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ACCT 2020 EXCEL BUDGET PROBLEM DESCRIPTION To demonstrate your understanding of the master budget and all of the supporting budgets, use the data set provided below to complete a comprehensive budget problem for WASATCH MANUFACTURING. You must prepare the assignment in Excel using the template provided. You must use formulas and link the budgets wherever possible, as indicated below in the grading criteria. CRITERIA The formatting is consistent, professional, and easy to read. The budgets are in the correct order (10%). In every cell possible, formulas are used to compute the required answers In every cell possible, data between budgets are linked. For example, if a change is made to January sales revenue, all other budgets update automatically as a result of the new revenue figure Each budget correctly computes the required data, including quarterly calculations The Excel document was uploaded to the student's SLCC ePortfolio DATA SET Wasatch Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Wasatch Manufacturing's operations: Current Assets as of December 31 (prior year): Cash $17,000 Accounts Receivable, net $55,000 Inventory $20,000 Property, Plant & Equipment, Net $105,000 Accounts Payable $37,000 Capital Stock $95,000 Retained Earnings $40,000 A. Actual sales in December were $105,000. Selling price per unit is projected to remain stable at $15 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows: January $120,000 February $135,000 March $129,000 April $141,000 May $102,000 2 ACCT 2020 Excel Budget Problem B. Sales are 30% cash and 70% credit. All credit sales are collected in the month following the sale. C. Wasatch Manufacturing has a policy that states that each month's ending inventory of finished goods should be 20% of the following month's sales (in units). D. Of each month's direct materials purchases, 25% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Four pounds of direct materials is needed per unit at $1.00 per pound. Ending inventory of direct materials should be 15% of next month's production needs. E. Most of the labor at the manufacturing facility is indirect, but there is some direct labor incurred. Each unit requires 0.10 direct labor hours. The direct labor wage rate is $15 per hour. All direct labor is paid for in the month in which the work is performed. F. Monthly manufacturing overhead costs are $10,000 for factory rent, $6,000 for other fixed manufacturing expenses, and $1.25 per unit for variable manufacturing overhead. No depreciation is included in these figures. All expenses are paid for in the month in which they are incurred. G. Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, Wasatch Manufacturing will purchase equipment for $20,000 (cash), while February's cash expenditures will be $8,000, and March's cash expenditure will be $25,000. H. Operating expenses are budgeted to be $1.30 per unit sold plus fixed operating expenses of $2,200 per month. All operating expenses are paid in the month in which they are incurred. I. Depreciation on the building and equipment for the general and administrative offices is budgeted to be $10,000 for the entire quarter, which includes depreciation on new acquisitions. J. Wasatch Manufacturing has a policy that the ending cash balance in each month must be at least $15,000. It has a line of credit with a local bank. The company can borrow in increments of $1,000 at the beginning of each month, up to a total outstanding loan balance of $100,000. The interest rate on these loans is 1.25% per month simple interest (not compounded). The company would pay down on the line of credit balance in increments of $1,000 if it has excess funds at the end of the quarter. The company would also pay the accumulated interest at the end of the quarter on the funds borrowed during the quarter. K. The company's income tax rate is projected to be 23% of operating income less interest expense. The company pays $28,000 cash at the end of February in estimated taxes. SPECIFIC REQUIREMENTS 1. Prepare a schedule of cash collections for January, February, and March, and for the quarter in total. To assist with the cash collections budget, first prepare a sales budget (Hint: Unit Sales = Sales in Dollars / Selling Price per Unit). 