Schedule of cash payments for a service company

Horizon Financial Inc. was organized on February 28. Projected selling and administrative expenses for each of the first three months of operations are as follows:

March	$181,900
April	171,000
May	155,600

Depreciation, insurance, and property taxes represent $39,000 of the estimated monthly expenses. The annual insurance premium was paid on February 28, and property taxes for the year will be paid in June. 73% of the remainder of the expenses are expected to be paid in the month in which they are incurred, with the balance to be paid in the following a schedule of cash payments for selling and administrative expenses for March, April, and May.

	March	April	May
March expenses:
Paid in March	$fill in the blank 1
Paid in April		$fill in the blank 2
April expenses:
Paid in April		fill in the blank 3
Paid in May			$fill in the blank 4
May expenses:
Paid in May			fill in the blank 5
Total cash payments	$fill in the blank 6	$fill in the blank 7	$fill in the blank 8

Sales and Production Budgets

Sonic Inc. manufactures two models of speakers, Rumble and Thunder. Based on the following production and sales data for June, prepare (a) a sales budget and (b) a production budget:

	Rumble		Thunder
Estimated inventory (units), June 1	264		66
Desired inventory (units), June 30	303		57
Expected sales volume (units):
Midwest Region	2,950		2,600
South Region	5,700		4,950
Unit sales price	$130		$220

Question Content Area

a. Prepare a sales budget.

Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
Model: Rumble
Midwest Region	fill in the blank 14a82efbdfdafbb_1	$fill in the blank 14a82efbdfdafbb_2	$fill in the blank 14a82efbdfdafbb_3
South Region	fill in the blank 14a82efbdfdafbb_4	fill in the blank 14a82efbdfdafbb_5	fill in the blank 14a82efbdfdafbb_6
Total	fill in the blank 14a82efbdfdafbb_7		$fill in the blank 14a82efbdfdafbb_8
Model: Thunder
Midwest Region	fill in the blank 14a82efbdfdafbb_9	$fill in the blank 14a82efbdfdafbb_10	$fill in the blank 14a82efbdfdafbb_11
South Region	fill in the blank 14a82efbdfdafbb_12	fill in the blank 14a82efbdfdafbb_13	fill in the blank 14a82efbdfdafbb_14
Total	fill in the blank 14a82efbdfdafbb_15		$fill in the blank 14a82efbdfdafbb_16
Total revenue from sales			$fill in the blank 14a82efbdfdafbb_17

Question Content Area

b. Do a production budget. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

	Units Rumble	Units Thunder
DepreciationDirect laborEstimated inventory, June 1Expected units to be soldSupervisor salaries	- Select -	- Select -
DepreciationDesired inventory, June 30Direct laborEstimated inventory, June 1Supervisor salaries	- Select -	- Select -
Total units available	fill in the blank 287f3dfecff7fee_7	fill in the blank 287f3dfecff7fee_8
DepreciationDirect laborEstimated inventory, June 1Expected units to be soldSupervisor salaries	- Select -	- Select -
Total units to be produced	fill in the blank 287f3dfecff7fee_12	fill in the blank 287f3dfecff7fee_13

Direct Materials Purchases Budget

Tobin's Frozen Pizza Inc. has determined from its production budget the following estimated production volumes for 12'' and 16'' frozen pizzas for November:

	Units
	12" Pizza	16" Pizza
Budgeted production volume	14,300		23,200

There are three direct materials used in producing the two types of pizza. The quantities of direct materials expected to be used for each pizza are as follows:

	12" Pizza	16" Pizza
Direct materials:
	Dough	0.90	lb. per unit	1.50	lbs. per unit
	Tomato	0.60		1.00
	Cheese	0.80		1.30

In addition, Tobin's has determined the following information about each material:

	Dough	Tomato	Cheese
Estimated inventory, November 1	620	lbs.	160	lbs.	360	lbs.
Desired inventory, November 30	650	lbs.	160	lbs.	390	lbs.
Price per pound	$1.10		$2.20		$3.20

Do November's direct materials purchases budget for Tobin's Frozen Pizza Inc. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

blank	Direct Materials	Direct Materials	Direct Materials	blank
	Dough	Tomato	Cheese	Total
Units required for production:
12" pizza	fill in the blank 1	fill in the blank 2	fill in the blank 3
16" pizza	fill in the blank 4	fill in the blank 5	fill in the blank 6
Desired inventory, November 1Desired inventory, November 30Estimated inventory, November 1Estimated inventory, November 30Supervisor salaries	- Select -	- Select -	- Select -
Total units available	fill in the blank 11	fill in the blank 12	fill in the blank 13
Desired inventory, November 1Desired inventory, November 30Estimated inventory, November 1Estimated inventory, November 30Supervisor salaries	- Select -	- Select -	- Select -
Total units to be purchased	fill in the blank 18	fill in the blank 19	fill in the blank 20
Unit Price	x $fill in the blank 21	x $fill in the blank 22	x $fill in the blank 23
Total direct materials to be purchased	$fill in the blank 24	$fill in the blank 25	$fill in the blank 26	$fill in the blank 27

