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Cost of Goods Sold Budget Quarter Year 9 Direct materials used 0 Direct labor used "1 Overhead 72 Budgeted manufacturing costs 73 Beginning finished goods 74 Cost of goods available for sale 75 Less: Ending finished goods 76 Budgeted cost of goods sold 77 78 79 Selling and Administrative Budget Quarter 80 Year 81 Planned sales in units 82 Variable selling and admin exp per unit 83 Total variable expense 84 Fixed selling and admin expense 85 Total selling and admin expenses 86 lin Cash Collections Quarter 8 Cash Sales #9 Received on account from: 10 Quarter 4, prior year 11 Quarter 1 12 Quarter 2 13 Quarter 3 14 Quarter 4 15 Total cash receipts 16 17 118 119 120 Quarter 4, prior year 121 Quarter 1 122 Quarter 2 123 Quarter 3 124 Quarter 4 125 Total cash needed 126 Cash Payments Quarter ANE Flexible Budget Performance Report 2019 Season Actual Results Spending Variance Flexible Budget Activity Variance Static Planning Budget 8 Production 9 Performances 10 11 Director & actor wages 12 Stagehands wages 13 Ticket Booth & usher wages 14 Scenery, costumes & props 15 Theatre hall rent 16 Printed programs 17 Publicity 18 Administrative expenses 19 Total expenses 20 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 (2020). The budget will detail each quarter's 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 2019 are 82,000 units and 68,000 for the first quarter of 2021. b. Unit sales by quarter (for 2020) are projected as follows: First quarter 64,000 Second quarter 70,000 Third quarter 76,000 Fourth quarter 86,000 The selling price is $82 per unit. Cash sales make up 20% of all sales. Quaint collects 80 percent of the credit sales within the quarter in which they are realized; the other 20 percent are collected in the following quarter. There are no bad debts. C. The beginning inventory of finished goods is 13,000 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 $12. e. There are 10,400 units of direct materials in beginning inventory as of January 1, 2019. 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 hand at the end of the year was 14,200. 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. g. Fixed overhead totals $576,400 for each of the first three quarters. Of this total, $175,000 represents depreciation. During the fourth quarter, the depreciation and total fixed overhead increases by $18.750. 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 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 $4.50 per direct labor hour. All variable overhead expenses are paid for in the quarter incurred. i. Fixed selling and administrative expenses total $230,000 per quarter, including $50,000 depreciation. j. Variable selling and administrative expenses are budgeted at $4 per unit sold. All selling and administrative expenses are paid for in the quarter incurred. k. The balance sheet as of December 31, 2018, is as follows: ASSETS LIABILITIES and STOCKHOLDERS'EQUITY Accounts Payable $ 680,000 Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Plant and equipment, net Total Assets $ 52,000 1,275,000 124.800 656,500 9,360,000 $11.468,300 Capital Stock Retained Earnings Total Liab. & Equity 9,750,000 1,038,300 $11.468,300 1. Quaint has a required cash balance of $50,000. An operating line of credit is available up to $250,000 at 10% 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. m. Quaint will pay quarterly dividends of $45,000. At the end of the third quarter, $575,000 of equipment will be purchased and at the end of the fourth quarter, $175,000 of equipment will be purchased n. The income tax rate is 30%. at 10% 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. m. Quaint will pay quarterly dividends of $45,000. At the end of the third quarter, $575,000 of equipment will be purchased and at the end of the fourth quarter, $175,000 of equipment will be purchased n. The income tax rate is 30%. Required Prepare a master budget for Quaint Stem Company for each quarter of 2019 and for the year in total. The following component budgets must be included: a. Sales budget b. Production budget c. Direct materials purchases budget d. Direct labor budget 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 Cost of Goods Sold Budget Quarter Year 9 Direct materials used 0 Direct labor used "1 Overhead 72 Budgeted manufacturing costs 73 Beginning finished goods 74 Cost of goods available for sale 75 Less: Ending finished goods 76 Budgeted cost of goods sold 77 78 79 Selling and Administrative Budget Quarter 80 Year 81 Planned sales in units 82 Variable selling and admin exp per unit 83 Total variable expense 84 Fixed selling and admin expense 85 Total selling and admin expenses 86 lin Cash Collections Quarter 8 Cash Sales #9 Received on account from: 10 Quarter 4, prior year 11 Quarter 1 12 Quarter 2 13 Quarter 3 14 Quarter 4 15 Total cash receipts 16 17 118 119 120 Quarter 4, prior year 121 Quarter 1 122 Quarter 2 123 Quarter 3 124 Quarter 4 125 Total cash needed 126 Cash Payments Quarter ANE Flexible Budget Performance Report 2019 Season Actual Results Spending Variance Flexible Budget Activity Variance Static Planning Budget 8 Production 9 Performances 10 11 Director & actor wages 12 Stagehands wages 13 Ticket Booth & usher wages 14 Scenery, costumes & props 15 Theatre hall rent 16 Printed programs 17 Publicity 18 Administrative expenses 19 Total expenses 20 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 (2020). The budget will detail each quarter's 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 2019 are 82,000 units and 68,000 for the first quarter of 2021. b. Unit sales by quarter (for 2020) are projected as follows: First quarter 64,000 Second quarter 70,000 Third quarter 76,000 Fourth quarter 86,000 The selling price is $82 per unit. Cash sales make up 20% of all sales. Quaint collects 80 percent of the credit sales within the quarter in which they are realized; the other 20 percent are collected in the following quarter. There are no bad debts. C. The beginning inventory of finished goods is 13,000 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 $12. e. There are 10,400 units of direct materials in beginning inventory as of January 1, 2019. 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 hand at the end of the year was 14,200. 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. g. Fixed overhead totals $576,400 for each of the first three quarters. Of this total, $175,000 represents depreciation. During the fourth quarter, the depreciation and total fixed overhead increases by $18.750. 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 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 $4.50 per direct labor hour. All variable overhead expenses are paid for in the quarter incurred. i. Fixed selling and administrative expenses total $230,000 per quarter, including $50,000 depreciation. j. Variable selling and administrative expenses are budgeted at $4 per unit sold. All selling and administrative expenses are paid for in the quarter incurred. k. The balance sheet as of December 31, 2018, is as follows: ASSETS LIABILITIES and STOCKHOLDERS'EQUITY Accounts Payable $ 680,000 Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Plant and equipment, net Total Assets $ 52,000 1,275,000 124.800 656,500 9,360,000 $11.468,300 Capital Stock Retained Earnings Total Liab. & Equity 9,750,000 1,038,300 $11.468,300 1. Quaint has a required cash balance of $50,000. An operating line of credit is available up to $250,000 at 10% 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. m. Quaint will pay quarterly dividends of $45,000. At the end of the third quarter, $575,000 of equipment will be purchased and at the end of the fourth quarter, $175,000 of equipment will be purchased n. The income tax rate is 30%. at 10% 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. m. Quaint will pay quarterly dividends of $45,000. At the end of the third quarter, $575,000 of equipment will be purchased and at the end of the fourth quarter, $175,000 of equipment will be purchased n. The income tax rate is 30%. Required Prepare a master budget for Quaint Stem Company for each quarter of 2019 and for the year in total. The following component budgets must be included: a. Sales budget b. Production budget c. Direct materials purchases budget d. Direct labor budget 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