You are on page 1of 6

# ACCT 2020

## EXCEL BUDGET PROBLEM

DESCRIPTION
To demonstrate your understanding of the master budget and all of the supporting budgets, use the data set
provided below to complete a comprehensive budget problem for WASATCH MANUFACTURING. Upload the
finished document to your SLCC ePortfolio. You must prepare the assignment in Excel using the template
provided. You must use formulas and link the budgets wherever possible, as indicated below in the grading
criteria. This assignment will count as the Chapter 9 Homework for this class.

SUBMISSION DETAILS

## Due Date: Sunday, November 29, 2015 at 11:59pm

Upload your completed Budget Excel file (NO PDFs) to your SLCC ePortfolio. LOG ON TO THIS CLASS

The formatting is consistent, professional, and easy to read. The budgets are in the correct order
(10%).
In every cell possible, formulas are used to compute the required answers (15%).
In every cell possible, data between budgets are linked. For example, if a change is made to January
sales revenue, all other budgets update automatically as a result of the new revenue figure (10%).
Each budget correctly computes the required data, including quarterly calculations (60%).
The Excel document was uploaded to the students SLCC ePortfolio (5%).

## HELP WITH EXCEL

If you are unfamiliar with preparing budgets in Excel, below is a series of videos prepared by Paige Paulsen
that cover preparing each of the budgets.
Preparing budgets in Excel video series:

## Sales & cash collections budget: http://youtu.be/3yG7FzDnvgM

Production Budget: http://youtu.be/MhrasFoIun0
Direct Materials Budget: http://youtu.be/eZJdhpm_bvc
Cash Disbursements for Direct Materials: http://youtu.be/58rCJpE-fCo
Conversion Costs Budgets: http://youtu.be/3N4DknOlBWk
Operating Expenses Budget: http://youtu.be/j81CLBhSWYs
Cash Budget: http://youtu.be/IXM3paew5n0
Budgeted Manufacturing Cost per Unit: http://youtu.be/EaS_f1IsqgI
Budgeted Income Statement: http://youtu.be/95ffm5qPfsU

## HELP WITH EPORTFOLIO

To receive full credit, this assignment needs to be uploaded into your SLCC ePortfolio. For assistance with

DATA SET
Wasatch Manufacturing is preparing its master budget for the first quarter of the upcoming year. The
following data pertain to Wasatch Manufacturings operations:
Current Assets as of December 31 (prior year):
Cash
\$17,000
Accounts Receivable, net
\$55,000
Inventory
\$20,000
Property, Plant & Equipment, Net
\$105,000
Accounts Payable
\$37,000
Capital Stock
\$95,000
Retained Earnings
\$40,000
A. Actual sales in December were \$105,000. Selling price per unit is projected to remain stable at \$15 per
unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted
to be as follows:
January
\$120,000
February \$135,000
March
\$129,000
April
\$141,000
May
\$102,000
B. Sales are 30% cash and 70% credit. All credit sales are collected in the month following the sale.
C. Wasatch Manufacturing has a policy that states that each months ending inventory of finished goods
should be 20% of the following months sales (in units).
D. Of each months direct materials purchases, 25% are paid for in the month of purchase, while the
remainder is paid for in the month following purchase. Four pounds of direct materials is needed per
unit at \$1.00 per pound. Ending inventory of direct materials should be 15% of next months
production needs.
E. Most of the labor at the manufacturing facility is indirect, but there is some direct labor incurred. Each
unit requires 0.10 direct labor hours. The direct labor wage rate is \$15 per hour. All direct labor is paid
for in the month in which the work is performed.
F. Monthly manufacturing overhead costs are \$10,000 for factory rent, \$6,000 for other fixed
manufacturing expenses, and \$1.25 per unit for variable manufacturing overhead. No depreciation is
included in these figures. All expenses are paid for in the month in which they are incurred.

## 3 ACCT 2020 Excel Budget Problem

G. Computer equipment for the administrative offices will be purchased in the upcoming quarter. In
January, Wasatch Manufacturing will purchase equipment for \$20,000 (cash), while Februarys cash
expenditures will be \$8,000, and Marchs cash expenditure will be \$25,000.
H. Operating expenses are budgeted to be \$1.30 per unit sold plus fixed operating expenses of \$2,200 per
month. All operating expenses are paid in the month in which they are incurred.
I.

