Kings Co. has accumulated the following budget data for the year 2020. 1. Sales: 34,000 units, unit selling price $75. 2. Cost of one unit of finished goods: Direct materials 2 pounds at $5 per pound, direct labor 3 hours at $12 per hour, and manufacturing overhead $6 per direct labor hour. 3. Inventores (raw materials only): Beginning, 10,000 pounds; ending, 15,000 pounds. 4. Raw materials cost: $5 per pound. 5. Selling and administrative expenses: $223,000. 6. Income taxes: 21% of Income before Income taxes. Instructions (a) Prepare a schedule showing the computation of cost of goods sold for 2020. (b) Prepare a budgeted Income statement for 2020. (a) Kings Co. Computation of Cost of Goods Sold For the Year Ending December 31, 2020 1 Cost of one unit of finished goods: 2 Direct materials 3 Direct labor Manufacturing overhead Total 3 4 15 8 7 7 8 8 ol 9 10 9 10 2 b) Kings Co. Budgeted Income Statement For the Year Ending December 31, 2020 1 Sales 2 Cost of goods sold (see part (a)) 3 Gross profit 4 Selling and administrative expenses 5 income before income taxes 6 Income tax expense 7 Net Income 8 9 10 3 15 6 7 8 9 10 Asia Company expects to have a cash balance of $10,000 on January 1, 2020, Relevant monthly budget data for the first 2 months of 2020 are as follows. Collections from customers: January $120,000, February $200,000. Payments for direct materials: January $60,000, February $95,000. Direct labor: January $30,000, February $45,000. Wages are paid in the month they are incurred. Manufacturing overhead: January $26,000, February $41,000. These costs include depreciation of $1,000 per month. All other overhead costs are paid as Selling and administrative expenses: January $15,000, February $20,000. These costs are exclusive of depreciation. They are paid as incurred. Sales of marketable securities in January are expected to realize $10,000 in cash. Asia Company has a line of credit at a local bank that enables it to borrow up to $25,000. The company wants to maintain a minimum monthly cash balance of $25,000 Instructions Prepare a cash budget for January and February Date Asia Company February 1 N 2 3 4 5 16 7 18 Asia Company Cash Budget For the Two Months Ending February 29, 2020 1 January 2 Beginning Cash Balance 3 Add: Receipts 4 Collections from customers 5 Sale of marketable securities 6 Total receipts 7 Total available cash & Less: Disbursements 9 Direct materials 10 Direct labor 11 Manufacturing overhead 12 Selling and administrative expenses 13 Total disbursements 14 Excess (deficiency) of available cash over cash 15 disbursements 16 Financing 17 Borrowings 18 Repayments 19 Ending cash balance 20 21 22 23 9 10 11 12 13 14 15 ch 16 17 18 19 20 21 22 23
