Introduction to Management Accounting Solutions Manual

WASATCH MANUFACTURING
Master Budget
Sales Budget
December January February March April May
Unit sales 8,444 8,900 9,900 9,200 9,500 8,600
Unit selling price $ 9.00 $ 9.00 $ 9.00 $ 9.00 $ 9.00 $ 9.00
Total sales Revenue $ 76,000.00 $ 80,100.00 $ 89,100.00 $ 82,800.00 $ 85,500.00 $ 77,400.00

Req. 1

Cash Collections Budget

January February March Quarter
Cash sales $ 20,025.00 $ 22,275.00 $ 20,700.00 $ 63,000.00
Credit sales $ 57,000.00 $ 60,075.00 $ 66,825.00 $ 183,900.00
Total collections $ 77,025.00 $ 82,350.00 $ 87,525.00 $ 246,900.00

Req. 2

Production Budget
January February March Quarter
Unit sales 8,900 9,900 9,200 28,000
Plus: Desired ending inventory 1,485 1,380 1,425 1,425
Total needed 10,385 11,280 10,625 29,425
Less: Beginning inventory 1,335 1,485 1,380 1,335
Units to produce 9,050 9,795 9,245 28,090

Req. 3

Direct Materials Budget

January February March Quarter
Units to be produced 9,050 9,795 9,245 28,090
Multiply by: Quantity of DM needed per unit 2 2 2 2
Quantity of DM needed for production 18,100 19,590 18,490 56,180
Plus: Desired ending inventory of DM 1,959 1,849 1,873 1,873
Total quantity of DM needed 20,059 21,439 20,363 58,053
Less: Beginning inventory of DM 905 980 925 905
Quantity of DM to purchase 19,154 20,460 19,439 57,148
Multiply by: Cost per pound $ 1.50 $ 1.50 $ 1.50 $ 1.50
Total cost of DM purchases $ 28,731.00 $ 30,689.25 $ 29,157.75 $ 85,722.00

April May
Unit Sales 9,500 8,600
Plus: Desired End Inventory 1,290
Total Needed 10,790
Less: Beginning Inventory 1,425
Units to produce 9,365
DM needed per unit 2
Quantity of DM needed for production 18,730

Req. 4

Cash Payments for Direct Material Purchases Budget

January February March Quarter
December purchases (From AP) $ 22,000.00 $ 22,000.00
January purchases $ 8,619.30 $ 20,111.70 $ 28,731.00
February purchases $ 9,206.78 $ 21,482.48 $ 30,689.25
March purchases $ 8,747.33 $ 8,747.33
Total disbursements $ 30,619.30 $ 29,318.48 $ 30,229.80 $ 90,167.58

Req. 5
Labor/Unit
Cash Payments for Direct Labor Costs 0.03
January February March Quarter Wage/Hour
Direct Labor $ 3,529.50 $ 3,820.05 $ 3,605.55 $ 10,955.10 $ 13.00

Chapter 9: The Master Budget and Responsibility Accounting 1

Introduction to Management Accounting Solutions Manual

Req. 6

Cash Payments for Manufacturing Overhead Budget

January February March Quarter
Rent (fixed) $ 6,500.00 $ 6,500.00 $ 6,500.00 $ 19,500.00
Other MOH (fixed) $ 2,100.00 $ 2,100.00 $ 2,100.00 $ 6,300.00
Variable manufacturing overhead $ 12,670.00 $ 13,713.00 $ 12,943.00 $ 39,326.00
Total disbursements $ 21,270.00 $ 22,313.00 $ 21,543.00 $ 65,126.00

Req. 7

Cash Payments for Operating Expenses Budget

January February March Quarter
Variable operating expenses $ 10,860.00 $ 11,754.00 $ 11,094.00 $ 33,708.00
Fixed operating expenses $ 1,400.00 $ 1,400.00 $ 1,400.00 $ 4,200.00
Total disbursements $ 12,260.00 $ 13,154.00 $ 12,494.00 $ 37,908.00

Req. 8

Combined Cash Budget

January February March Quarter
Cash balance, beginning $ 6,000.00 $ 5,346.20 $ 5,290.68 $ 6,000.00
Plus: cash collections (req. 1) $ 77,025.00 $ 82,350.00 $ 87,525.00 $ 246,900.00
Total cash available $ 83,025.00 $ 87,696.20 $ 92,815.68 $ 263,536.88
Less cash payments:
DM purchases (req. 4) $ 30,619.30 $ 29,318.48 $ 30,229.80 $ 90,167.58
Direct labor (req. 5) $ 3,529.50 $ 3,820.05 $ 3,605.55 $ 10,955.10
MOH costs (req 6) $ 21,270.00 $ 22,313.00 $ 21,543.00 $ 65,126.00
Operating expenses (req 7) $ 12,260.00 $ 13,154.00 $ 12,494.00 $ 37,908.00
Tax payment $ 10,800.00 $ 10,800.00
Equipment purchases $ 15,000.00 $ 6,000.00 $ 4,000.00 $ 25,000.00
Total cash payments $ 82,678.80 $ 85,405.53 $ 71,872.35 $ 239,956.68
Ending cash before financing $ 346.20 $ 2,290.68 $ 20,943.33 $ 23,580.20
Financing:
Borrowings $ 5,000.00 $ 3,000.00 $ 8,000.00
Repayments $ (8,000.00) $ (8,000.00)
Interest $ (315.00) $ (315.00)
Total financing $ 5,000.00 $ 3,000.00 $ (8,315.00) $ (315.00)
Cash balance, ending $ 5,346.20 $ 5,290.68 $ 12,628.33 $ 23,265.20

Req. 9

Budgeted Manufacturing Cost per Unit

Direct materials cost per unit $3.00
Direct labor cost per unit $0.39
Variable MOH cost per unit $1.40
Fixed MOH per unit (given in problem) $0.95
Cost of manufacturing each unit $5.74

Req. 10

Damon Manufacturing
Budgeted Income Statement
For the Quarter Ended March 31
Sales $ 252,000.00
Cost of goods sold $ 160,720.00
Gross profit $ 91,280.00
Operating expenses $ 37,908.00
Depreciation expense $ 5,200.00
Operating income $ 48,172.00
Less: interest expense $ (315.00)
Less: provision for income tax $ 13,399.96
Net income $ 34,457.04

Chapter 9: The Master Budget and Responsibility Accounting 2