The company maintains a finished goods inventory equal to 10% of the following month's sales. The inventory of finished goods on July 1 is as it should be. Raw Materials Purchasing Budget Each unit of SUPER DUPER widget requires 0.6 pounds of WHAM compound. To prevent shortages, the company would like the inventory of WHAM compound on hand at the end of each month to equal 40% of the following month's production needs. The inventory on July 1 is 1,344 pounds. WHAM compound costs $12.00 per pound and Vaughan pays for 50% of its purchases in the month of purchase; the remainder is paid in the following month. $41,184 of WHAM compound was purchased in June and 50% was paid for in June. Master Budget Project Group W3 Vaughan Company makes AMAZING SUPER DUPER Widgets. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist in budget preparation: 1. Sales Budget The marketing department has estimated sales as follows for the remainder of the year: (Actual sales in June were 5,000 units) \begin{tabular}{|r|r|l|l|} \hline the year: (Actual sales in June were 5,000 units) & & October & 4,000 \\ \hline July & 4,000 & November & 6,000 \\ \hline August & 25,000 & December & 8,000 \\ \hline \end{tabular} The selling price of a SUPER DUPER widget is $80 and all sales are on account. Sales Price Based on past experience, sales are collected in the following pattern: 20%inthemonthofsale75%inmonthfollowingthesale5%arenevercollected(uncollectible) \begin{tabular}{|l|r|r|r|r|} \hline \multicolumn{1}{|c|}{\begin{tabular}{c} Vaughan Company \\ Sales Budget \end{tabular}} & \multicolumn{2}{c|}{} & \multicolumn{1}{c|}{ Total } \\ \hline \multicolumn{1}{|c|}{ 3rd Quarter } & \multicolumn{1}{|c|}{ July } & \multicolumn{1}{c|}{ August } & \multicolumn{1}{c|}{ September } & 3rd Quarter \\ \hline Sales in Units & 4,000 & 25,000 & 15,000 & 44,000 \\ \hline Selling Price per Unit & 80 & 80 & 80 & 80 \\ \hline Total Sales in $ & 320,000 & 2,000,000 & 1,200,000 & 3,520,000 \\ \hline & & & & \\ \hline \end{tabular} Ending FG Inventory 7. Now it is time for the Selling and Administrative Budget. It too will be divided into a variable portion and a fixed portion. Assume that variable S\&A costs are $3 per unit plus bad debt expense. Further assume that monthly Fixed Costs are as follows: Advertising $9,000, Executive Salaries $15,000, Other $5,000, and Office depreciation is $3,000. S\&A are paid in the month incurred. \begin{tabular}{|c|c|c|c|c|} \hline Vaughan Company & & & & \\ \hline S\&A Budget & & & & Total \\ \hline 3rd Quarter & July & August & September & 3rd Quarter \\ \hline Budgeted Sales & 4,000 & 25,000 & 15,000 & 44,000 \\ \hline Variable S\&A Expenses & 7 & 7 & 7 & 7 \\ \hline Budgeted Variable S\&A Exp. & 28,000 & 175,000 & 105,000 & 308,000 \\ \hline \multicolumn{5}{|l|}{\begin{tabular}{l} Budgeted Fixed S\&A Expenses: \\ Advertising \end{tabular}} \\ \hline Advertising & 9,000 & 9,000 & 9,000 & 20,000 \\ \hline Executive Salaries & 15,000 & 15,000 & 15,000 & 45,000 \\ \hline Other & 5,000 & 5,000 & 5,000 & 15,000 \\ \hline Depreciation & 3,000 & 3,000 & 3,000 & 9,000 \\ \hline Total Fixed S\&A Expenses & 32,000 & 32,000 & 32,000 & 96,000 \\ \hline Total Budgeted S\&A Expenses & 60,000 & 207,000 & 137,000 & 404,000 \\ \hline Less: Depreciation & (3,000) & (3,000) & (3,000) & (9,000) \\ \hline Less: Bad Debt Expense & (16,000) & (100,000) & (60,000) & (176,000) \\ \hline Budgeted Cash S\&A Expenses & 41,000 & 104,000 & 74,000 & 219,000 \\ \hline \end{tabular} 7. a variable portion and a fixed portion. Assume that variable S\&A costs are $3 per unit plus bad debt expense. Further assume that monthly Fixed Costs are as follows: Advertising $9,000, Executive Salaries $15,000, Other $5,000, and Office depreciation is $3,000. S\&A are paid in the month incurred. From here we go to the cash budget. We need to know cash receipts, cash disbursements, Cash flows/deficit, and the financing