MORRISSEY MANUFACTURING

Master Budget
NOTE: Cells highlighted in blue contain static numbers (inputs) and not formulas.

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 $ 9 $ 9 $ 9 $ 9 $ 9
Total sales Revenue $ 76,000 $ 80,100 $ 89,100 $ 82,800 $ 85,500 $ 77,400

Req. 1

Cash Collections Budget

January February March Quarter
Cash sales $ 20,025 $ 22,275 $ 20,700 $ 63,000
Credit sales $ 57,000 $ 60,075 $ 66,825 $ 183,900
Total collections $ 77,025 $ 82,350 $ 87,525 $ 246,900

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 1,810 1,959 1,849 1,810
Quantity of DM to purchase 18,249 19,480 18,514 56,243
Multiply by: Cost per pound $ 1.50 $ 1.50 $ 1.50 $ 1.50
Total cost of DM purchases $ 27,374 $ 29,220 $ 27,771 $ 84,365

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 $ 22,000
January purchases $ 8,212 $ 19,161 $ 27,374
February purchases $ 8,766 $ 20,454 $ 29,220
March purchases $ 8,331 $ 8,331
Total disbursements $ 30,212 $ 27,927 $ 28,785 $ 86,925

Req. 5

Cash Payments for Direct Labor Costs

January February March Quarter
Units Produced 9,050 9,795 9,245 28,090
Multiply by: Hours per unit 0.03 0.03 0.03 0.03
Direct Labor Hours 272 294 277 843
Multiply by: Direct Labor rate per hour $ 13 $ 13 $ 13 $ 13
Direct Labor Cost $ 3,530 $ 3,820 $ 3,606 $ 10,955
Req. 6

Cash Payments for Manufacturing Overhead Budget

January February March Quarter
Rent (fixed) $ 6,500 $ 6,500 $ 6,500 $ 19,500
Other MOH (fixed) $ 2,100 $ 2,100 $ 2,100 $ 6,300
Variable manufacturing overhead $ 12,670 $ 13,713 $ 12,943 $ 39,326
Total disbursements $ 21,270 $ 22,313 $ 21,543 $ 65,126

Req. 7

Cash Payments for Operating Expenses Budget

January February March Quarter
Variable operating expenses $ 10,680 $ 11,880 $ 11,040 $ 33,600
Fixed operating expenses $ 1,400 $ 1,400 $ 1,400 $ 4,200
Total disbursements $ 12,080 $ 13,280 $ 12,440 $ 37,800

Req. 8

Combined Cash Budget

January February March Quarter
Cash balance, beginning $ 6,000 $ 4,933 $ 5,143 $ 6,000
Plus: cash collections (req. 1) $ 77,025 $ 82,350 $ 87,525 $ 246,900
Total cash available $ 83,025 $ 87,283 $ 92,668 $ 252,900
Less cash payments:
DM purchases (req. 4) $ 30,212 $ 27,927 $ 28,785 $ 86,925
Direct labor (req. 5) $ 3,530 $ 3,820 $ 3,606 $ 10,955
MOH costs (req 6) $ 21,270 $ 22,313 $ 21,543 $ 65,126
Operating expenses (req 7) $ 12,080 $ 13,280 $ 12,440 $ 37,800
Tax payment $ 10,800 $ 10,800
Equipment purchases $ 15,000 $ 6,000 $ 4,000 $ 25,000
Total cash payments $ 82,092 $ 84,141 $ 70,374 $ 236,606
Ending cash before financing $ 933 $ 3,143 $ 22,294 $ 16,294
Financing:
Borrowings $ 4,000 $ 2,000 $ 6,000
Repayments $ (6,000) $ (6,000)
Interest $ (270) $ (270)
Total financing $ 4,000 $ 2,000 $ (6,270) $ (270)
Cash balance, ending $ 4,933 $ 5,143 $ 16,024 $ 16,024

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 (given data) $ 1.40
Fixed MOH per unit (given data) $ 0.60
Cost of manufacturing each unit $ 5.39

Req. 10

Wasatch Manufacturing
Budgeted Income Statement
For the Quarter Ended March 31
Sales $ 252,000
Cost of goods sold $ 150,920
Gross profit $ 101,080
Operating expenses $ 37,800
Depreciation expense (given data) $ 5,200
Operating income $ 58,080
Less: interest expense $ (270)
Less: provision for income tax $ 16,186.80
Net income $ 41,623