3 ACCT 2020 Excel Budget Problem Sales Budget December January February March April May Unit Sales Price per Unit Sales Revenue Cash Collections Budget January February March Quarter Cash sales Credit sales Total cash collections 2. Prepare a production budget. Production Budget January February March Quarter Unit sales Plus: Desired ending inventory Total needed Less: Beginning inventory Units to produce 3. Prepare a direct materials budget. Direct Materials Budget January Units to be produced Multiply by: Quantity of DM needed per unit (lbs.) Quantity of DM needed for production (lbs.) Plus: Desired ending inventory of DM (lbs.) Total quantity of DM needed (lbs.) Less: Beginning inventory of DM (lbs.) Quantity of DM to purchase (lbs.) Multiply by: Cost per pound Total cost of DM purchases February March Quarter 4 ACCT 2020 Excel Budget Problem 4. Prepare a cash payments budget for the direct material purchases from Requirement 3. Cash Payments for Direct Material Purchases Budget January February March Quarter December Purchases (from A/P) January Purchases February Purchases March Purchases Total Cash Payments 5. Prepare a cash payments budget for direct labor. Cash Payments for Direct Labor Budget January February March Quarter Units Produced Multiply by: Hours per Unit Direct Labor Hours Multiply by: Direct Labor Rate per Hour Direct Labor Cost 6. Prepare a cash payments budget for manufacturing overhead costs. Cash Payments for Manufacturing Overhead Budget January February March Quarter Rent (fixed) Other Manufacturing Overhead (fixed) Variable Manufacturing Overhead Costs Cash Payments for Manufacturing Overhead 7. Prepare a cash payments budget for operating expenses. Cash Payments for Operating Expenses Budget January February March Quarter Variable Operating Expenses Fixed Operating Expenses Cash Payments for Operating Expenses 8. Prepare a combined cash budget. Combined Cash Budget January February March Quarter 5 ACCT 2020 Excel Budget Problem Cash Balance, Beginning Plus: Cash Collections Total Cash Available Less Cash Payments: DM Purchases Direct Labor Manufacturing Overhead costs Operating Expenses Tax Payment Equipment Purchases Total Cash Payments Ending Cash before Financing Financing: Borrowings Repayments Interest Payments Cash Balance, Ending 9. Calculate the budgeted manufacturing cost per unit (assume that fixed manufacturing overhead is budgeted to be $0.75 per unit for the year.) Budgeted Manufacturing Cost per Unit Direct materials cost per unit Direct labor cost per unit Variable manufacturing costs per unit Fixed manufacturing overhead per unit Cost of manufacturing each unit 10. Prepare a budgeted income statement for the quarter ending March 31 (Hint: Cost of Goods Sold = Budgeted Manufacturing Cost per Unit X Number of Units Sold). Budgeted Income Statement For the Quarter Ended March 31 6 ACCT 2020 Excel Budget Problem Sales Revenue Less: Cost of Goods Sold Gross Profit Less: Operating Expenses Less: Depreciation Expense Operating Income Less: Interest Expense Less: Income Tax Expense Net Income MANAGERIAL ACCOUNTING - Fourth Edition Solutions Manual WASATCH MANUFACTURING Master Budget Sales Budget January February March April Cash Collections Budget January February March Quarter Production Budget January February March Quarter December Chapter 9: The Master Budget May Page 1 of 6 MANAGERIAL ACCOUNTING - Fourth Edition Direct Materials Budget January February Solutions Manual March Quarter Cash Payments for Direct Material Purchases Budget January February March Quarter Cash Payments for Direct Labor Budget January February March Quarter Chapter 9: The Master Budget Page 2 of 6 MANAGERIAL ACCOUNTING - Fourth Edition Chapter 9: The Master Budget Solutions Manual Page 3 of 6 MANAGERIAL ACCOUNTING - Fourth Edition Solutions Manual Cash Payments for Manufacturing Overhead Budget January February March Quarter Cash Payments for Operating Expenses Budget January February March Quarter Combined Cash Budget January February Quarter Chapter 9: The Master Budget March Page 4 of 6 MANAGERIAL ACCOUNTING - Fourth Edition Chapter 9: The Master Budget Solutions Manual Page 5 of 6 MANAGERIAL ACCOUNTING - Fourth Edition Solutions Manual Budgeted Manufacturing Cost per Unit Budgeted Income Statement Chapter 9: The Master Budget Page 6 of 6