Operating Budget, Comprehensive Analysis

Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world. Projected sales in units for the coming five months are given below.

January10,000February10,500March13,700April16,000May18,500

The following data pertain to production policies and manufacturing specifications followed by Ponderosa:

1. Finished goods inventory on January 1 is 900 units. The desired ending inventory for each month is 20 percent of the next month's sales.
2. The data on materials used are as follows:Direct MaterialPer-Unit UsageUnit CostPart #K2982$4Part #C3037
3. Inventory policy dictates that sufficient materials be on hand at the beginning of the month to satisfy 30 percent of the next month's production needs. This is exactly the amount of material on hand on January 1.
4. The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20.
5. Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.)Fixed Cost
6. ComponentVariable Cost
7. ComponentSupplies$ ?$1.00Power?0.20Maintenance12,5001.10Supervision14,000?Depreciation45,000?Taxes4,300?Other86,0001.60
8. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.)Fixed CostsVariable CostsSalaries$ 88,600?Commissions?$1.40Depreciation25,000?Shipping?3.60Other137,0001.60
9. The unit selling price of the wiring harness assembly is $110.
10. In February, the company plans to purchase land for future expansion. The land costs $68,000.
11. All sales and purchases are for cash. The cash balance on January 1 equals $62,900. The firm wants to have an ending cash balance of at least $25,000. If a cash shortage develops, sufficient cash is borrowed to cover the shortage and provide the desired ending balance. Any cash borrowed must be borrowed in $1,000 increments and is repaid the following month, as is the interest due. The interest rate is 12 percent per annum.

Required:

Prepare. a monthly operating budget for the first quarter with the following schedules:

