Part 2 Computer Accessories assembles a computer

Beginning-of-year balances
	Cash			$50,000
	Accounts receivables (previous quarter's sales)			$61,200
	Raw materials			653	Kits
	Finished Goods			510	Units
	Accounts payable			$33,255
Desired end-of-year inventory balances
	Raw materials			500	kits
	Finished goods			270	units
Desired end-of-quarter balances
	Raw materials as a portions of the following quarter's production			20%
	Finished goods as a portion of the following quarter's sales			15%
Manufacturing costs other than raw materials are paid in month incurred unless it is an noncash expense
	Variable Standard cost per unit	Unit of input		Unit price per input	Total cost per unit
	Raw materials	1	kit	$50	$50
	Direct labor hours at rate	0.8	hour	$25	$20
	Variable overhead/labor hour	0.8	hour	$10	$8
	Total Variable Standard cost per unit				$78
	Fixed overhead cost per quarter used cash			$50,000
	Manufacturing Depreciation per quarter			$10,000
Selling and administrative costs are paid in month incurred unless it is an noncash expense
	Variable cost per unit			$6
	Fixed selling and administrative cost per quarter used cash			$25,000
	Selling and administrative depreciation per quarter			$5,000
Additional information: All cash payments except purchases are made quarterly as incurred.
Portion of sales collected
	Collected in the quarter of sale			75%
	Subsequent quarter			24%
	Bad debts			1%
Portion of purchases paid
	Paid in the quarter of purchases			70%
	Subsequent quarter			30%
Unit selling price				$150
Sales forecast
	Quarter	First	Second	Third	Fourth
	Unit sales	3,400	2,500	3,000	4,100

Required: Prepare and answer the following.

1. A sales budget for each quarter and the year.

2. A production budget for finished goods of units each quarter and the year.

3. A purchases budget for raw material of kits each quarter and the year.

4. A manufacturing cost budget for each quarter and the year.

5. A selling and administrative expense budget for each quarter and the year.

6. A cash budget for each quarter and the year.

7. A pro-forma contribution income statement for each quarter and the year.

Hint: You will need to compute Variable Cost of Goods Sold for each quarter, which is unit sold times total Variable Standard cost per unit.

8. Using your information from #7, compute the Breakeven in dollars for the year.

Hint: Compute the annual contribution margin ratio.

9. What if the company is able to lower the fixed Manufacturing overhead costs that uses cash per quarter from $50,000 to $45,000. Which budgets will change and what will be the new annual income?

You should only have to change the fixed manufacturing overhead costs that uses cash on this worksheet and all the appropriate budgets will change on the solution worksheet if you have

set up your cell references correctly. Please make sure you return the Fixed manufacturing overhead costs that uses cash back to the original number before you submit your solution.