WASATCH 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 (25%) 20,025 22,275 20,700 63,000
Credit sales (75%) 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 (15%) 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 (10%) 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 (15%) 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 (240) (240)
Total financing 4,000 2,000 (6,240) (240)
Cash balance, ending 4,933 5,143 16,054 16,054

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 (240)
Less: provision for income tax @ 28% 16,195
Net income 41,645