X Cengage Log in X CengageNOWv2 | Online teachin X + https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator= &i... @ ... Chapter 9 eBook Print Item ? Operating Budget, Comprehensive Analysis Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world. Projected sales in units for the coming five months are given below. January 10,000 February 10,500 March 13,700 April 16,000 May 18,500 The following data pertain to production policies and manufacturing specifications followed by Ponderosa: a. Finished goods inventory on January 1 is 900 units. The desired ending inventory for each month is 20 percent of the next month's sales. b. The data on materials used are as follows: Direct Material Per-Unit Usage Unit Cost Part #K298 2 $4 Part #C30 3 Inventory policy dictates that sufficient materials be on hand at the beginning of the month to satisfy 30 percent of the next month's production needs. This is exactly the amount of material on hand on January 1. c. The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20. d. Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.) Fixed Cost Variable Cost Component Component Supplies $ - 1.00 Power 0.20 Maintenance 12,500 1.10 Supervision 14,000 Depreciation 45,000 Taxes 4,300 Other 86,000 1.60 e. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.) Fixed Costs Variable Costs Salaries $ 88,600 Next Check My Work Save and Exit Submit Assignment for Grading Assignment Score: 86.57% Email Instructor 12:25 PM Type here to search O 3/10/2021Cengage Log in X CengageNOWv2 | Online teachin X + X https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator= &i... Q ... Chapter 9 eBook Print Item Other 86,000 1.60 ? e. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.) Fixed Costs Variable Costs Salaries $ 88,600 Commissions $1.40 Depreciation 25,000 Shipping 3.60 Other 137,000 1.60 f. The unit selling price of the wiring harness assembly is $110. g. In February, the company plans to purchase land for future expansion. The land costs $68,000. h. All sales and purchases are for cash. The cash balance on January 1 equals $62,900. The firm wants to have an ending cash balance of at least $25,000. If a cash shortage develops, sufficient cash is borrowed to cover the shortage and provide the desired ending balance. Any cash borrowed must be borrowed in $1,000 increments and is repaid the following month, as is the interest due. The interest rate is 12 percent per annum. Required: Prepare a monthly operating budget for the first quarter with the following schedules: 1. Sales budget January February March Total Units 10,000 10,500 13,700 34,200 Unit selling 110 110 110 110 price Sales $ 1,100,000 V $ 1,155,000 1,507,000 $ 3,762,000 Feedback Check My Work See Cornerstone 8.1. 2. Production budget Check My Work Next Assignment Score: 86.57% Email Instructor Save and Exit jubmit Assignment for Grading Type here to search O 12:25 PM 3/10/2021Cengage Log in X CengageNOWv2 | Online teachin X + X CA https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&i... Q Chapter 9 eBock Print Item January February March Total Unit sales 10,000 10,500 13,700 34,200 Desired ending inventory 2,100 V 2,740 3,200 V 3,200 Total needed 12,100 13,240 16,900 37,400 Less: Beginning -900 V -2,100 -2,740 -900 V inventory Units produced 11,200 11,140 14,160 V 36,500 Foodhack Check My Work See Cornerstone 8.2. 3. Direct materials purchases budget January February March Total Part K298 Part C30 Part K298 Part C30 Part K298 Part C30 Part K298 Part C30 Units produced 11,200 11,200 11,140 11,140 14,160 14,160 36,500 36,500 Dir. mat. per 2 3 unit V Production 22,400 33,600 22,280 33,420 28,320 needs 42,480 73,000 109,500 Desired EI 6,684 V 10,026 6,496 12,744 9,900 14,850 9,900 14,850 Total needed 29,084 43,626 30,776 46,164 38,220 57,330 82,900 124,350 Less: BI 6,720 10,080 6,684 10,026 8,496 12,744 6,720 10,080 Dir. mat. to 22,364 V 33,546 V 24,092 V 36,136 29,724 purchase 44,586 76,180 114,270 Cost per unit 4 7 7 4 V 7 V Check My Work Next Assignment Score: 86.57% Email Instructor Save and Exit Submit Assignment for Grading Type here to search O 12:25 PM 3/10/2021Cengage Log in X CengageNOWv2 | Online teachin X + X https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator= &i... Q Chapter 9 Book Print Item Check My Work See Cornerstone 8.2. 3. Direct materials purchases budget January February March Total Part K298 Part C30 Part K298 Part C30 Part K298 Part C30 Part K298 Part C30 Units produced 11,200 11,200 11,140 11,140 14,160 14,160 36,500 36,500 Dir. mat. per unit V Production 22,400 33,600 22,280 33,420 28,320 needs 42,480 73,000 109,500 Desired EI 6,684 10,026 8,496 12,744 14,850 9,900 14,850 Total needed 29,084 43,626 30,776 46,164 38,220 57,330 82,900 124,350 Less: BI 6,720 V 10,080 6,684 10,026 8,496 12,744 6,720 10,080 Dir. mat. to 22,364 33,546 24,092 36,138 29,724 purchase 44,586 76,180 114,270 Cost per unit V Total purchase 89,456 V $ 234,822 96,368 252,966 118,896 $ 312,102 304,720 cost 799,890 Feedback Check My Work See Cornerstone 8.3. 4. Direct labor budget. Round your answers to two decimal places, if required. January February March Total Units to be produced 11,200 11,140 14,160 36,500 Check My Work Next Assignment Score: 86.57% Email Instructor Save and Exit Submit Assignment for Grading Type here to search O m 12:25 PM 3/10/2021Cengage Log in X CengageNOWv2 | Online teachin X + X https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&i... Chapter 9 eBook Print Item 4. Direct labor budget. Round your answers to two decimal places, if required. January February March Total Units to be produced 11,200 11,140 14,160 36,500 Direct labor time per unit 1.5 1.5 (hrs.) 1.5 V 1.5 V Total hours needed 16,800 16,710 21,240 54,750 Wages per hour 20 20 20 20 Total direct labor cost 336,000 334,200 424,800 $ 1,095,000 Foodhack Check My Wark See Cornerstone 8.4. 