| Prepare a budgeted income statement for the quarter ending March 31. (Hint: Cost of goods sold = Budgeted cost of manufacturing each unit / Number of units sold) using the information below |
Budgeted Income Statement For the Quarter Ended March 31 Sales Cost of good sold Gross profit Operating expenses Depreciation expense Operating income Less interest expense Less provision for income taxes Net income Osborne Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to remain stable at $20 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows: Sales are 15% cash and 85% credit. All credit sales are collected in the month following the sale. c Oosborne 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 iunits). Of each month's direct material purchases, 35% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Four kilograms of direct material is needed per unit at $2.50 per kilogram. Ending inventory of direct materials should be 40% of next month's production needs. Monthly manufacturing conversion costs are $5,000 for factory rent, $4,200 for other fixed manufacturing expenses, and $1.65 per unit for variable manufacturing overhead. No depreciation is included in these figures. All expenses are paid in the month in which they are incurred. f Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, Osborne Manufacturing will purchase equipment for $8,500 (cash), while February's cash expenditure will be $13,500, and March's cash expenditure will be $9,900. g Operating expenses are budgeted to be $1.45 per unit sold plus fixed operating expenses of $3,100 per month. All operating expenses are paid in the month in which they are incurred. Depreciation on the building and equipment for the general and administrative offices is budgeted to be $3,850 for the entire quarter, which includes depreciation on new acquisitions. Usborne IvIanuracturing has a policy that the ending cash balance in each month must be at least $4,800. The company has a line of credit with a local bank. It 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 4% per month simple interest (not compounded). Osborne Manufacturing pays down the line of credit balance if it has excess funds at the end of the quarter. The company also pays the accumulated interest at the end of the quarter on the funds borrowed during the quarter. The company's income tax rate is projected to be 18% of operating income less interest expense. The company pays $11,200 cash at the end of February in estimated taxes. Cash Collections Budget Cash Sales Credit Sales Total cash collections \begin{tabular}{|l|l|l|l|l|} \hline January & February & March & Quarter \\ \hline$12,900.00 & $16,575.00 & $19,810.50 & $49,285.50 \\ $69,062.50 & $73,100.00 & $93,925.00 & $236,087.50 \\ \hline$81,962.50 & $89,675.00 & $113,735.50 & $285,373.00 \\ \hline \end{tabular} Production Budget Unit Sales Plus: Desired ending inventory Total needed Less: Beginning inventory Units to produce April 6094.5 1403 7497.5 1218.9 6279 Nirert Materiale Ridoot Pach Daumante far Nirart MAatarial Durrhacoc Rudaot Cash Payments for Conversion Costs Budget Variable Rent (fixed) Other fixed MOH Total payments for conversion costs Cash Payments for Direct Material Purchases Budget This row MUST at least $4,800 (stated in "info")
