Question P9-57A: #2 at the bottom (prepare a production budget) I need the numbers as well as the Excel formulas.
Nine-Month Mar 31 Jun 30 Sep 30 Total Cash sales, 40% s 50,000 70,000 $ 60,000 $ 180,000 . Credit sales, 60% 75,000 105.000 90.000 270,000 Total sales, revenue... $125000 $175.000 150000 $450,00 In the past, cost of goods sold has been 70% of total sales. The director of marketing and the financial vice president agree that each quarter's ending inventory should not be below $10,000 plus 15% of cost of goods sold for the following quarter. The marketing director expects sales of $245,000 during the fourth quarter. The January 1 inventory was $23,125. Requirement Prepare a cost of goods sold, inventory, and purchases budget for each of the first three quarters of the year. Compute cost of goods sold for the entire nine-month period PROBLEMS Group A P9-57A Comprehensive budgeting problem (Learning Objectives 2 & 3) Martin Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Martin Manufacturing's operations: Current Assets as of December 31 (prior year): Cash $ 4,500 47,000 15,700 $120,000 $ 42,400 $124,000 $ 23,100 a. Actual sales in December were $70,000. Selling price per unit is projected to remain Accounts receivable, net.. Inventory... Property, plant, and equipment, net. Accounts payabl. Capital stok Retained earning stable at $10 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows January February. March.... April. May .$ 80,000 ....92,000 $ 99,000 97,000 $ 85,000 Sales are 30% cash and 70% credit. All credit sales are collected in the month follow- ing the sale b. The Master Budget . Martin Manufacturing has a policy stating that each month's ending in ished goods should be 25% of the following month's sales (in units. Of each month's direct materials purchases, 20% are paid for in the month of pur- chase, while the remainder is paid for in the month following purchase. Two pounds of direct material is needed per unit at $2 per pound. Ending inventory of direct materi- d. als should be 10% of next month's production needs. Most of the labor at the manufacturing facility is indirect, but there is some direct la- bor incurred. The direct labor hours per unit is 0.01. The direct labor rate per hour is $12 per hour. All direct labor is paid for in the month in which the work is performed The direct labor total cost for each of the upcoming three months is as follows e. January S 996 $1,125 $1,182 March Monthly manufacturing overhead costs are $5,000 for factory rent, $3,000 for other fixed manufacturing expenses, and $1.20 per unit for variable manufacturing over- head. No depreciation is included in these figures. All expenses are paid in the month in which they are incurred. f. g. Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, Martin Manufacturing will purchase equipment for $5 while February's cash expenditures will be $12,000 and March's cash expenditures will be $16,000. ,000 (cash), h. Operating expenses are budgeted to be $1.00 per unit sold plus fixed operating ex per month. All operating expenses are paid in the month in which penses of $1,000 they are incurred. No depreciation is included in these figures Depreciation on the building and equipment for the general and administrative offices is budgeted to be $4,600 for the entire quarter, which includes depreciation on new acquisitions Martin Manufacturing has a policy that the ending cash balance in each month must be at least $4,000. 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 $150,000. The interest rate on these loans is 1% per month simple inter- est (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 bor- rowed during the quarter The company's income tax rate is projected to be 30% of operating income less inter- est expense. The company pays $10,000 cash at the end of February in estimated taxes. i. i. k. Requirements 1. Prepare a schedule of cash collections for January, February, and March, and for the quarter in total. Use the following format: Cash Collections Budget For the Quarter Ended March 31 Month arc uarter anuar sales dit sales Total cash collections 2. Prepare a production budget, using the following format: Production Budget For the Quarter Ended March 31 2 Month January February March Quarter 5 Unit sales 6 Plus: Desired ending inventory 7 Total needed 8 Less: Beginning invento 9 Number of units to produce 10 Sales in dollars/Selling price per unit *Hint: Unit sales 3. Prepare a direct materials budget, using the following format: CD Direct Materials Budget For the Quarter Ended March 31 2 anuary FkontyHard Ouarter Month Units to be produced (from Production Budget) Multiply by uantity (pounds) of DM nee ded per unit 6
