Question
REQUIREMENTS: 1) Sales Budget 2) Production Budget Budgets should be for the individual three (3) months of the first quarter of 2019. Include a quarterly
REQUIREMENTS: | ||||||||
1) Sales Budget | ||||||||
2) Production Budget | ||||||||
Budgets should be for the individual three (3) months of the first quarter of 2019. | ||||||||
Include a quarterly total column on the right side. | ||||||||
Each budget/requirement should be in a separate tab within one spreadsheet. | ||||||||
All pages should be in portrait format using the same font. | ||||||||
Use proper rounding and show two (2) decimal places of accuracy on dollar amounts. | ||||||||
Round up and show whole amounts on all other figures. | ||||||||
(Hint) Excel provides functions for rounding: | ||||||||
=ROUND(your formula,2) | ||||||||
=ROUNDUP(your formula,0) | ||||||||
Bottas Manufacturing, Inc. | ||||
Balance Sheet | ||||
December 31, 2018 | ||||
ASSETS | ||||
Cash | $ 25,711.00 | |||
Marketable securities | 20,000.00 | |||
Accounts receivable | 565,844.43 | |||
Inventories: | ||||
Finished goods | $ 86,385.60 | |||
Work in process | 0.00 | |||
Direct materials | 7,193.94 | 93,579.54 | ||
Total Current Assets | 705,134.97 | |||
Property, plant and equipment | $ 844,200.00 | |||
Less: Accumulated depreciation | (318,600.00) | |||
Total Property, Plant and Equipment | 525,600.00 | |||
Total Assets | $ 1,230,734.97 | |||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||
Accounts payable | $ 5,755.15 | |||
Income taxes payable | 0.00 | |||
Total Current Liabilities | $ 5,755.15 | |||
Long-term notes payable | 436,000.00 | |||
Total Liabilities | 441,755.15 | |||
Common stock ($5.00 Par) | $ 475,000.00 | |||
Paid-in capital | 100,000.00 | |||
Retained earnings | 213,979.82 | |||
Total Stockholders Equity | 788,979.82 | |||
Total Liabilities and Stockholders Equity | $ 1,230,734.97 | |||
Total Liabilities and Stockholders Equity | ||||
FACTS SHEET: |
1. Sales | ||||||
2018 Actual Units | 2019 Budgeted Units | |||||
2018 Nov | 2018 Dec | 2019 Jan | 2019 Feb | 2019 Mar | 2019 Apr | 2019 May |
7,835 | 7,970 | 7,450 | 7,090 | 8,320 | 9,070 | 10,120 |
The selling price per unit has remained constant from the past year and is expected to | ||||||
remain unchanged throughout the first quarter of 2019 at an amount of | $ 59.99 | |||||
2. Production | ||||||
The Company's policy is to produce during each month, enough units to meet the current | ||||||
month's sales as well as a desired inventory at the end of the month which should be | ||||||
equal to | 23% | of next month's estimated sales. On December 31, 2018, the | ||||
finished goods inventory consisted of | 1,714 | units. | ||||
3. Direct Materials | ||||||
Each month the Company purchases enough direct materials to meet that month's | ||||||
production requirements and an amount equal to | 25% | of the next month's | ||||
estimated production requirements. Each unit of finished product requires | 2.83 | |||||
pounds of direct materials at a cost of | $1.38 | per pound. On December 31, 2018 | ||||
the direct materials inventory consisted of | 5,213 | lbs. | ||||
4. Direct Labour | ||||||
Direct labour hours required per unit of finished product: | 1.75 | |||||
Average rate per direct labour hour: | $ 12.25 | |||||
5. Factory Overhead | ||||||
The Company applies variable factory overhead at the rate of | 120% | of direct | ||||
labour cost. The Company has the following fixed overhead expenses per month: | ||||||
Factory supervisor's salary | $ 5,400.00 | |||||
Factory rent | 6,000.00 | |||||
Factory insurance | 6,500.00 | |||||
Depreciation of factory equipment | 600.00 | |||||
6. Cost of Goods Sold | ||||||
Beginning finished goods inventory units were at a cost of | $ 50.40 | |||||
The Company has no beginning or ending work in process inventory. | ||||||
Beginning direct materials were at a cost of | $ 1.38 | |||||
