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 10,600 March 13,200 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 7 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 2. 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. 1. In February, the company plans to purchase land for future expansion. The land costs $68,000. 1. All sales and purchases are for cash. The cash balance on January 1 equals $62,800. The firm wants to have an ending cash balance of at least $25,000. If 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, a annum. Required: Prepare a monthly operating budget for the first quarter with the following schedules: Required: Prepare a monthly operating budget for the first quarter with the following schedules: 1. Sales budget January February March Total Units 10,000 10,600 13,800 x 34,400 Unit selling price 110 110 110 110 Sales 1,100,000 $ 1,166,000 1,518,000 x 3,784,000 X 2. Production budget January February March Total Unit sales 10,000 10,600 13,800 X 34,400 Desired ending inventory 2,120 2,760 X 3,200 3,200 Total needed 12,120 13,360 X 17,000 X 37,600 X Less: Beginning 900 2,120 2,760 X 900 inventory Units produced 11,220 11,240 14,240 x 36,700 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 11,220 11,220 11,240 x 11,240 x 14,240 x 14,240 X 36,700 x 36,700 x Dir. mat. per unit 2 3 2 3 2 3 2 3 Production 22,440 33,660 22,480 X 33,720 X 28,480 X 42,720 X 73,400 X 110,100 x needs Desired EI 6,744 x 10,116 X 8,544 x 12,816 X 9,900 14,850 9,900 14,850 Total needed 29,184 x 43,776 x 31,024 46,536 X 38,380 X 57,570 X 83,300 X 124,950 X Less: BI 6,732 10,098 V 6,744 x 10,116 X 8,544 x 12,816 X 6,732 10,098 Dir. mat. to 22,452 x 33,678 X 24,280 x 36,420 X 29,836 X 44,754 X 76,568 x 114,852 x purchase Cost per unit 4 7 4 7 4 7 4 7 Total purchase 89,808 X 235,746 97,120 $ 254,940 X $ 119,344 X 313,278 X 306,272 X $ 803,964 X cost 4. Direct labor budget. Round your answers to two decimal places, if required. January February March Total Units to be produced 11,220 11,240 X 14,240 x 36,700 X Direct labor time per unit (hrs.) 1.5 1.5 1.5 1.5 Total hours needed 16,830 16,860 X 21,360 X 55,050 x Wages per hour $ 20 20 20 20 Total direct labor cost $ 336,600 337,200 X $ 427,200 X 1,101,000 X 5. Overhead budget. Round your answers to two decimal places, if required. January February March Total Budgeted direct 16,830 16,860 x 21,360 x 55,050 X labor hours Variable overhead 3.90 3.90 3.90 3.90 rate Budgeted var. 65,637 65,754 x 83,304 x 214,695 overhead Budgeted fixed 161,900 x 161,900 X 161,900 x 485,700 x overhead Total overhead 227,537 X 227,654 X 245,204 x 700,395 x cost 6. Selling and administrative expense budget. Round your answers to the nearest cent, if required. January February March Total Planned sales 10,000 10,600 13,800 x 34,400 X Variable selling & administrative expense per 6.6 6.6 6.6 6.6 unit Total variable expense 66,000 $ 69,960 91,080 x 227,040 X Fixed selling & administrative expense: Salaries 88,500 $ 88,500 x 88,500 $ 265,500 Depreciation 25,000 25,000 25,000 75,000 Other 137,000 137,000 137,000 411,000 Total fixed expenses 250,500 X $ 250,500 X $ 250,500 X 751,500 x Total selling & administrative expenses 316,500 x $ 320,460 x $ 341,580 X $ 978,540 X 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 8 Part C30 21 Direct labor 30 Overhead: Variable 5.85 Fixed 13.23 Total unit cost 78.08 Number of units 3,200 Finished goods 249,870 8. Cost of goods sold budget Direct materials used Part K298 Part C30 Direct labor used Overhead Budgeted manufacturing costs Add: Beginning finished goods Goods available for sale Less: Ending finished goods Budgeted cost of goods sold 9. Budgeted income statement (ignore income taxes) Sales $ Less: Cost of goods sold X Gross margin $ Less: Selling and administrative expense Income before income taxes $ X 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 x Cash receipts Total cash available $ Disbursements: Purchases $ DL payroll Overhead Marketing & admin X Land Total disbursements $ Ending balance $ Financing: Borrowed/repaid Interest paid Ending cash balance