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Operating Budget, Comprehensive Analysis

Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world. Projected sales in units for the coming five months are given below.

Operating Budget, Comprehensive Analysis Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world. Projected sales in units for the coming five months are given below. The following data pertain to production policies and manufacturing specifications followed by Ponderosa: Finished goods inventory on January 1 is 900 units. The desired ending inventory for each month is 20 percent of the next month's sales. The data on materials used are as follows: Inventory policy dictates that sufficient materials be on hand at the beginning of the month to satisfy 30 percent of the next month's production needs. This is exactly the amount of material on hand on January 1. The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20. Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.) Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.) The unit selling price of the wiring harness assembly is $110. In February, the company plans to purchase land for future expansion. The land costs $68,000. All sales and purchases are for cash. The cash balance on January 1 equals $62,900. The firm wants to have an ending cash balance of at least $25,000. If a cash shortage develops, sufficient cash is borrowed to cover the shortage and provide the desired ending balance. Any cash borrowed must be borrowed in $1,000 increments and is repaid the following month, as is the interest due. The interest rate is 12 percent per annum. Required: Prepare a monthly operating budget for the first quarter with the following schedules: 0 1 1 1. Sales budget January February March Total Units Correct 1 of Unit $ sellin g price Correct 2 of $ Correct 5 of $ Correct 3 of $ Correct 6 of $ Correct 4 of $ Correct 7 of $ Correct 8 of $ Sales Correct 9 of Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution Correct 10 o Correct 11 o Correct 12 o 1 2. Production budget January Unit sales Desired ending inventor y Total needed Less: Beginnin g inventor y Units produce d February March Total Correct 1 of Correct 2 of Correct 3 of Correct 4 of Correct 5 of Correct 6 of Correct 7 of Correct 8 of Correct 9 of Correct 10 o Correct 11 o Correct 12 o Correct 13 o Correct 14 o Correct 15 o Correct 16 o Correct 17 o Correct 18 o Correct 19 o Correct 20 o Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution 1 3. Direct materials purchases budget January Part K298 February Part C30 Part K298 March Part C30 Part K298 Pa Units produce d Dir. mat. per unit Producti on needs Desired EI Total needed Correct 1 of Correct 2 of Correct 3 of Correct 4 of Correct 5 of Correct 9 of Correct 10 o Correct 11 o Correct 12 o Correct 13 o Correct 17 o Correct 18 o Correct 19 o Correct 20 o Correct 21 o Correct 25 o Correct 26 o Correct 27 o Correct 28 o Correct 29 o Correct 33 o Correct 34 o Correct 35 o Correct 36 o Correct 37 o Correct 41 o Correct 42 o Correct 43 o Correct 44 o Correct 45 o Correct 49 o Correct 50 o Correct 51 o Correct 52 o Correct 53 o Less: BI Dir. mat. to purchas e $ Cost per unit Total purchas e cost $ Correct 57 o $ $ Correct 58 o $ Correct 65 o $ Correct 59 o $ Correct 66 o $ Correct 60 o $ Correct 67 o $ Correct 61 o $ Correct 68 o $ Correct 69 o Correct 65 o Correct 66 o Correct 67 o Correct 68 o Correct 69 o Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution 1 4. Direct labor budget. Round your answers to two decimal places, if required. January February March Total Units to be produced Correct 1 of Correct 2 of Correct 3 of Correct Direct labor time per unit (hrs.) Correct 5 of Correct 6 of Correct 7 of Correct Total hours needed Correct 9 of Correct 10 o Correct 11 o Correct $ $ $ $ Wages per hour Correct Correct 13 o $ Total