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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

PRESIDIO MANUFACTURING
Master Budget

Sales Budget
January
February

December
Unit Sales
Unit Selling Price $
Total Sales Revenue

$

5,917
12.00

$

71,000

$

8,300
12.00

$

99,600

$

9,900
12.00

$

118,800

March
$

9,600
12.00

$

115,200

Cash Collections Budget
January
February

April

May

$

9,000
12.00

$

8,600
12.00

$

108,000

$

103,200

March

Quarter

Cash Collections (35%)
Credit Collections (65%)

$

34,860
46,150

$

41,580
64,740

$

40,320
77,220

$

116,760
188,110

Total Cash Collections

$

81,010

$

106,320

$

117,540

$

304,870

Production Budget
January
February

March

Quarter

Unit Sales
Desired Ending Inventory

8,300
990

9,900
960

9,600
900

27,800
900

Total Needed

9,290

10,860

10,500

28,700

Beginning Inventory
Units to Produced

Chapter 9: The Master Budget

830

990

960

830

8,460

9,870

9,540

27,870

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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Direct Materials Budget
January
February

March

Quarter

Units to be produced
Quantity of DM needed per unit
Quantity of DM needed for production
Desired ending inventory of DM

8,460
3
25,380
5,922

9,870
3
29,610
5,724

9,540
3
28,620
5,376

27,870
3
83,610
5,376

Total quantity of DM needed

31,302

35,334

33,996

88,986

Beginning inventory of DM
Quantity of DM to purchase
Cost per pound

5,076
26,226
2

5,922
29,412
2

5,724
28,272
2

5,076
83,910
2

Total cost of DM purchases

$

52,452.0

$

April
Unit Sales

$

56,544.0

$

167,820

May

9,000

Desired End Inventory (10%)

58,824.0

8,600

860

Total Needed

9,860

Beginning Inventory

900

Units to produce

8,960

DM needed per unit

3

DM needed for production

26,880

20% of DM

Cash Payments for Direct Material Purchases Budget
January
February
March
December purchases
(From Accounts Payable on balance sheet)
January puchases
February Purchases
March Purchases

$
$

$

Total disbursements

43,000
10,490

53,490

$
$

41,962
11,765

$

53,726

$
$

47,059
11,309

$
$
$
$

$

58,368

$

Cash Payments for Direct Labor Budget
January
February
March
Units to be produced
x DL hours per unit

Chapter 9: The Master Budget

8,460
0.05

9,870
0.05

Quarter

9,540
0.05

43,000
52,452
58,824
11,309
165,585

Quarter
27,870
0.05

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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Total hours required
x DL cost per hour

$

423
9

$

494
9

$

477
9

$

1,394
9

Total cost of direct labor

$

3,807

$

4,442

$

4,293

$

12,542

Chapter 9: The Master Budget

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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Cash Payments for Manufacturing Overhead Budget
January
February
March
Variable MOH cost
Rent (fixed)
Other fixed MOH
Cash Payments for Manufacturing Overhead

Quarter

$
$
$

5,500
2,900
9,306

$
$
$

5,500
2,900
10,857

$
$
$

5,500
2,900
10,494

$
$
$

16,500
8,700
30,657

$

17,706

$

19,257

$

18,894

$

55,857

Cash Payments for Operating Expenses Budget
January
February
March
Variable operating expenses
Fixed operating expenses
Cash Payments for Operating Expenses

$
$
$

10,375
1,800
12,175

$
$
$

12,375
1,800
14,175

$
$
$

Combined Cash Budget
January
February
Cash balance, beginning
Add cash collections
Total cash available
Less cash disbursements:
For materials
For labor
For manufaturing overhead
For operating expenses
For equipment
For taxes

$

4,600
81,010
85,610

$

4,432
106,320
110,752

12,000
1,800
13,800

Quarter
$
$
$

March
$

4,952
117,540
122,492

34,750
5,400
40,150

Quarter
$

4,600
304,870
309,470

53,490
3,807
17,706
12,175
5,000

53,726
4,442
19,257
14,175
12,200
10,000

58,368
4,293
18,894
13,800
16,600

165,585
12,542
55,857
40,150
33,800
10,000

Total disbursements

92,178

113,800

111,955

317,933

Excess (deficiency) of cash
Financing:
Borrowings
Repayments
Interest
Total financing

(6,568)

(3,048)

11,000

8,000

Cash balance, ending

Chapter 9: The Master Budget

11,000
$

4,432

8,000
$

4,952

$

10,537

(8,463)

(6,000)
(490)
(6,490)

19,000
(6,000)
(490)
12,510

4,047

$

4,047

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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Budgeted Manufacturing Cost per Unit
Direct materials: 3 lbs. each x $2 per lb.
Direct labor
Conversion costs: $1.10 each
Fixed MOH: $0.70 each
Cost of manufacturing each unit

$
$
$
$
$

6.00
0.45
1.10
0.70
8.25

Budgeted Income Statement
Sales
Cost of goods sold($8.25 x units sold)
Gross profit
Operating expenses
Depreciation expense
Operating income
Less: interest expense
Less: provision for income tax @ 30%

$

333,600
(229,350)
104,250
40,150
4,600
59,500
(490)
17,703

Net income

$

41,307

Chapter 9: The Master Budget

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