Personal Budget

At the beginning of the school year, Craig Kovar decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:

Cash balance, September 1 (from a summer job)	$8,860
Purchase season football tickets in September	120
Additional entertainment for each month	310
Pay fall semester tuition in September	4,800
Pay rent at the beginning of each month	430
Pay for food each month	240
Pay apartment deposit on September 2 (to be returned December 15)	600
Part-time job earnings each month (net of taxes)	1,100

Question Content Area

a. Do a cash budget for September, October, November, and December. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments.

	September	October	November	December
Estimated cash receipts from:
Additional entertainmentFoodPart-time jobRentTuition	$- Select -	$- Select -	$- Select -	$- Select -
Additional entertainmentDepositFoodRentTuition				- Select -
Total cash receipts	$fill in the blank d92165fd6f8803a_8	$fill in the blank d92165fd6f8803a_9	$fill in the blank d92165fd6f8803a_10	$fill in the blank d92165fd6f8803a_11
Less estimated cash payments for:
CashInsuranceMovie ticketsPart-time jobSeason football tickets	$- Select -
Additional entertainmentCashInsuranceMovie ticketsPart-time job	- Select -	$- Select -	$- Select -	$- Select -
CashInsuranceMovie ticketsPart-time jobTuition	- Select -
CashInsuranceMovie ticketsPart-time jobRent	- Select -	- Select -	- Select -	- Select -
CashFoodInsuranceMovie ticketsPart-time job	- Select -	- Select -	- Select -	- Select -
DepositInsuranceMovie ticketsPart-time jobPrepaid rent	- Select -
Total cash payments	$fill in the blank d92165fd6f8803a_33	$fill in the blank d92165fd6f8803a_34	$fill in the blank d92165fd6f8803a_35	$fill in the blank d92165fd6f8803a_36
Cash increase (decrease)	$fill in the blank d92165fd6f8803a_37	$fill in the blank d92165fd6f8803a_38	$fill in the blank d92165fd6f8803a_39	$fill in the blank d92165fd6f8803a_40
Less cash balance at beginning of monthPlus cash balance at beginning of month	- Select -	- Select -	- Select -	- Select -
Cash balance at end of month	$fill in the blank d92165fd6f8803a_46	$fill in the blank d92165fd6f8803a_47	$fill in the blank d92165fd6f8803a_48	$fill in the blank d92165fd6f8803a_49

Question Content Area

b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?

StaticFlexible

c. What are the budget implications for Craig Kovar?

Craig can see that his present plan

will providewill not provide

sufficient cash. If Craig did not budget but went ahead with the original plan, he would be $fill in the blank b38f5cfd9016078_3

overshort

at the end of December, with no time left to adjust.

Schedule of Cash Collections of Accounts Receivable

OfficeMart Inc. has "cash and carry" customers and credit customers. OfficeMart estimates that 25% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 25% pay their accounts in the month of sale, while the remaining 75% pay their accounts in the month following the month of sale. Projected sales for the next three months are as follows:

October	$122,000
November	153,000
December	223,000

The Accounts Receivable balance on September 30 was $82,000.

Do a schedule of cash collections from sales for October, November, and December. Round all calculations to the nearest whole dollar.

	October	November	December
Receipts from cash sales:
Cash sales	$fill in the blank 1	$fill in the blank 2	$fill in the blank 3
September sales on account:
Collected in October	fill in the blank 4
October sales on account:
Collected in October	fill in the blank 5
Collected in November		fill in the blank 6
November sales on account:
Collected in November		fill in the blank 7
Collected in December			fill in the blank 8
December sales on account:
Collected in December			fill in the blank 9
Total cash receipts	$fill in the blank 10	$fill in the blank 11	$fill in the blank 12

Direct Labor Cost Budget

Ace Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for July for the two rackets is as follows:

	Junior	Pro Striker
Production budget	6,500 units	24,100 units

Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:

	Forming Department	Assembly Department
Junior	0.20 hour per unit	0.50 hour per unit
Pro Striker	0.30 hour per unit	0.60 hour per unit

The direct labor rate for each department is as follows:

Forming Department	$20.00 per hour
Assembly Department	$9.00 per hour

Do the direct labor cost budget for July.

	Forming Department	Assembly Department
Hours required for production:
Junior	fill in the blank 1	fill in the blank 2
Pro Striker	fill in the blank 3	fill in the blank 4
Total	fill in the blank 5	fill in the blank 6
Hourly rate	x$fill in the blank 7	x$fill in the blank 8
Total direct labor cost	$fill in the blank 9	$fill in the blank 10