7. Selling and Administrative Expenses | ||||||
Variable selling and administrative expenses are: | ||||||
Freight out | $ 0.80 | per unit | ||||
Sales commissions | 1% | of sales | ||||
Fixed selling and administrative expenses per month are: | ||||||
Salaries | $ 8,700.00 | |||||
Rent | 1,800.00 | |||||
Advertising | 150.00 | |||||
Insurance | 250.00 | |||||
Depreciation (excluding depreciation | ||||||
of computer to be purchased at the | ||||||
end of January 2019. See Note A) | 10,050.00 | |||||
All selling and administrative costs, except depreciation, are paid for in cash during the | ||||||
month in which they are incurred. | ||||||
8. Income Statement | ||||||
Interest revenue for the quarter ending March 31, 2019, is | $ 300.00 | |||||
Interest expense for the quarter ending March 31, 2019, see Note B. | ||||||
Income tax rate is | 30% | of income before taxes computed at the end of the | ||||
quarter ending March 31, 2019, payable in the second quarter. | ||||||
9. Cash Collection Policy | ||||||
Total sales consist of the following: | ||||||
Cash sales: | 5% | |||||
Credit sales: | 95% | |||||
Credit collections are as follows: | ||||||
In the month following the month of sale: | 75% | |||||
In the second month following the month of sale: | 25% | |||||
The accounts receivable balance of as of December 31, 2018, represents | 75% | |||||
of credit sales made in December plus | 25% | of credit sales made in November to | ||||
be collected in January. It also includes | 25% | of credit sales made in December to | ||||
be collected in February. | ||||||
The Company does not have bad debts. | ||||||
10. Cash Payments Policy | ||||||
Material purchase payments are made as follows: | ||||||
In the month of purchase: | 80% | |||||
In the following month the balance: | 20% | |||||
The accounts payable balance of | $ 5,755.15 | as of December 31, 2018 | ||||
represents | 20% | of purchases made in December to be paid in January. | ||||
All labour costs are paid for during the month in which they are incurred. | ||||||
All factory overhead costs, except depreciation, are paid for during the month in | ||||||
which they are incurred. | ||||||
Note A. Capital Expenditure | ||||||
The Company expects to buy a new computer on January 31, 2019, for use in the sales and | ||||||
administrative offices at a cost of | $ 18,000.00 | which will be paid in cash. | ||||
Monthly depreciation expense will be an additional | $ 300.00 | |||||
Note B. Debt Repayment | ||||||
On March 31, 2019, the Company is scheduled to pay | $ 30,000.00 | of the long-term notes | ||||
payable plus interest expense for the first quarter at a rate of | 12% | |||||
Note C. General Information | ||||||
Each budget/requirement should be in a separate tab/activity sheet within one workbook. | ||||||
All pages should be in portrait format using the same font. | ||||||
Use proper rounding and show two (2) decimal places of accuracy on dollar amounts. | ||||||
Round up and show whole amounts on all other figures. | ||||||
(Hint) Excel provides functions for rounding: | ||||||
=ROUND(your formula,2) | ||||||
=ROUNDUP(your formula,0) |
PROBLEM #1: Bottas Manufacturing, Inc. | ||||||
Sales Budget (sample format) | ||||||
For the Quarter Ending March 31, 2019 | ||||||
January | February | March | Quarter | |||
- | - | |||||
Expected unit sales | ||||||
Unit selling price | ||||||
- | - | |||||
Total sales | ||||||
= | = |
PROBLEM #2: Bottas Manufacturing, Inc. | ||||||
Production Budget (sample format) | ||||||
For the Quarter Ending March 31, 2019 | ||||||
January | February | March | Quarter | |||
- | - | |||||
Expected unit sales | ||||||
Add: desired ending FG inventory | ||||||
- | ||||||
Total units available | ||||||
Less: beginning FG inventory | ||||||
- | - | |||||
Total units to be produced | ||||||
= | = |
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