section. Vaughan's cash guidelines are as follows: They have a line of credit that can be accessed in $1,000 increments at an anual interest rate of 12%. Money will be borrowed on the last day of a given month and paid back on the last day of the month when it can be. Minimum cash balance required by Vaughan is $50,000. The beginning cash balance on July 1 is $50,000. Interest is paid when money is paid back. Raw Materials Purchasing Budget Each unit of SUPER DUPER widget requires 0.6 pounds of WHAM compound. To prevent shortages, the company would like the inventory of WHAM compound on hand at the end of each month to equal 40% of the following month's production needs. The inventory on July 1 is 1,344 pounds. WHAM compound costs $12.00 per pound and Vaughan pays for 50% of its purchases in the month of purchase; the remainder is paid in the following month. $41,184 of WHAM compound was purchased in June and 50% was paid for in June. Next we will prepare our FOH budget. FOH is applied based on DLH. Estimated variable FOH is expected to be $500,000 and estimated DLH are expected to be 250,000 . Fixed FOH is estimated to be $8,800 per month with $5,000 of that amount being depreciation of factory equipment and building. Like DL, assume that FOH is paid in the month incurred. Now we need to prepare the Ending FG Inventory Budget. Based on past experience, sales are collected in the following pattern: 4. The next Budget is the Direct Labor Budget. Let's assume that each unit takes 2 DLH to make and each DLH costs $18. Let's further assume that labor is paid in the month incurred. 5. Next we will prepare our FOH budget. FOH is applied based on DLH. Estimated variable FOH is expected to be $500,000 and estimated DLH are expected to be 250,000 . Fixed FOH is estimated to be $8,800 per month with $5,000 of that amount being depreciation of factory equipment and building. Like DL, assume that FOH is The company maintains a finished goods inventory equal to 10% of the following month's sales. The inventory of finished goods on July 1 is as it should be. Raw Materials Purchasing Budget Each unit of SUPER DUPER widget requires 0.6 pounds of WHAM compound. To prevent shortages, the company would like the inventory of WHAM compound on hand at the end of each month to equal 40% of the following month's production needs. The inventory on July 1 is 1,344 pounds. WHAM compound costs $12.00 per pound and Vaughan pays for 50% of its purchases in the month of purchase; the remainder is paid in the following month. $41,184 of WHAM compound was purchased in June and 50% was paid for in June. Master Budget Project Group W3 Vaughan Company makes AMAZING SUPER DUPER Widgets. Management is now preparing detailed budgets for the third quarter, July through September, and has assembled the following information to assist in budget preparation: 1. Sales Budget The marketing department has estimated sales as follows for the remainder of the year: (Actual sales in June were 5,000 units) \begin{tabular}{|r|r|l|l|} \hline the year: (Actual sales in June were 5,000 units) & & October & 4,000 \\ \hline July & 4,000 & November & 6,000 \\ \hline August & 25,000 & December & 8,000 \\ \hline \end{tabular} The selling price of a SUPER DUPER widget is $80 and all sales are on account. Sales Price Based on past experience, sales are collected in the following pattern: 20%inthemonthofsale75%inmonthfollowingthesale5%arenevercollected(uncollectible) \begin{tabular}{|l|r|r|r|r|} \hline \multicolumn{1}{|c|}{\begin{tabular}{c} Vaughan Company \\ Sales Budget \end{tabular}} & \multicolumn{2}{c|}{} & \multicolumn{1}{c|}{ Total } \\ \hline \multicolumn{1}{|c|}{ 3rd Quarter } & \multicolumn{1}{|c|}{ July } & \multicolumn{1}{c|}{ August } & \multicolumn{1}{c|}{ September } & 3rd Quarter \\ \hline Sales in Units & 4,000 & 25,000 & 15,000 & 44,000 \\ \hline Selling Price per Unit & 80 & 80 & 80 & 80 \\ \hline Total Sales