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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

WASATCH MANUFACTURING
Master Budget
Heather McGuire
Sales Budget
January
7000
8000
$15
$15
$105,000
$120,000

February
9000
$15
$135,000

March
8600
$15
$129,000

9400
$15
$141,000

Cash Collections Budget


January
$36,000
$73,500
$109,500

February
$40,500
$84,000
$124,500

March
$38,700
$94,500
$133,200

Quarter
$115,200
$252,000
$367,200

January
8000
1800
9800

February
9000
1720
10720

March
8600
1880
10480

Quarter
25600
1880
27480

1600
8200

1800
8920

1720
8760

1600
25880

8760
4

Quarter
25880
4

December
Number of Unit Sales
Price per Unit
Sales Revenue

Cash Sales (30% Current Month's Sales)


Credit Sales (70% Previous Month's Sales)
Total Cash Collections

April

May
6800
$15
$102,000

Production Budget
Unit Sales
Plus: Desired Ending Inventory (20% Next Month's Unit Sales)
Total Needed
Less: Beginning Inventory (20% Current Month's Unit Sales or Last Month's
Ending Inventory)
Units to be Produced

Additional Required Calculations for Production Budget


April
Unit Sales
Plus: Desired Ending Inventory
Total Needed
Less: Beginning Inventory (20% Current Month's Unit Sales or Last Month's
Ending Inventory)
Units to Produce

Units to be Produced
Multiply By: Quantity of DM Needed per Unit (lbs.) (Given 4)

Chapter 9: The Master Budget

9400
1360
10760
1880
8880

Direct Materials Budget


January
8200
4

February
8920
4

March

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MANAGERIAL ACCOUNTING - Fourth Edition


Quantity of DM Need for Production (lbs.)
Plus: Desired Ending Inventory of DM (lbs.) (15% Next's Month's Production
Need)
Total Quantity of DM Needed (lbs.)
Less: Beginning Inventory of DM (lbs.) (15% Current Month's Production Need or
Last Month's Ending Inventory)
Quantity of DM to Purchase (lbs.)
Multiply By: Cost Per Pound (Given $1.00/lb)
Total Cost of DM Purchases

Solutions Manual
32800

35680

35040

103520

5352
38152

5256
40936

5328
40368

5328
108848

4920
33232
$1.00
$33,232

5352
35584
$1.00
$35,584

5256
35112
$1.00
$35,112

4920
103928
$1.00
$103,928

Additional Required Calculations for Direct Materials Budget


April
Units to be Produced
Multiply By: Quantity of DM Needed per Unit (lbs.)
Quantity of DM Need for Production (lbs.)

8880
4
35520

Cash Payments for Direct Material Purchases Budget


January
February
December Purchases (From Accounts Payable on Balance Sheet)
$37,000
January Purchases (25% Same Month, 75% Next Month)
$8,308
$24,924
February Purchases (25% Same Month, 75% Next Month)
$8,896
March Purchases (25% Same Month, 75% Next Month)
Total Cash Payments
$45,308
$33,820

Cash Payments for Direct Labor Budget


January
Units to be Produced
8200
0.10
Multiply By: Hours per Unit (Given 0.10 hours/unit)
Direct Labor Hours
820
$15.00
Multiply By: Direct Labor Rate per Hour (Given $15.00/hour)
Direct Labor Cost (Cash Payments)
$12,300

February
8920
0.10
892
$15.00
$13,380

Cash Payments for Manufacturing Overhead Budget


January
February
Rent (Fixed)
$10,000
$10,000
$6,000
$6,000
Other Manufacturing Overhead (MOH Fixed)
Variable Manufacturing Overhead Costs ($1.25 x Units to be Produced)
$10,250
$11,150

Chapter 9: The Master Budget

March

$26,688
$8,778
$35,466

March

Quarter
$37,000
$33,232
$35,584
$8,778
$114,594

8760
0.10
876
$15.00
$13,140

Quarter
25880
0.10
2588
$15.00
$38,820

March
$10,000
$6,000

Quarter
$30,000
$18,000

$10,950

$32,350

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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Cash Payments for Manufacturing Overhead

$27,150

$26,950

$80,350

Cash Payments for Operating Expenses Budget


January
February
Variable Operating Expenses ($1.30 x Number Unit Sales)
$10,400
$11,700
$2,200
$2,200
Fixed Operating Expenses
Cash Payments for Operating Expenses
$12,600
$13,900

March
$11,180
$2,200
$13,380

Quarter
$33,280
$6,600
$39,880

Beginning Cash Balance


Plus: Total Cash Collections
Total Cash Available
Less: Cash Payments
DM Purchases
Direct Labor
Manufacturing Overhead Costs (MOH)
Operating Expenses
Tax Payment
Equipment Purchases
Total Cash Payments
Ending Cash Before Financing
Financing
Plus: Borrowings
Less: Repayments
Less: Interest Payments
Total Financing
Ending Cash Balance ($15,000 minimum required)

$26,250

Combined Cash Budget


January
$17,000
$109,500
$126,500

February
$15,042
$124,500
$139,542

March
$15,292
$133,200
$148,492

Quarter
$17,000
$367,200
$384,200

$45,308
$12,300
$26,250
$12,600
$0
$20,000
$116,458
$10,042

$33,820
$13,380
$27,150
$13,900
$28,000
$8,000
$124,250
$15,292

$35,466
$13,140
$26,950
$13,380
$0
$25,000
$113,936
$34,556

$114,594
$38,820
$80,350
$39,880
$28,000
$53,000
$354,644
$29,556

$5,000
$0
$0
$5,000
$15,042

Err:518
$0
$0
Err:518
$15,292

Err:518
$5,000
$188
Err:518
$29,369

$5,000
$5,000
$188
-$188
$29,369

Budgeted Manufacturing Cost per Unit


Direct Materials Cost per Unit (4 lbs. each unit x $1.00 per pound)
Direct Labor Cost per Unit (0.10 hours per unit x $15.00 per hour)
Variable Manufacturing Costs per Unit (Given in MOH Budget $1.25 per unit)
Fixed Manufacturing Overhead per Unit (Given $0.75 per unit)
Cost of Manufacturing each Unit

$4.00
$1.50
$1.25
$0.75
$7.50

Budgeted Income Statement


Sales Revenue
Less: Costs of Goods Sold
Gross Profit

Chapter 9: The Master Budget

$384,000
$192,000
$192,000

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MANAGERIAL ACCOUNTING - Fourth Edition


Less: Operating Expenses
Less: Depreciation Expense (Given $10,000)
Operating Income
Less: Interest Expense
Less: Income Tax Expense (23% of Operating Income-Interest Expense)
Net Income

Chapter 9: The Master Budget

Solutions Manual
$39,880
$10,000
$142,120
$188
$32,644
$109,288

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