OBJECTIV: 1 (2) Problem 9.51 Understanding Relationships, Manter Budget, Comprehensive Review Optima Compasy is a hiphtechinology erganizition that produces a mass-storige system. The design of Optima's system is unique and represents a beeulathroogt in the industry. The units Optima produces combine positive fratures of boch sompect atd bard disks. The sompuny is completing its fifth ytar of operations and is poppuring to beld its mastrr bodpet for the comine year (2014). The budget will detail each quarer's activity and the activiry for the your in foul The master budpet will be based on the following imformation: a. Fourth-quarter ssles for 2013 are 55,000 unite b. Unit sales by quarter (for 2014 ) are propected as followx Chepert = Phufe Fuaninet The selling price is 5400 per unt. All stim are crotir sales. Optima collets 89 ef all sales within the guarter in which thry ate realited; the other 15% is eolected in the following quarter. There are no bad debes. c. There is bo beginning imventary of finishind goodk. Optima is plunes the folloneles etiding finished goods inventories for each quarter d. Each mass-siorage unil uses five hours of direct labor and thete enits of ahen malerials. Laborers are paid $10 per bour, and one anit of diect materials costs $s. c. There afe 65,760 units of direct materials in beginnisg imventery as of Jasuary 1, 2ot4, As the end of eacts quarter, Optima plasts to tave 30% of the diret matertall aceded foe next quarter's unis saies. Optima will end the year with the sambe apoent of dirnct materials foumd in this year's beginning invemtory. f. Optima buys direct materials on acpount. Hvelf of the purchases ase poid for in the quarter of acquivition, and the remaining half are paid for it the follomis cuarter. Waves and alaries afe paid on the 15 th and 30 ch of each month. g. Fived overbead totals $1 million each qurner. Or this tocal, 5360,000 repesets depoecia. tion. All other fixed expenses are paid for in cash in the quarter incursed. The fased evertead rate is computed by dividing the year's total fised overthead by the year's bodpeted pooductioe in units. h. Variable overhead is budgeted at 86 per direct labor hour. All surible evertead expenses are paid for in the quarter incurred. i. Fived selling and administrative expenses total 5250,000 per quarter, indiading $50,000 depectiation. j. Variable selling and administrative expenses are bodpeted at 510 per unit sild AM selling and administrative expenses are paid for in the quarter incurred. k. The balance sheet as of December 31, 2013, is as follow: 1. Optina will pay quarterly dividends of \$300,000. At the end of the foerth quaster, 51 milhon of cyuipment will be purchased. 10. Pro forma income statement (using absorption costing) (Note: Ignore income taxe 11. Pro forma balance sheet (Note: Ignore income taxes.) OBJECTIV: 1 (2) Problem 9.51 Understanding Relationships, Manter Budget, Comprehensive Review Optima Compasy is a hiphtechinology erganizition that produces a mass-storige system. The design of Optima's system is unique and represents a beeulathroogt in the industry. The units Optima produces combine positive fratures of boch sompect atd bard disks. The sompuny is completing its fifth ytar of operations and is poppuring to beld its mastrr bodpet for the comine year (2014). The budget will detail each quarer's activity and the activiry for the your in foul The master budpet will be based on the following imformation: a. Fourth-quarter ssles for 2013 are 55,000 unite b. Unit sales by quarter (for 2014 ) are propected as followx Chepert = Phufe Fuaninet The selling price is 5400 per unt. All stim are crotir sales. Optima collets 89 ef all sales within the guarter in which thry ate realited; the other 15% is eolected in the following quarter. There are no bad debes. c. There is bo beginning imventary of finishind goodk. Optima is plunes the folloneles etiding finished goods inventories for each quarter d. Each mass-siorage unil uses five hours of direct labor and thete enits of ahen malerials. Laborers are paid $10 per bour, and one anit of diect materials costs $s. c. There afe 65,760 units of direct materials in beginnisg imventery as of Jasuary 1, 2ot4, As the end of eacts quarter, Optima plasts to tave 30% of the diret matertall aceded foe next quarter's unis saies. Optima will end the year with the sambe apoent of dirnct materials foumd in this year's beginning invemtory. f. Optima buys direct materials on acpount. Hvelf of the purchases ase poid for in the quarter of acquivition, and the remaining half are paid for it the follomis cuarter. Waves and alaries afe paid on the 15 th and 30 ch of each month. g. Fived overbead totals $1 million each qurner. Or this tocal, 5360,000 repesets depoecia. tion. All other fixed expenses are paid for in cash in the quarter incursed. The fased evertead rate is computed by dividing the year's total fised overthead by the year's bodpeted pooductioe in units. h. Variable overhead is budgeted at 86 per direct labor hour. All surible evertead expenses are paid for in the quarter incurred. i. Fived selling and administrative expenses total 5250,000 per quarter, indiading $50,000 depectiation. j. Variable selling and administrative expenses are bodpeted at 510 per unit sild AM selling and administrative expenses are paid for in the quarter incurred. k. The balance sheet as of December 31, 2013, is as follow: 1. Optina will pay quarterly dividends of \$300,000. At the end of the foerth quaster, 51 milhon of cyuipment will be purchased. 10. Pro forma income statement (using absorption costing) (Note: Ignore income taxe 11. Pro forma balance sheet (Note: Ignore income taxes.)
