need: (7) Compute the Cost of Goods Sold (5 points) (8) Prepare a Budgeted Income Statement (10 points)

from: Budget Excel Project Astro Co.

Astro Corporation is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process.

Sales

Unit sales for November 2019 = 112,500 Unit sales for December 2019 = 102,100 Expected unit sales for January 2020 = 113,000 Expected unit sales for February 2020 = 112,500 Expected unit sales for March 2020 = 116,000 Expected unit sales for April 2020 = 125,000 Expected unit sales for May 2020 = 137,500 Unit selling price $12

Astro likes to keep 10% of the next months unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31, 2019, totalled $183,780.

Direct Materials

Direct materials cost 75 cents per pound. Two pounds of direct materials are required to produce each unit.

Astro likes to keep 5% of the materials needed for the next month in its ending inventory. Raw Materials on December 31, 2019 were 11,295 pounds. Payment for materials is made within 15 days. 50% is paid in the month of purchase, and 50% is paid in the month after purchase. Accounts Payable balance on December 31, 2019 was $120,595.

Direct Labor

Labor requires 12 minutes per unit for completion and is paid at a rate of $8 per hour.

Manufacturing Overhead

Indirect materials 30 per labor hour Indirect labor 50 per labor hour Utilities 45 per labor hour Maintenance 25 per labor hour Salaries $42,000 per month Depreciation $16,800 per month Property taxes $ 2,675 per month Insurance $ 1,200 per month Janitorial $ 1,300 per month

Selling and Administrative

Variable selling and administrative cost per unit is $1.60.

Advertising $15,000 a month Insurance $ 1,400 a month Salaries $72,000 a month Depreciation $ 2,500 a month Other fixed costs $ 3,000 a month

Other Information

The Cash balance on December 31, 2019 is $100,500, but management has decided it would like to maintain a cash balance of at least $800,000 beginning on January 31, 2020. Dividends are paid each month at the rate of $2.50 per share for 5,000 shares outstanding. The company has an open line of credit with Crown Bank. The terms of the agreement require borrowing to be in $1,000 increments at 8% interest. Astro borrows on the first day of the month and repays on the last day of the month. A $500,000 equipment purchase is planned for February.

Instructions (Round all numbers to whole dollars, except COGS per unit)

Please and than you. Need to see how to do:

(7) Compute the Cost of Goods Sold

(8) Prepare a Budgeted Income Statement

Answers:

Sales Budget For January, February and March 2020 Budgeted Unit Budgeted Unit Budgeted Total Sales Price Dollars 113,000 $ 12 $ 1,356,000 112,500 $ 12$ 1,350,000 116,000 $ 12$ 1,392,000 341,500 $ 4,098,000 January February March Total for the Quarter Units Sales Add: Desired ending inventory(10% of next sales) Total needs Less: Beginning inventory Units to be produced Production Budget For January, February and March 2020 January 113,000 11,250 124,250 11,300 112,950 February 112,500 11,600 124,100 11,250 112,850 March 116,000 12,500 128,500 11,600 116,900 April 125,000 13,750 (137,500*10%) 138,750 12,500 126,250 April 126,250 2 252,500 Direct Material budget For January, February and March 2020 January February Units to be produced (A) 112,950 112,850 Quantity of Direct material needed per unit (B) 2 2 Total Quantity of Direct material needed (A*B) 225,900 225,700 Add: Desired ending inventory of Direct material(5% of next month) 11,285 11,690 Total needs 237,185 237,390 Less: beginning inventory of Direct material 11,295 11,285 Total Quantity of direct material to purchase 225,890 226,105 Cost per unit $ 0.75 $ 0.75$ Total cost of direct material purchase $ 169,418 $ 169,579 $ March 116,900 2 233,800 12,625 246,425 11,690 234,735 0.75 176,051 Units to be produced (A) Direct Labour hours per unit(12/60) (B) Total Direct Labour hours (C = A*B) Direct Labour Rate (D) Total Direct Labour budget (CD) Direct Labour Budget For January, February and March 2020 January February 112,950 112,850 0.2 0.2 22,590 22,570 $ 8 $ 8 $ $ 180,720 $ 180,560 $ March Quarter 116,900 0.2 23,380 8 187,040 $548,320 February March Quarter 6,771 $ 11,285$ 10,157 $ 5,643 $ 33,855$ 7,014 $ 20,562 11,690$ 34,270 10,521 $ 30,843 5,845 $ 17,135 35,070 $ 102,810 Manufacturing Overhead Budget For January, February and March 2020 January Variable cost Indirect Material(0.3 * direct labour hour) $ 6,777 $ Indirect Labour(0.5 * direct labour hour) $ 11,295 $ Utilities(0.45 * direct labour hour) $ 10,166 $ Maintenance(0.25 * direct labour hour) $ 5,648 $ Total Variable Cost (A) $ 33,885 $ Fixed Costs Salaries $ 42,000 $ Depreciation $ 16,800 $ Property Taxes $ 2,675 $ Insurance $ 1,200 $ Janitorial $ 1,300 $ Total Fixed Costs (B) $ 63,975 $ Total Manufacturing OH (C = A+B) $ 97,860 $ Direct Labour Hours (D) 22,590 Predetermined overhead rate for the quarter (C/D) 42,000 $ 16,800 $ 2,675$ 1,200 $ 1,300 $ 63,975 $ 97,830$ 22,570 42,000 $ 126,000 16,800 $ 50,400 2,675$ 8,025 1,200 $ 3,600 1,300 $ 3,900 63,975 $ 191,925 99,045 $ 294,735 23,380 68,540 $ 4.30 March Quarter 116000 1.60 185,600 $ 546,400 Selling and Admin Expense Budget For January, February and March 2020 January February Budgeted Sales in units (A) 113000 112500 Variable Expenses per unit (B) $ 1.60 $ 1.60 $ Total Variable Selling and Admin expenses (C = A*B) $ 180,800 $ 180,000 $ Fixed Expenses Advertising $ 15,000 $ 15,000 $ Insurance $ 1,400 $ 1,400 $ Salaries $ 72,000 $ 72,000 $ Depreciation $ 2,500 $ 2,500 $ Others $ 3,000 $ 3,000 $ Total Fixed Expenses (D) $ 93,900 $ 93,900 $ Total Selling and Admin expenses (C+D) $ 274,700 $ 273,900 $ 15,000 $ 45,000 1,400 $ 4,200 72,000 $ 216,000 2,500 $ 7,500 3,000 $ 9,000 93,900 $ 281,700 279,500 $ 828,100