Introduction to Management Accounting Solutions Manual

WASATCH MANUFACTURING
Master Budget

Sales Budget
December January February
Unit sales 8,768 8,900 9,900
Unit selling price $ 9 $ 9 $ 9
Total sales Revenue $ 80,100 $ 89,100

Req. 1

Cash Collections Budget

January February March
Cash sales $20,025 $22,275 $20,700
Credit sales 60075 66825 62100
Total collections $80,100 $89,100 $82,800

Req. 2

Production Budget
January February March
Unit sales 8,900 9,900 9,200
Plus: Desired ending inventory 1,135 1,485 1,380
Total needed 10,035 11,385 10,580
Less: Beginning inventory 1,267 1,335 1,485
Units to produce 8,768 10,050 9,095

Req. 3

Direct Materials Budget

January February March
Units to be produced 8,768 10,050 9,095
Multiply by: Quantity of DM needed per unit 2 2 2
Quantity of DM needed for production 17,536 20,100 18,190
Plus: Desired ending inventory of DM 1,754 2,010 1,819
Total quantity of DM needed 19,290 22,110 20,009
Less: Beginning inventory of DM 2,534 1,754 2,010
Quantity of DM to purchase 16,756 20,356 17,999
Multiply by: Cost per pound $ 1.50 $ 1.50 $ 1.50
Total cost of DM purchases $25,134 $30,534 $26,999

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Introduction to Management Accounting Solutions Manual

April May
Unit Sales 9,500 8,600
Plus: Desired End Inventory 950 860
Total Needed 10,450 9460
Less: Beginning Inventory 920 950
Units to produce 9,530 8510
DM needed per unit 2 2
Quantity of DM needed for production 19,060 17020

Req. 4

Cash Payments for Direct Material Purchases Budget

January February March
December purchases (From AP)
January purchases
February purchases
March purchases
Total disbursements

Req. 5

Cash Payments for Direct Labor Costs

January February March
Direct Labor $3,420 $3,916 $3,547

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Req. 6

Cash Payments for Manufacturing Overhead Budget

January February March
Rent (fixed) $6,500 $6,500 $6,500
Other MOH (fixed) $2,100 $2,100 $2,100
Variable manufacturing overhead $ 12,275 $ 14,070 $ 12,733
Total disbursements $20,875 $22,670 $21,333

Req. 7

Cash Payments for Operating Expenses Budget

January February March
Variable operating expenses $ 10,680 $ 11,880 $ 11,040
Fixed operating expenses $ 1,400 $ 1,400 $ 1,400
Total disbursements $12,080 $13,280 $12,440

Req. 8

Combined Cash Budget

January February March
Cash balance, beginning $4,400 $4,400 $4,400
Plus: cash collections (req. 1) 25,725 80,775 87,525
Total cash available 30,125 85,175 91,925
Less cash payments:
DM purchases (req. 4)
Direct labor (req. 5) 3,420 3,916 3,547
MOH costs (req 6) 20,875 22,670 21,333
Operating expenses (req 7) 12,080 13,280 12,440
Tax payment 10,800
Equipment purchases
Total cash payments
Ending cash before financing
Financing:
Borrowings
Repayments
Interest
Total financing
Cash balance, ending

Req. 9

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Budgeted Manufacturing Cost per Unit

Direct materials cost per unit $3.00
Direct labor cost per unit $0.39
Variable MOH cost per unit
Fixed MOH per unit (given in problem) $0.80
Cost of manufacturing each unit $5.59

Req. 10

Damon Manufacturing
Budgeted Income Statement
For the Quarter Ended March 31
Sales $ 251,400
Cost of goods sold 82,667
Gross profit
Operating expenses
Depreciation expense
Operating income
Less: interest expense
Less: provision for income tax
Net income

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 Introduction to Management Accounting Solutions Manual

TURING

March April May

9,200
$ 9 $ 9 $ 9
$ 92,800

Quarter
$62,850
$188,550
$251,400

Quarter
$28,000
4,000
32,000
4,087
27,913

Quarter
27,913
2
55,826
5,583
61,409
6,298
55,111
$ 1.50
$82,667

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Introduction to Management Accounting Solutions Manual

Quarter

Quarter
$10,883

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Introduction to Management Accounting Solutions Manual

Quarter
$19,500
$6,300
$39,078
$64,878

Quarter
$33,600
$4,200
$37,800

Quarter
$4,400
194,025
207,225

13,183
64,878
37,800

Chapter 9: The Master Budget and Responsibility Accounting 7