5. Overhead budget. Round your answers to two decimal places, if required. January February March Total Budgeted direct labor hours Variable overhead rate Budgeted var. overhead Budgeted fixed overhead Total overhead cost Foodhack Check My Work See Cornerstone 8.5. 5. Selling and administrative expense budget. Round your answers to the nearest cent, if required. Check My Work Next Assignment Score: 86.57% Email Instructor Save and Exit Submit Assignment for Grading Type here to search O 12:25 PM 3/10/2021Cengage Log in X CengageNOWv2 | Online teachin X + X CA https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator= &i... Q Chapter 9 Book Print Item Foodhack Check My Work See Cornerstone 8.5. 5. Selling and administrative expense budget. Round your answers to the nearest cent, if required. January February March Total Planned sales 10,000 10,500 13,700 34,200 Variable selling & administrative expense per 6.6 6.6 v 6.6 6.6 unit Total variable expense 66,000 69,300 90,420 225,720 Fixed selling & administrative expense: Salaries 86,600 86,600 86,600 265,800 V Depreciation 25,000 25,000 25,000 75,000 V Other 137,000 137,000 137,000 411,000 V Total fixed expenses 250,600 250,600 250,600 751,800 Total selling & administrative expenses $ 316,600 $ 319,900 $ 341,020 $ 977,520 Foodhack Check My Work See Cornerstone 8.9. 7. Ending finished goods inventory budget. Round intermediate calculations to the nearest cent. Round your answers to the nearest cent, if required. Unit cost computation: Direct materials: Check My Work Next Assignment Score: 86.57% Email Instructor Save and Exit Submit Assignment for Grading 12:25 PM Type here to search O 3/10/2021Cengage Log in X CengageNOWv2 | Online teachin X + X CA https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator= &i... Q Chapter 9 eBock Print Item Foodhack Check My Work See Cornerstone 8.9. 7. Ending finished goods inventory budget. Round intermediate calculations to the nearest cent. Round your answers to the nearest cent, if required. Unit cost computation: Direct materials: Part K298 B Part C30 21 V Direct labor Overhead: Variable 5.85 Fixed Total unit cost Number of units 3,200 Finished goods Foodhack Check My Work See Cornerstone 8.6. 3. Cost of goods sold budget Direct materials used Part K298 292,000 Check My Work Next Assignment Score: 86.57% Email Instructor Save and Exit Submit Assignment for Grading 12:25 PM Type here to search O M 3/10/2021Cengage Log in X CengageNOWv2 | Online teachin X + X Cn https://v2.cengagenow.com/ilmn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator= &i... Q Chapter 9 eBock Print Item Foodhack Check My Work See Cornerstone 8.6. 3. Cost of goods sold budget Direct materials used Part K298 292,000 Part C30 766,500 Direct labor used 1,095,000 V Overhead 698,925 Budgeted manufacturing 2,852,425 Losts Add: Beginning finished goods Goods available for sale Less: Ending finished goods Budgeted cost of goods old Foodback Check My Work See Cornerstone 8.7. 9. Budgeted income statement (ignore income taxes) Sales 3,762,000 Less: Cost of goods sold Check My Work Next Assignment score: 86.57% Email Instructor Save and Exit Submit Assignment for Grading O 12:26 PM Type here to search M 3/10/2021Cengage Log in X CengageNOWv2 | Online teachin X + X https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator= &i... Q Chapter 9 eBlock Print Item sold Foodhack Chack My Work See Cornerstone 8.7. 9. Budgeted income statement (ignore income taxes) Sales 3,762,000 Less: Cost of goods sold Gross margin Less: Selling and administrative expense 977,520 Income before income taxes Foodhack Check My Work See Cornerstone 8.10. 10. Cash budget Enter a negative balance as a negative amount, and if an amount is zero enter "0". January February March Total Beginning balance 62,900 28,702 25,299 62,900 Cash receipts 1,100,000 1,155,000 1,507,000 3,762,000 Total cash 1,162,900 1,183,702 1,532,299 3,824,900 available Disbursements: Purchases 324,278 349,334 430,998 1,104,610 DL payroll 336,000 334,200 424,800 1,095,000 Check My Work Next Assignment Score: 86.57% Email Instructor Save and Exit Submit Assignment for Grading Type here to search O 12:26 PM 3/10/2021Cengage Log in X CengageNOWv2 | Online teachin X + X https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&i... Q Chapter 9 Book Print Item See Cornerstone 8.10. 10. Cash budget Enter a negative balance as a negative amount, and if an amount is zero enter "0". January February March Total Beginning balance 62,900 28,702 25,299 62,900 Cash receipts 1,100,000 1,155,000 1,507,000 3,762,000 Total cash 1,162,900 1,183,702 1,532,299 3,824,900 V available Disbursements: Purchases 324,278 349,334 430,998 1,104,610 DL payroll 336,000 334,200 424,600 1,095,000 Overhead 182,320 181,969 199,636 563,925 Marketing & 291,600 294,900 316,020 902,520 admin Land 68,000 68,000 Total disbursements 1,134,198 1,228,403 1,371,454 3,734,055 Ending balance 26,702 -44,701 160,845 90,845 Financing: Borrowed/repaid 70,000 -70,000 0 Interest paid 0 -700 -700 Ending cash balance 26,702 25,299 90,145 90,145 Foodhack Check My Work See Cornerstone 8.12. Check My Work Next Assignment Score: 86.57% Email Instructor Save and Exit Submit Assignment for Grading O M 12:26 PM Type here to search 3/10/2021