master budget e-k
(See Examp Quaint Stem Company is a high-end glassware manufacturer that produces fine stemware of the highest quality. The company is completing its fourth year of operations and is preparing to build its master budget for the coming year (2021) The budget will detail each quarters activity and the activity for the year in the total. The master budget will be based on the following information a Fourth-quarter sales for 2020 are 82.000 units and 65,000 for the first quarter of 2022 b. Unit sales by quarter (for 2021) are projected as follows First quarter 68 000 Second quarter 70.000 Third quarter 76,000 Fourth quarter 86,000 The selling price is $85 per unit Cash sales make up 25% of all sales. Quaint collects 75 percent of the credit sales within the quarter in which they are realized the other 25 percent are collected in the following quarter. There are no bad debts. c. The beginning inventory of finished goods is 16,000 units. Required ending inventory is 25% of the next quarter's sales in units d Each stemware unit uses one and a half hours of direct labor and two units of direct materials. Laborers are paid $24.00 per hour and one unit of direct materials costs $11. e. There are 10,400 units of direct materials in beginning inventory as of January 1, 2020. At the end of each quarter, Quaint plans to have 10 percent of the direct materials needed for next quarter's unit sales. The ending unit of direct materials on band at the end of the year was 19.500. f Quaint buys direct materials on account. Half of the purchases are paid for in the quarter of acquisition, and the remaining half are paid for in the following quarter. Wages and salaries are paid on the 15th and 30th of each month 8. Fixed overhead totals $678,600 for each of the first three quarters of this total, $255,000 represents depreciation. During the fourth quarter, the depreciation increases by $19.575 and total fixed overhead increases by $24,650. All fixed expenses other than depreciation are paid for in cash in the quarter incurred. The fixed overhead rate is computed by dividing the year's total fixed overhead by the year's expected actual units produced. h. Variable overhead is budgeted at $5.00 per direct labor hour All variable overhead expenses are paid for in the quarter incurred Fixed selling and administrative expenses total $305,000 per quarter, mcluding $50.000 depreciation, Variable selling and administrative expenses are budgeted at $6 k per unit sold All selling and administrative expenses are paid for in the quarter incurred. 1 The balance sheet as of December 31, 2020, is as follows ASSETS LIABILITIES and STOCKHOLDERS' EQUITY 1 S 680.000 Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Plant and equipment, net Total Assets s 52,000 Accounts Payable 1,275,000 114,400 808,000 Capital Stock 9.360.000 Retained Earnings S116092100 Total Liab & Equity 9,890.000 1039,400 $11.6092400 m. Quaint has a required cash balance of $25,000. An operating line of credit is available up to $250,000 at 8% interest. All borrowings and payments must be made in increments of $10,000 and interest is paid when principal is paid. All borrowings take place at the beginning of the quarter and all payments take place at the end of the quarter n. Quaint will pay quarterly dividends of $35,000. At the end of the third quarter, $550,000 of equipment will be purchased and at the end of the fourth quarter. $355,000 of equipment will be purchased 0. The income tax rate is 30%. Required Prepare a master budget for Quaint Stem Company for each quarter of 2021 and for the year in total. The following component budgets must be included: ates budget Droduetion budget e Direet materials purchases budget d. Direct labor tuttet e. Overhead budget f Ending finished goods inventory budget g. Cost of goods sold budget h Selling and administrative expenses budget i Cash budget j. Pro forma income statement k Pro forma balance sheet w 1 Answers ABER Sale Quarter Dear MI Quarter Malib STORE .100.000 3.210.3.2 Qar LCD ON IT . 1.225.00 AI Erdele Pute Salin Quarter 116.100 Come and your IM Prodele Over Tom Credits Chades Catwa timated collection Free 5.7. Anwwer ARR2 W 5. ASKO LAS 5.42 TAMS STAN SMA SMS 30415 Dard Total I HA Y SK 18350 21.0 MS 21 Q artur Lii 20.00 MAR 21. 15.500 VES on line Tal Tradered 91.00 TU Answers Am Direttorial purchased Our Morroneffabilah HO Material 100 Rewari forum 151300 Le Region 10400 14 Profil 1. Valby TS 1.571.101 3 15.00 110 Quarter 11.10 I OKA 1616 15.70 110 HUS 10-400 IN444 E SIE STIRI SATICI SSE . A3 Expected there Our Quar Quarter Total BA ON TW Padure Mas Pasidare Plated Trond 1. 1. 1,710991 74 5156 Answer A Director del Our w DI SOT 1030 Oerter arters TE 10 1168 19 1.50 20 112.76 120391 34 24 2.514.00 2.5 297.000 Mobiply Heart Faded Maple Dirert aber 52.60
