The firms two product lines are designated as S small frames; times inches and L large frames; times inches The primary raw materials are flexible metal strips and inch by inch glass sheets. Each S frame requires a foot metal strip; an L frame requires a foot strip. Allowing for normal breakage and scrap glass, FrameIt can get either four S frames or two L frames out of a glass sheet. Other raw materials, such as cardboard backing, are insignificant in cost and are treated as indirect materials. LaKendra Jackson, FrameIts controller, is in charge of preparing the master budget for x She has gathered the following information: Sales in the fourth quarter of x are expected to be S frames and L frames. The sales manager predicts that over the next two years, sales in each product line will grow by units each quarter over the previous quarter. For example, S frame sales in the first quarter of x are expected to be units. FrameIts sales history indicates that percent of all sales are on credit, with the remainder of the sales in cash. The companys collection experience shows that percent of the credit sales are collected during the quarter in which the sale is made, while the remaining percent is collected in the following quarter. For simplicity, assume the company is able to collect percent of its accounts receivable. The S frame sells for $ and the L frame sells for $ These prices are expected to hold constant throughout x FrameIts production manager attempts to end each quarter with enough finishedgoods inventory in each product line to cover percent of the following quarters sales. Moreover, an attempt is made to end each quarter with percent of the glass sheets needed for the following quarters production. Because metal strips are purchased locally, FrameIt buys them on a justintime basis; inventory is negligible. All of FrameIts directmaterial purchases are made on account, and percent of each quarters purchases are paid in cash during the same quarter as the purchase. The other percent is paid in the next quarter. Indirect materials are purchased as needed and paid for in cash. Workinprocess inventory is negligible. Projected production costs in x are as follows:The predetermined overhead rate is $ per directlabor hour. The following production overhead costs are budgeted for All of these costs will be paid in cash during the quarter incurred except for the depreciation charges. Framelts quarterly selling and administrative expenses are $ paid in cash. Jackson anticipates that dividends of $ will be declared and paid in cash each quarter. Framelts projected balance sheet as of December x follows: Case Algo Part : Prepare the budgeted balance sheet. Prepare Framelts budgeted balance sheet as of December times
Jeffrey Vaughn, president of FrameIt Company, was just concluding a budget meeting with his senior staff. It was November of x and the group was discussing preparation of the firms master budget for xIve decided to go ahead and purchase the industrial robot weve been talking about. Well make the acquisition on January of next year, and I expect it will take most of the year to train the personnel and reorganize the production process to take full advantage of the new equipment.
In response to a question about financing the acquisition, Vaughn replied as follows: The robot will cost $ Well finance it with a oneyear $ loan from Shark Bank and Trust Company. Ive negotiated a repayment schedule of four equal installments on the last day of each quarter. The interest rate will be percent, and interest payments will be quarterly as well. With that the meeting broke up and the budget process was on
FrameIt Company is a manufacturer of metal picture frames. The firms two product lines are designated as S small frames; times inches and L large frames; times inches The primary raw materials are flexible metal strips and inch by inch glass sheets. Each S frame requires a foot metal strip; an L frame requires a foot strip. Allowing for normal breakage and scrap glass, FrameIt can get either four S frames or two L frames out of a glass sheet. Other raw materials, such as cardboard backing, are insignificant in cost and are treated as indirect materials. LaKendra Jackson, FrameIts controller, is in charge of preparing the master budget for x She has gathered the following information:
Sales in the fourth quarter of x are expected to be S frames and L frames. The sales manager predicts that over the next two years, sales in each product line will grow by units each quarter over the previous quarter. For example, S frame sales in the first quarter of x are expected to be units.
FrameIts sales history indicates that percent of all sales are on credit, with the remainder of the sales in cash. The companys collection experience shows that percent of the credit sales are collected during the quarter in which the sale is made, while the remaining percent is collected in the following quarter. For simplicity, assume the company is able to collect percent of its accounts receivable.
The S frame sells for $ and the L frame sells for $ These prices are expected to hold constant throughout x
FrameIts production manager attempts to end each quarter with enough finishedgoods inventory in each product line to cover percent of the following quarters sales. Moreover, an attempt is made to end each quarter with percent of the glass sheets needed for the following quarters production. Because metal strips are purchased locally, FrameIt buys them on a justintime basis; inventory is negligible.
All of FrameIts directmaterial purchases are made on account, and percent of each quarters purchases are paid in cash during the same quarter as the purchase. The other percent is paid in the next quarter.
Indirect materials are purchased as needed and paid for in cash. Workinprocess inventory is negligible.
Projected production costs in x are as follows:The predetermined overhead rate is $ per directlabor hour. The following production overhead costs are budgeted
for
All of these costs will be paid in cash during the quarter incurred except for the depreciation charges.
Framelts quarterly selling and administrative expenses are $ paid in cash.
Jackson anticipates that dividends of $ will be declared and paid in cash each quarter.
Framelts projected balance sheet as of December x follows:
Case Algo Part : Prepare the budgeted balance sheet.
Prepare Framelts budgeted balance sheet as of December times
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started