direct labor cost Correct 14 o $ Correct 15 o $ $ Correct Correct 17 o Correct 18 o Correct 19 o Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution 1 5. Overhead budget. Round your answers to two decimal places, if required. January Budgete d direct labor hours Variable overhea d rate Budgete $ d var. overhea d Budgete d fixed overhea d Total overhea d cost February March Total Correct 1 of Correct 2 of Correct 3 of Correct 4 of Correct 5 of Correct 6 of Correct 7 of Correct 8 of $ $ $ Correct 9 of Correct 10 o Correct 11 o Correct 12 o Correct 13 o Correct 14 o Correct 15 o Correct 16 o $ $ Correct 17 o $ Correct 18 o $ Correct 19 o Correct 20 o Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution 1 6. Selling and administrative expense budget. Round your answers to the nearest cent, if required. January Planned sales Variable selling & $ administrative expense per unit February Correct 1 of March Correct 2 of $ Total Correct 3 of $ C $ C Correct 5 of Correct 6 of Correct 7 of Correct 5 of Correct 6 of $ Correct 7 of $ $ $ Total variable expense C Correct 9 of Correct 10 o Correct 11 o Fixed selling & administrative expense: $ $ $ $ Salaries C Correct 13 o Correct 14 o Correct 15 o Depreciation Correct 17 o Correct 18 o Correct 19 o C Other Correct 21 o Correct 22 o Correct 23 o C $ $ $ $ Total fixed expenses C Correct 25 o Total selling & administrative expenses $ Correct 26 o $ Correct 27 o $ $ C Correct 29 o Correct 30 o Correct 31 o Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution 1 7. Ending finished goods inventory budget. Round intermediate calculations to the nearest cent. Round your answers to the nearest cent, if required. Unit cost computation: Direct materials: Part K298 $ Correct 1 of Part C30 Correct 2 of Direct labor Correct 3 of Overhead: Variable Correct 4 of Fixed Correct 5 of Total unit cost $ Correct 6 of Correct 7 of Number of units Finished goods $ Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution 1 8. Cost of goods sold budget Direct materials used Correct 8 of $ Part K298 Correct 1 of Part C30 $ Correct 2 of Correct 3 of Direct labor used Correct 4 of Overhead Correct 5 of $ Budgeted manufacturing costs Correct 6 of Add: Beginning finished goods Correct 7 of $ Goods available for sale Correct 8 of Less: Ending finished goods Correct 9 of $ Budgeted cost of goods sold Correct 10 o Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution 1 9. Budgeted income statement (ignore income taxes) Sales $ Correct 1 of Less: Cost of goods sold Correct 2 of $ Gross margin Correct 3 of Less: Selling and administrative expense Correct 4 of $ Income before income taxes Correct 5 of Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution 1 10. Cash budget Enter a negative balance as a negative amount, and if an amount is zero enter "0". January $ Beginning balance February $ March $ Total $ Correct 1 of Correct 2 of Correct 3 of Correct 4 of Correct 5 of Correct 6 of Correct 7 of Correct 8 of Cash receipts $ Total cash available Disbursemen ts: $ Correct 9 of $ Correct 10 o $ Correct 11 o Correct 12 o $ $ $ $ Purchases Correct 13 o Correct 14 o Correct 15 o Correct 16 o Correct 17 o Correct 18 o Correct 19 o Correct 20 o Correct 21 o Correct 22 o Correct 23 o Correct 24 o Correct 25 o Correct 26 o Correct 27 o Correct 28 o DL payroll Overhead Marketing & admin Land Correct 29 o Total disbursemen ts $ $ Correct 31 o $ Ending balance Correct 30 o $ Correct 32 o $ $ Correct 33 o $ Correct 34 o $ Correct 35 o Correct 36 o Correct 37 o Correct 38 o Correct 39 o Correct 40 o Correct 41 o Correct 42 o Correct 43 o Correct 44 o Correct 45 o Correct 46 o Financing: Borrowed/re paid Interest paid Correct 43 o $ Ending cash balance $ Correct 47 o Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution Correct 44 o Correct 45 o $ Correct 48 o Correct 46 o $ Correct 49 o Correct 50 o