Question 4

You have been asked to review the information of Dexter Corp. and prepare elements of the master budget for the year ending December 2013.

Given:

A) Balance Sheet:

Dexter Corp Balance Sheet December 31, 2012
ASSETS	LIABILITIES AND EQUITIES
Current Assets:		Current Liabilities:
Cash.............................................................	$ 76,153	Accounts payable.........................	$ 23,451
Accounts receivable..................................	26,000
Inventory: Direct Materials (1,600 kg @ $5)...........	8,000	Equity:
Finished Goods (4,600 @ $5.818).........	26,764	Contributed capital......................	151,746
	136,917	Retained earnings........................	171,720
Capital Assets:		Total equity..................................	323,466
Manufacturing property & equipment..	320,000
Less: accumulated amortization.............	110,000
	210,000
Total Assets................................................	$ 346,917	Total Liabilities and Equity.........	$ 346,917

B) The units are expected to be sold for $12.50 with the following volumes:

December 2012	22,000
January 2013	23,000
February 2013	23,500
March 2013	40,000
April 2013	42,000
May 2013	40,000

C) Variable manufacturing costs:

	Quantity	Cost	Cost per Unit
Direct materials (DM)	0.4	kg	$ 5.00	per kg	$ 2.00
Direct labour (DL)	0.2	hours	$ 15.00	per hour	$ 3.00
Manufacturing Overhead (MOH) (applied on DLH)	0.2	hours	$ 8.00	per hour	$ 1.60

D) Total fixed manufacturing costs per unit:

Estimated annual fixed manufacturing overhead $ 180,000

Includes annual depreciation of $ 24,000

Applied based on direct labour hours (DLH)

E) Desired minimum inventories:

Direct materials	15%	of next month's production needs
Finished goods	20%	of next month's sales in units

F) Selling & administrative costs:

Variable:

Sales commissions: 4% of sales if sales are > $300,000

2% of sales if sales are < or = $300,000

Fixed:

$30,000 monthly, including amortization of $5,000

G) Collection of sales:

All sales are on account and are expected to be collected 45% in the month of sale and 55% in the month following the sale.

H) Payment of direct material purchases:

All direct material purchases are on account, and payments are:

65% in the month of purchase

35% in the month following the purchase

All other operating expenses are paid in the month incurred (budgeted)

I) Minimum cash balance required is: $30,000

Interest is calculated at an annual rate of: 12%

Required(please show notes to support some calculations):

Note: all shaded cells onall schedules are there 'just in case' you require them to calculate any necessary numbers - you may not need to fill in each shaded box on each schedule.

1. Complete the SALES BUDGET (2 marks)

	Dexter Corp.
	Sales Budget
	For the 3 months ending March 31, 2013
	Dec	Jan	Feb	Mar	Total	Apr	May
Sales in Units
Selling Price/unit
Sales in $

Complete the CASH COLLECTIONS SCHEDULE (7 marks)

Dexter Corp.
Budgeted Cash Collections
For the 3 months ending March 31, 2013
	Jan	Feb	Mar	Total
Accounts Receivable Dec 31
From Jan sales
From Feb sales
From Mar sales
Total cash collected each month
Budgeted Accounts Receivable Mar 31

1. Complete the PRODUCTION BUDGET (7 marks)

Dexter Corp.
Production Budget
For the 3 months ending March 31, 2013
	Dec	Jan	Feb	Mar	Total	Apr	May
Sales in units
_____* Desired Ending Inventory
Total Needs
______* Beginning Inventory
Production in Units

* state either ADD or LESS

1. Complete the DIRECT MATERIALS BUDGET (7 marks)

Dexter Corp.
Direct Materials Purchases Budget
For the 3 months ending March 31, 2013
	Dec	Jan	Feb	Mar	Total	Apr	May
Production in units
DM quantity per unit (kg)
DM quantity for production
_____* Desired Ending Balance
Total Needs
______* Beginning Inventory
Kgs to be purchased
Unit Cost
Purchases in dollars

* state either ADD or LESS

1. Complete the CASH DISBURSEMENTS SCHEDULE (7 marks)

Dexter Corp.
Budgeted Cash Disbursements for Purchases
For the 3 months ending March 31, 2013
	Jan	Feb	Mar	Total
Accounts Payable Dec 31
From Jan purchases
From Feb purchases
From Mar purchases
Total cash disbursements each month
Budgeted Accounts Payable Mar 31

1. Complete the DIRECT LABOUR BUDGET (2 marks)

Dexter Corp.
Direct Labour Budget
For the 3 months ending March 31, 2013
	Jan	Feb	Mar	Total
Production in Units
DL hours per unit
Total DLH
DL rate per hour
Direct Labour Budget

1. Complete the MANUFACTURING OVERHEAD BUDGET for JANUARY only (4 marks)

	January
Variable Overhead
Fixed Overhead
Total
______*Non-cash items:
Cash Disbursements for Manufacturing Overhead

* state either ADD or LESS

(LIST any non-cash items in the space provided)

1. Complete the SELLING AND ADMINISTRATIVE BUDGET for JANUARY only (3 marks)

	January
Variable Selling & Administrative:
Fixed Selling & Administrative
Total Selling and Administrative Expenses
______*Non-cash Items:
Cash Disbursements for Selling and Admin

* state either ADD or LESS

(LIST any variable expenses and non-cash items in the space provided)

1. Complete the CASH BUDGET for JANUARY only (11 marks)

	January
Beginning cash balance
Add: Cash collections
Total cash available
Cash Disbursements:
Payment of purchases
Direct labour
Manufacturing overhead
Selling & Admin
Total disbursements
Excess/Deficient Cash Balance
Financing:
Cash borrowed
Cash repaid
Interest
Total financing
Ending cash balance