Altec Manufacturing Inc. Cash Budget For the year ended December 31, 2022 Feb Mar Apr May Jan 15580 Jun Jul Aug Sep Oct NO Die Tear 5 11.57100 11.12.30 Cash once begann Morecept Collections from customers Total cosavalt TO teu diabet 11 Direct materih 12 Drector 13 Manufacturing overed TE Seandaires 15 Income Taxes 16 Tex payable 17 treat exposed monthly 18 Captains purchase 19 Dividend payment 20 Totalissements 21 mm cash required 255,197 (23.40 (1.27355) 000 (10 000) (635) + (05.000 22. Excess (de cof cash before financing 25.4 (2.55.197 (1.23.480) (127363) (951001 (10,000) 11 Orect materials 12 Drect labour Manufacturing overhead 14 Selling and distrative expenses 15 Income Taximents 16 Tax payable 12 Interest expense palm 18 Captasse purchases 19 Dividend payment 20 Total absents 21 mm cash bace roured (425) 16.13.20 (15000) 845,194 22 recess deficiency of cash before ang 23 24 Financing 25 Bonuweda mer 26 Repat this month 22 Tot aicing 28 And back mum cash balance 29 Cash balance, ending 30 31 32 Bank loan balance at God of month 33 Los balance for nterest Cicution 34 102.000 102.000 15.000 102.000 Altec Manufacturing Inc. Schedule of Income Taxes Payable For the year ended December 31, 2022 Take Me of year Add to the year Deduce during the year De web nes Tengendalye Master Budget Case': Altec Manufacturing Inc. Altec Manufacturing Inc. is a company that manufactures and sells a single product, which they call an Altec. For planning and control purposes they utilize a monthly master budget, which is usually developed at least six months in advance of the budget year. Their fiscal year end is December 31. During the summer of 2021, Dave Koppelaar, the Altec controller, spent considerable time with Mary T.Barra, the Manager of Marketing, putting together a sales forecast for the next budget year (January to December, 2022). Unfortunately, their collaboration worked so well they eloped to Las Vegas, were married by an Elvis impersonator, and settled down somewhere in the desert. Prior to their departure they e-mailed letters of resignation and a cryptic sales forecast to the President of Altec. Their sales forecast consisted of these few lines: For the year ended December 31, 2021*: 70,000 units at $150.00 each For the year ended December 31, 2022: 80.000 units at $150.00 each For the year ended December 31, 2023: 90,000 units at $150.00 each *Expected sales for the year ended December 31, 2021 are based on actual sales to date and budgeted sales for the duration of the year. Altec's President felt certain that the marriage wouldn't last, and expected David would be back any day. But the end of the year is quickly approaching, and there is still no word from the desert. The President, desperately needing the budget completed, has approached you, a management accounting student, for help in preparing the budget for the coming fiscal year: Your conversations with the President and your investigations of the company's records have rad the foll 1) Sales are seasonal, and sometimes correspond with general holidays. History shows that January, February and March are the slowest months with only 4% of total sales in each month. Spring break causes April sales to jump to 10% of the annual total before dropping back to 6% in each of May and June. The summer months of July and August each contribute 9% of sales. Fall sales start slowly at only 3% of total sales, but as Christmas shopping picks up momentum, sales climb to 11% in October, move to 15% in November and peak at 19% in December. This pattern of sales is not expected to change in the next two years. 2) From previous experience, management has determined that an ending inventory equal to 38% of the next month's sales is required to fit the buyer's demands. 3) Because sales are seasonal. Altec must rent an additional storage facility from September to December to house the additional inventory on hand. The only related cost is a flat S28.000 per month payable at the beginning of the month. 4) The only raw material used in the production of toodles is space-age acrylic (SAA), a compact material that is purchased in powder form. Each product requires 55 kilograms of SAA, at a cost of $0.85 per kilogram. The supplier of SAA tends to be somewhat erratic so Altec finds it necessary to maintain an inventory balance equal to 38% of the following month's production needs as a precaution against stock-outs. Altec pays for 55% of a month's purchases in the month of purchase, 25% in the following month and the remaining 20% two months after the month of purchase. The ending balance of raw materials at December 31, 2021 is 33,000 kilograms. 