Depreciation on the building and equipment for the general and administrative offices is budgeted to
be \$10,000 for the entire quarter, which includes depreciation on new acquisitions.

J. Wasatch Manufacturing has a policy that the ending cash balance in each month must be at least
\$15,000. It has a line of credit with a local bank. The company can borrow in increments of \$1,000 at
the beginning of each month, up to a total outstanding loan balance of \$100,000. The interest rate on
these loans is 1.25% per month simple interest (not compounded). The company would pay down on
the line of credit balance in increments of \$1,000 if it has excess funds at the end of the quarter. The
company would also pay the accumulated interest at the end of the quarter on the funds borrowed
during the quarter.
K. The companys income tax rate is projected to be 23% of operating income less interest expense. The
company pays \$28,000 cash at the end of February in estimated taxes.

SPECIFIC REQUIREMENTS
1. Prepare a schedule of cash collections for January, February, and March, and for the quarter in total.
To assist with the cash collections budget, first prepare a sales budget (Hint: Unit Sales = Sales in
Dollars / Selling Price per Unit).

December

Sales Budget
January
February

March

April

Unit Sales
Price per Unit
Sales Revenue

## Cash Collections Budget

January February
Cash sales
Credit sales
Total cash collections

March

Quarter

May

## 2. Prepare a production budget.

Production Budget
January February

March

Quarter

Unit sales
Plus: Desired ending inventory
Total needed
Less: Beginning inventory
Units to produce
3. Prepare a direct materials budget.
Direct Materials Budget
January February

March

Quarter

Units to be produced
Multiply by: Quantity of DM needed
per unit (lbs.)
Quantity of DM needed for production (lbs.)
Plus: Desired ending inventory of DM (lbs.)
Total quantity of DM needed (lbs.)
Less: Beginning inventory of DM (lbs.)
Quantity of DM to purchase (lbs.)
Multiply by: Cost per pound
Total cost of DM purchases

4. Prepare a cash payments budget for the direct material purchases from Requirement 3.
Cash Payments for Direct Material Purchases Budget
January
February
March
December Purchases (from A/P)
January Purchases
February Purchases
March Purchases
Total Cash Payments

Quarter

## 5. Prepare a cash payments budget for direct labor.

Cash Payments for Direct Labor Budget
January
February
Units Produced
Multiply by: Hours per Unit
Direct Labor Hours
Multiply by: Direct Labor Rate per Hour
Direct Labor Cost

March

Quarter

## 6. Prepare a cash payments budget for manufacturing overhead costs.

Cash Payments for Manufacturing Overhead Budget
January
February
March

Quarter

Rent (fixed)

## 7. Prepare a cash payments budget for operating expenses.

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

Quarter

## 8. Prepare a combined cash budget.

Combined Cash Budget
January
February
Cash Balance, Beginning
Plus: Cash Collections
Total Cash Available
Less Cash Payments:
DM Purchases
Direct Labor
Operating Expenses
Tax Payment
Equipment Purchases
Total Cash Payments
Ending Cash before Financing
Financing:
Borrowings
Repayments
Interest Payments
Cash Balance, Ending

March

Quarter

## 6 ACCT 2020 Excel Budget Problem

9. Calculate the budgeted manufacturing cost per unit (assume that fixed manufacturing overhead is
budgeted to be \$0.75 per unit for the year.)
Budgeted Manufacturing Cost per Unit
Direct materials cost per unit
Direct labor cost per unit
Variable manufacturing costs per unit
Cost of manufacturing each unit

10. Prepare a budgeted income statement for the quarter ending March 31 (Hint: Cost of Goods Sold =
Budgeted Manufacturing Cost per Unit X Number of Units Sold).
Budgeted Income Statement
For the Quarter Ended March 31
Sales Revenue
Less: Cost of Goods Sold
Gross Profit
Less: Operating Expenses
Less: Depreciation Expense
Operating Income
Less: Interest Expense
Less: Income Tax Expense
Net Income