Question
The following information applies to ALL parts of budgeting question. Woodruff Manufacturing produces a part used in the production of jet-boat engines. The following information
The following information applies to ALL parts of budgeting question.
Woodruff Manufacturing produces a part used in the production of jet-boat engines. The following information is gathered from the company records for preparing budgets for the 2nd Quarter ending 30 June 2021.
| (1) | Selected general ledger balances on 1 April 2021 | ||||||||||
|
| Cash | $16,500 | |||||||||
|
| Finished goods inventory (600 units) | $42,000 | |||||||||
|
| Direct materials inventory (1200kgs) | $7,200 | |||||||||
|
| Accountants receivable | $64,800 | |||||||||
| (2) | All sales are credit sales. Actual and projected sales from March 2021 to July 2021 are: | ||||||||||
|
| March (actual) | 900 units | @180 = | $162,000 |
| ||||||
|
| April (estimated) | 800 units | @180 = | $144,000 |
| ||||||
|
| May (estimated) | 1,000 units | @180 = | $180,000 |
| ||||||
|
| June (estimated) | 1,200 units | @180 = | $216,000 |
| ||||||
|
| July (estimated) | 1,400 units | @180 = | $252,000 |
| ||||||
| (3) | The desired ending finished goods inventory for each month is 75% of the next months sales. The desired direct materials ending inventory equivalent to 50% of next months sales requirement. | ||||||||||
| (4) | Variable product cost per unit |
|
| ||||||||
|
| Direct materials(Metal): 3kg @ 8 per kg | $24.00 |
| ||||||||
|
| Labour: 3 hours @ $15 per labour hour | $45.00 |
| ||||||||
|
| Variable overhead | $5.00 | $74.00 | ||||||||
| (5) | Monthly fixed costs | ||||||||||
|
| Manufacturing (including depreciation $16,000) | $40,000 |
| ||||||||
|
| Administrative and selling | $32,000 |
| ||||||||
| (6) | Cash collections and disbursements |
|
| ||||||||
|
| The accountant projects 60% of the cash is collected in the month of sale and the balance is collected in the month following sale. | ||||||||||
|
| All material purchases and other expenses are paid in the month in which they are incurred. | ||||||||||
Required: (a) Prepare production budgets in units for April, May and June, 2021.
(b) Prepare direct materials purchases budgets in kilograms and dollars for April, May and June, 2021.
(c) Prepare a cash budget for April, May and June, 2021.
(d) Participation in the budget process is often viewed as way to improve the accuracy of the targets as well as encouraging managers to take responsibility for achieving the targets. Briefly explain any potential negative effects that may accrue from this process.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Statistical Analysis Microsoft Excel 2010
Authors: Conrad Carlberg
1st Edition
0789747200, 9780789747204