5) Altec expects that any payments made in the month of purchase will be subject to 2%, net/30 terms. The purchase discounts are reported as one metric on their administration department's balanced Scorecard. To provide the information for the balanced scorecard, purchase discounts are included in the selling and administration budget, and are considered a non-cash item. 6) Beginning accounts payable will consist of S227,800 arising from the following estimated direct material purchases for November and December of 2021: SAA purchases in November 2021: $450,000 SAA purchases in December 2021: S306,000 7) Altec's manufacturing process is highly automated. Employees are paid on a per unit basis. Their total pay each month is, therefore, dependent on production volumes and averages $20.00 per hour before benefits. The employer's portion of employee benefits adds 20% to the hourly rate. All payroll costs are paid in the period in which they are incurred. Each unit spends a total of 75 minutes in production $20.00 per hour verore venens. The employer's por contor employee benens auus 2010 the hourly rate. All payroll costs are paid in the period in which they are incurred. Each unit spends a total of 75 minutes in production. 8) Due to the similarity of the equipment in each of the production stages and the company's concentration on a single product, manufacturing overhead is allocated based on volume (i.e. the units produced). The variable overhead manufacturing rate is $25.95 per unit, consisting of: Utilities--$12.00; Indirect Materials--$5.00; Plant maintenance--54.50, environmental fee--$1.95: and Other--$2.50. 9) The expected fixed manufacturing overhead costs below cover the twelve months ended December 31, 2021 and are based on actual costs to date and budgeted costs for the duration of the year. Training and development S 47.520 Property and business taxes 36,000 Supervisor's salary 89.400 Amortization on equipment 227.760 Insurance 92.460 Other 109,600 S 602.740 a) The property and business taxes, levied by the municipality covering the calendar year, are paid in one lump sum on June 30 of each year. The expected payment for next year (2022) is $39,000 b) The annual insurance premium is paid at the beginning of April each year, covering the subsequent 12 months, from April 1 of the current year to March 31 of the next year. The premium is expected to go up to $93,300 on April 1, 2022. c) All other "cash-related" fixed manufacturing overhead costs are incurred evenly over the year, paid as incurred, and are not expected to change in 2022. d) Altec uses the straight line method of amortization. 10) In 20x1, the average total cost to manufacture one unit was $93.90 under absorption costing. 11) Selling and administrative expenses (S&A) are known to be a mixed cost; however, there is a lot of uncertainty about what portion is fixed and what is variable. Previous experience has provided the following information: Lowest level of sales: Highest level of sales: 42.500 units Total S&A Expenses: S1.273.123 87.500 units Total S&A Expenses: $2,493.073 These costs are paid in the month in which they occur. Not included in the above expenses are bad debt expense and the purchases discount. 12) Sales are on a cash and credit basis, with 21% collected during the month of the sale, 42% the following month, and 35% the month thereafter. 2% of sales are uncollectible (bad debt expense). 13) Sales in November and December 2021 are expected to be $1,100,000 and $1,600,000 respectively. Based on the above collection pattern this will result in accounts receivable of $1,617,000 at December 31, 2021 which will be collected in January and February, 2022. 14) During the fiscal year ending December 31, 2022, Altec will be required to make monthly income tax installment payments of $10,000. Outstanding income taxes from the year ended December 31, 2021 must be paid in March 2022. Income tax expense is estimated to be 25% of income before tax. Income taxes for the year ended December 31, 20x2, in excess of installment payments, will be paid in March, 2023. 15) Altec is planning to acquire additional manufacturing equipment for $304,750 cash. 40% of this amount is to be paid in April 2022, the rest, in May 2022. The manufacturing overhead costs shown above already include the amortization on this equipment. 16) Altec. has a policy of paying dividends at the end of each quarter. The president tells you that the board of directors is planning on continuing their policy of declaring dividends of $32,000 per quarter. a 17) An arrangement has been made with the local bank that if Altec maintains a minimum balance of $15,000 in their bank account, they will be given a line of credit at a preferred rate of 5% per annum. All borrowings from and repayments to the bank must be in multiples of $1,000 and interest must be paid at the end of each month. All borrowing is considered to occur on the first day of the month, repayments on the last day of the month. Therefore, the amount subject to interest each month is the balance owing at the beginning of the month plus any amounts borrowed at the beginning of the month. Note that any amounts repaid that month do not reduce the amount subject to interest that month because they are assumed repaid on the last day of the month. 