Question
The Diesel Dynamo Company is a high-tech diesel subsystem production business that produces technology accessories for trucks and other transport. The design of Diesel Dynamo
The Diesel Dynamo Company is a high-tech diesel subsystem production business that produces technology accessories for trucks and other transport. The design of Diesel Dynamo products are unique and represent a breakthrough in the industry. The units Diesel Dynamo produces claim to provide for greater dependability, quality and longevity. The company is completing its third year of operations and is preparing to create a master budget for next year, 2017. The budget will detail each quarters activities and the activity for the year in total.
Through connections at the Rotary Club, the CEO was able obtain a template for use in creating a master budget and has provided it to you along with financial information from the corporate controller. Your job is to create the initial documents for the master budget:
overhead budget
selling and administrative expense budget
cash budget include a schedule of cash collections and payments
finished goods inventory calculation
At that point you will present your results at the budget committee meeting before continuing to complete all of the documents needed.
| Diesel Dynamo Company | ||||||
| Budget Project | ||||||
| Fall 2017 | ||||||
| INPUT SECTION | ||||||
| SALES | ||||||
| 4th | 1st | 2nd | 3rd | 4th | ||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||
| 2017 | 2018 | 2018 | 2018 | 2018 | ||
| Budgeted Sales in units | 43,000 | 37,900 | 34,500 | 31,000 | 43,000 | |
| Budgeted Selling Price | $530 | per production unit (Finished Good) | ||||
| RECEIVABLES | ||||||
| Receivables Collection Schedule | 91.50% | quarter of sale | ||||
| 5.50% | quarter following sale | |||||
| 3.00% | uncollectible | |||||
| 100.00% | ||||||
| Policy | Entire projected uncollectible receivables are written off each quarter | |||||
| INVENTORY COSTS | ||||||
| Direct Labor | 4.5 | hours | ||||
| $19.50 | per direct labor hour | |||||
| Raw Materials | 3 | direct material units per finished good production unit | ||||
| $85.00 | per raw material unit | |||||
| Variable Overhead | $9.50 | per Direct Labor Hour | ||||
| Fixed Overhead | ||||||
| Depreciation | $304,000 | per quarter | ||||
| Other Fixed Overhead | $950,000 | per quarter | ||||
| Fixed Overhead Application Rate | CALCULATE FROM PRODUCTION BUDGET | |||||
| INVENTORY ACCOUNTS | ||||||
| 4th | 1st | 2nd | 3rd | 4th | ||
| Ending Finished Goods Inventory | Quarter | Quarter | Quarter | Quarter | Quarter | |
| in units | 0 | 15,000 | 19,000 | 20,000 | 15,000 | |
| Raw Materials Inventory | ||||||
| Beginning Inventory 1/1/2018 | 28,436 | units |
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