P22-47B

Requirements

1. Prepare Irwin’s sales budget for the first quarter of 2019.

2. Prepare Irwin’s production budget for the first quarter of 2019.

3. Prepare Irwin’s direct materials budget, direct labor budget, and manufacturing
overhead budget for the first quarter of 2019. Round the predetermined overhead
allocation rate to two decimal places. The overhead allocation base is direct labor hours.

4. Prepare Irwin’s cost of goods sold budget for the first quarter of 2019.

5. Prepare Irwin’s selling and administrative expense budget for the first quarter of
2019.

Solution:

Requirement 1

IRWIN BATTING COMPANY

Sales Budget
For the Quarter Ended March 31, 2019
Particulars Youth Bats Adult Bats Total
Budgeted units sale (a) 1,400 3,300 4,700
Budgeted selling price (b) $35 $50
Total sales (a*b) US$49,000 US$165,000 US$214,000

Requirement 2

IRWIN BATTING COMPANY

Production Budget
For the Quarter Ended March 31, 2019
Particulars Youth Bats Adult Bats Total
Budgeted bats to be sold 1,400 3,300 4,700
Add: Desired Ending inventory 220 300 520
Total need 1,620 3,600 5,220
Less: Beginning Inventory (700) (550) (1,250)
Budgeted Bats to be produced 920 3,050 3,970

Requirement 3

IRWIN BATTING COMPANY

Direct Materials Budget
For the Quarter Ended March 31, 2019

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Particulars Youth Bats Adult Bats Total
Budgeted Bats to be produced (a) 920 3,050 3,970
Material Needed per bat (b) 40 70
Total Material needed for production (a*b) US$ 36,800 US$213,500 250,300
Add: Desired Ending inventory US$90,000
Total need 340,300
Less: Beginning Inventory -90,000
Budgeted purchase of bats 250,300
Rate 0.10
Budgeted purchase of bats in dollars US$25,030

IRWIN BATTING COMPANY

Direct Labor Budget
For the Quarter Ended March 31, 2019
Particulars Youth Bats Adult Bats Total
Budgeted Bats to be produced (a) 920 3,050 3,970
Labor hours needed per bat (b) 0.40 0.40 0.40
Total labor hours needed for production (a*b) 368.00 1,220.00 1,588.00
Labor cost per hour 26 26 26
Direct labor cost US$9,568 US$31,720 US$41,288

IRWIN BATTING COMPANY

Manufacturing Overhead Budget
For the Quarter Ended March 31, 2019
Particulars Youth Bats Adult Bats Total
Budgeted Bats to be produced (a) 920 3,050 3,970
Variable overhead per bat (b) US$ 0.30 US$ 0.30 US$ 0.30
Budgeted variable overhead (a*b) US$276 US$915 US$1,191
Budgeted fixed overhead:
Depreciation 1,300
Other cost 14,977
Total Budgeted fixed overhead 16,277
Total Budgeted overhead (c) US$17,468
Direct labor hours (d) 368 1220 1,588
Predetermined overhead rate (c/d) 11

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Requirement 4

Calculations for Cost of Goods Sold Budget:

Bats in
beginning Cost of bats in beginning
inventory × Cost per bat = inventory

Youth Bats: 700 bats * $15 per bat = $10500

Adult Bats: 550 bats * $10 per bat = $5500

Bats sold in 1st − Bats in beginning Bats produced and sold

quarter of 2019 Inventory = in 1st quarter of 2019

Youth Bats: 1400 - 700 = 700 bats

Adult Bats: 3300 - 550 = 2750 bats

Manufacturing cost per bat Youth Bats Adult Bats

Direct materials cost per bat US$4.00 US$7.00
Direct labor cost per bat (0.4 Directlabor Hr/bat * $26/Directlabor Hr) US$10.40 US$10.40
Manufacturing overhead cost per bat (0.4 DLhr/bat * $11 per DLhr US$4.40 US$4.40
Total projected manufacturing cost per bat 18.80 21.80

Bats produced
and sold in Cost of bats
1st quarter of × Manufacturing produced and sold
2019 cost per bat = in 1st quarter of 2019

Youth Bats: 700 bats * 18.80 = $13160

Adult Bats: 550 bats * 21.80 = $11990

IRWIN BATTING COMPANY

Cost of Goods Sold Budget
For the Quarter Ended March 31, 2019
Particulars Youth Bats Adult Bats Total
Beginning inventory (a) US$10,500 US$5,500 US$16,000
Total bats Produced and sold (b) 13,160 11,990 25,150
Total budgeted COGS (a+b) US$23,660 US$17,490 US$41,150

Requirement 5

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 IRWIN BATTING COMPANY
Selling and Administrative Expense Budget
For the Quarter Ended March 31, 2019
Salaries expense US$13,000
Rent expense 3,500
Insurance expense 1,400
Depreciation expense 450
Supplies expense (1% of $214,000 total sales) 2,140
Total Budgeted selling and administrative expense US$20,490

P22-48B

Requirements

1. Prepare Haney’s schedules for cash receipts from customers and cash payments
for the first quarter of 2018.

2. Prepare Haney’s cash budget for the first quarter of 2018.

Requirement 1

Schedule of Cash Receipts from Customers 1st Qtr. 2018

Total sales US$214,000
Cash receipts from customers:
Accounts receivable balance, December 31, 2017 US$23,200
First Quarter sales (65% * $214,000) 139,100
Total cash receipts from customers US$162,300

Accounts receivable balance, March 31, 2018

First Quarter sales Collected in Second quarter (35% * $214,000) 74,900

Schedule of Cash Payments 1st Qtr. 2018

Total direct material purchased US$40,300
Cash payment
Direct material:
Accounts payable balance, December 31, 2017 9,000
First quarter direct material purchase (40300 * 50%) US$20,150
Total Payment direct material purchase 29,150

Direct labor:
Total payment for direct labor 37,200

Manufacturing overheads:
Variable manufacturing overheads 1,150
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Insurance and property tax 6,600
Total payment manufacturing overheads 7,750

Selling and Administration expenses:

Salaries expenses 13,000
Rent expenses 2,500
Insurance expenses 1,100
Supplies expenses 4,280
Total payment selling and administration expenses 20,880

Income Tax:
Total payment for income tax 44,000

Capital expenditure:
Total payment for capital expenditure 38,000

Total cash payment 176,980

Accounts Payable balance, March 31, 2018

First quarter direct material purchase paid in 2nd quarter (40300 * 50%) 20,150

Requirement 2

HANEY
Cash Budget
For the Quarter Ended March 31, 2018
Beginning Cash Balance US$45,000
Cash Receipt 162,300
Total cash available 207,300

Cash payments:
Purchase of direct material 29,150
Direct labor 37,200
Manufacturing overheads 7,750
Selling and Administration expenses 20,880
Income tax 44,000
Capital expenditure 38,000
Total Cash payment US$176,980

Ending cash balance 30,320