in $ & 320,000 & 2,000,000 & 1,200,000 & 3,520,000 \\ \hline & & & & \\ \hline \end{tabular} Ending FG Inventory 7. Now it is time for the Selling and Administrative Budget. It too will be divided into a variable portion and a fixed portion. Assume that variable S\&A costs are $3 per unit plus bad debt expense. Further assume that monthly Fixed Costs are as follows: Advertising $9,000, Executive Salaries $15,000, Other $5,000, and Office depreciation is $3,000. S\&A are paid in the month incurred. \begin{tabular}{|c|c|c|c|c|} \hline Vaughan Company & & & & \\ \hline S\&A Budget & & & & Total \\ \hline 3rd Quarter & July & August & September & 3rd Quarter \\ \hline Budgeted Sales & 4,000 & 25,000 & 15,000 & 44,000 \\ \hline Variable S\&A Expenses & 7 & 7 & 7 & 7 \\ \hline Budgeted Variable S\&A Exp. & 28,000 & 175,000 & 105,000 & 308,000 \\ \hline \multicolumn{5}{|l|}{\begin{tabular}{l} Budgeted Fixed S\&A Expenses: \\ Advertising \end{tabular}} \\ \hline Advertising & 9,000 & 9,000 & 9,000 & 20,000 \\ \hline Executive Salaries & 15,000 & 15,000 & 15,000 & 45,000 \\ \hline Other & 5,000 & 5,000 & 5,000 & 15,000 \\ \hline Depreciation & 3,000 & 3,000 & 3,000 & 9,000 \\ \hline Total Fixed S\&A Expenses & 32,000 & 32,000 & 32,000 & 96,000 \\ \hline Total Budgeted S\&A Expenses & 60,000 & 207,000 & 137,000 & 404,000 \\ \hline Less: Depreciation & (3,000) & (3,000) & (3,000) & (9,000) \\ \hline Less: Bad Debt Expense & (16,000) & (100,000) & (60,000) & (176,000) \\ \hline Budgeted Cash S\&A Expenses & 41,000 & 104,000 & 74,000 & 219,000 \\ \hline \end{tabular} 7. a variable portion and a fixed portion. Assume that variable S\&A costs are $3 per unit plus bad debt expense. Further assume that monthly Fixed Costs are as follows: Advertising $9,000, Executive Salaries $15,000, Other $5,000, and Office depreciation is $3,000. S\&A are paid in the month incurred. From here we go to the cash budget. We need to know cash receipts, cash disbursements, Cash flows/deficit, and the financing section. Vaughan's cash guidelines are as follows: They have a line of credit that can be accessed in $1,000 increments at an anual interest rate of 12%. Money will be borrowed on the last day of a given month and paid back on the last day of the month when it can be. Minimum cash balance required by Vaughan is $50,000. The beginning cash balance on July 1 is $50,000. Interest is paid when money is paid back. Raw Materials Purchasing Budget Each unit of SUPER DUPER widget requires 0.6 pounds of WHAM compound. To prevent shortages, the company would like the inventory of WHAM compound on hand at the end of each month to equal 40% of the following month's production needs. The inventory on July 1 is 1,344 pounds. WHAM compound costs $12.00 per pound and Vaughan pays for 50% of its purchases in the month of purchase; the remainder is paid in the following month. $41,184 of WHAM compound was purchased in June and 50% was paid for in June. Next we will prepare our FOH budget. FOH is applied based on DLH. Estimated variable FOH is expected to be $500,000 and estimated DLH are expected to be 250,000 . Fixed FOH is estimated to be $8,800 per month with $5,000 of that amount being depreciation of factory equipment and building. Like DL, assume that FOH is paid in the month incurred. Now we need to prepare the Ending FG Inventory Budget. Based on past experience, sales are collected in the following pattern: 4. The next Budget is the Direct Labor Budget. Let's assume that each unit takes 2 DLH to make and each DLH costs $18. Let's further assume that labor is paid in the month incurred. 5. Next we will prepare our FOH budget. FOH is applied based on DLH. Estimated variable FOH is expected to be $500,000 and estimated DLH are expected to be 250,000 . Fixed FOH is estimated to be $8,800 per month with $5,000 of that amount being depreciation of factory equipment and building. Like DL, assume that FOH is