18) A listing of the estimated balances in the company's ledger accounts as of December 31, 2021 is given below this is the ending balance sheet for 2021); Cash Accounts receivable Inventory-raw materials Inventory-finished goods Prepaid insurance Capital assets (net) S 15.680 1.617,000 28,050 28,170 23,115 1.328,000 $ 3,040,015 Bank loan payable Accounts payable Income tax payable Capital stock Retained earnings 102.000 227.800 11.200 1.200,000 1.499,010 S 3.01,015 Part 1 (15 points) 1. Prepare a monthly master budget for Altec Manufacturing Inc for the year ended December 31, 2022, including the following schedules: (Use the templates provided) Sales Budget & Schedule of Cash Receipts Production Budget Direct Materials Budget & Schedule of Cash Disbursements Direct Labour Budget Manufacturing Overhead Budget Cost of Goods Manufactured Budget Ending Finished Goods Inventory Budget Cost of Goods Sold Budget Selling and Administrative Expense Budget Cash Budget 2. Prepare a budgeted income statement and a budgeted statement of retained earnings for the year ended December 31, 2022, using absorption costing. 3. Prepare a budgeted balance sheet as at December 31, 2022. Part 2 (5 points) For this part, you are required to use Excel Goal Seek and Solver Functions to solve the CEO's questions. Please see Budget Assignment Part 2 requirements excel file for more detail. Note: Part 1 of the case was re-developed based on the Master Budget Case (v B.0). 2012, McGraw-Hill Ryerson Altec Manufacturing Inc. Schedule of Income Taxes Payable For the year ended December 31, 2022 To Megye Add color years) Deductes during the year ws tes Tondote 22.55191 10.23.480) (1.27.353 1985 100 (10,000) 11 Drect sents 12 Drect labour Manufacturing overhead 14 Selling and distrative expenses 15 Income Tax ments 16 Tax payable 17 Interest expense pad 18 Capital asset purchases 19 Dividend payment 20 Total disbursements 21 Minum cash bergured (425) 15.13.205 (15000) 8.45,194 22 Deces (deficiency of cash before financing 23 24 France 25 borrowed more 26 Repaid this month 27 Toa Lng 28 Add back mum cash balance 29 Cash balance, ending 30 31 32 Bank loan balance at end of month 33 Los bance for nterest calculation 34 (1.02.000 11.02.000 15.000 S458194 102.000 Altec Manufacturing Inc. Cash Budget For the year ended December 31, 2022 Jan 15 580 Feb Mar Apr May Jun Jul ANG Sep Oct NO Dec Tear 5 11.2000 1173.00 Cash beberang Adreces Collections from customers Totalcoh avatable TO Les disbursements Direct materia 12 Drect bour 13 Manufacturing overad ta Seng and distrative expenses Income Taxes 16 Tex payable 17 erat exposed monthly 18 Captaiset purchase 19 Dividendent 20 Totalisbursements 21 mm cash ice regured 255,197) (1.23.40 (1.2753) (639) 0.000) (125) > (15.000 22 Excess deficiency of cash before financing 525194 Altec Manufacturing Inc. Schedule of Prepaid Insurance For the year ended December 31, 2022 Feb Mar Apr May Jun Jul Aug Sep Oct Dec Year 3 39 40 41 42 43 44 Balance at beginning of moeite 45 Expensed during the month 46 Balance before premium pod 47 Premium and 48 Balance end of month 49 50 51 52 53 Jan 23115 U705) 15 410 15,410 Altec Manufacturing Inc. Schedule of Expected Cash Disbursement for Manufacturing OH For the year ended December 31, 2022 Jan 1,57206 fet Mar Apr May Jun Jul Aug Sep Oct Now Dec Year 23 24 25 26 27 Tota manytactang ON for month 28 Noncus tem 29 property tax 30 insance amortization Monthly cash disbursement 32 manufacturing Oh 33 Lumpsum payments 34 Property tax 35 ce Cau debut for 36 manufacturing oH 37 30 3250 7,705 10.800 127.50 512733 RS Altec Manufacturing Inc. Manufacturing Overhead Budget 3 For the year ended December 31, 2022 5 Jan Inb Mar Apr May A Sep 6 buttons NO Dec 411 4,116 5040 6,224 72 12 14 13000 7 Varese per un 17416 45.500 1.4 365 2591 2005 125.21 25 235 215 M Veracturing overhead 1. 1. D 1.1.14.16 1.242.340 04.100 2.17. 12. 2. 112 LE LAS 11.2. 15.21705 9 10 ranged Ta drvenant 3560 12 Property and bus 320 Supervisor Sale 7.450 14 Art 10.00 15 Insurance 7700 16 Other 7 Temanufacturing OH $0.478 18 19 Total manufacturing on 0 1 2 Altec Manufacturing Inc. 3 Schedule of Expected Cash Disbursement for Manufacturing OH For the year ended December 31, 2022 Data Sales & Cash Coll Prod DM & Cash Dis OL MOH COGM COGS SSAND Altec Manufacturing Inc Mancturing Overhead Budget For the year ended December 31, 2022 3 an FEB M AN Mer Jun Aus sep 6 Der 4116 5540 9534 6,504 2 amb un 1146 1 25 0 95 25 155 05 2012 Ver mand 1. 1.1.810 11 12 1.164.0 5.112.24 2.50 2.6221 1412 33.31 132 10 reducing 11 Training and deve 3500 12 Property and uses 2.250 13 Superheroes 7,450 14 Aron que 00 15 ce 7.705 16 One 3,133 17 martstung oh 4120 18 19 Tamaturg H S2 20 21 02 Altec Manufacturing Inc. 23 Schedule of Expected Cash Disbursement for Manufacturing OH 24 For the year ended December 31, 2022 Data Sales Cash Coll Podo DM & Cashib DL MOH COGM CORES SAAD Altec Manufacturing Inc. Manufacturing Overhead Budget For the year ended December 31, 2022 2 3 3 Jan Production in Units 4,116 Variable overhead rate per un 5 26.95 Variable manufacturing overhead 1.05.810 Feb 4116 Mar 5940 Apr 9.524 May 6324 Jun 7235 Jul 965 Ang 7812 Sep 5.444 Oct 13 000 Now 17.476 Dec 45300 Yeer 10.100 > Fored manufacturing overhead 1 Training and development 2 Property and business taxes 3 Supervisor Salaries Amortization on equipment Insurance Other Totalfixed manufacturing OH 3.960 3250 7.450 18 900 7705 9.133 50.478 Total manufacturing OH $ 5.157.200 Altec Manufacturing Inc. Schedule of Expected Cash Disbursement for Manufacturing OH For the year ended December 31, 2022
