ACCT 338 (In Class Partners Assignment)

6.508.60

Intro Management Accounting

ACCT 338 –Winter 2024

MASTER BUDGET IN CLASS PARTNERS ASSIGNMENT

Time Allotted for This Exam: Take home Due on: Check your D2L

Start this project after your in-class activity #2

Instructions:
In a team of three (3) people or less, you will create a budget in Excel, linking every cell of raw data you
can. For example, if changes occur in the number of units the Company believes it can sell, the entire
schedule should be updated without having to type in the data again. You may use your textbook and any
notes for this activity. However, there will be no collaboration with other students apart from your group
members.

Kindly note the followings:

 The Excel template to be used is in Ms. Team under files named "Master Budget assignment."
Download the Excel file in the folder to your desktop for your assignment.
 Do not use any other template from any other source. DO NOT USE THE TEMPLATE I
CREATED IN CLASS FOR CHAPTER 6.
 You will see the Word document of the question in Ms. Team under files.

Submission:
 One team member should upload the completed solution into D2L under the assignment folder
when you are done.

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Purpose

The overall purpose of this assignment is to enhance your skills with Excel relating to linking
raw data into a schedule that will be useful to managers. It will help you integrate and
understand the various components of an operating and cash budget.

Required:

In Excel, create a solution with all of the following items. ALL RAW DATA SHOULD BE
TYPED AT THE BEGINNING OF YOUR SCHEDULES. ALL cells that can be linked need to
be. If I change any number in your raw data the schedules should update appropriately. Your
solution needs to have the following items labeled in the following order:

a. Revenues budget (2 marks)

b. Production budget in units (2 marks)

c. Direct materials usage budget and direct materials purchases budget (10 marks)

d. Direct manufacturing labour cost budget (2 marks)

e. Manufacturing overhead cost budget broken down by the 3 activities. (6 marks)

f. Budgeted unit costs of ending finished goods inventory (6 marks)

g. Budgeted total costs of ending finished goods inventory and direct materials inventory (4
marks)

h. Cost of goods sold budget (5 marks)

i. Selling, general and administration and shipping costs budget (2 marks)

j. Cash budget (14 marks)

k. Budgeted income statement (6 marks)

BUDGET DATA:
Akin Manufacturing Ltd. (AML) produces and sells 2 products: A+33 and AA34. A+33
currently sells for $170 and they believe they will be able to sell 2,700 units in October. AA34
currently sells for $205 and it is estimated there will be 3,000 units sold in October.
On October 1, there were 300 units of A+33 with a cost of $20,400. They plan to have 500 units
of A+33 in stock on October 31. On October 1, there were 650 units of AA34 in stock with a
cost of $65,260. The October 31 estimate of finished goods required for AA34 is 750 units.

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AML uses FIFO cost-flow assumption for finished goods inventory.

Each product uses 2 direct materials: Mercury and Plastic. The Mercury cost $6.50 per litre and
the plastic costs $8.60 per metre. Additional information relating to the materials is below.

Input quantities per Unit of

Output
A+33 AA34
Direct materials:
Mercury (litres per unit) 0.8 litres 1.4 litres
Plastic (metres per unit) 1 metre 2 metres

Inventory information: Direct

Materials
Mercury Plastic
Beginning inventory 640 litres 810 metres
Beginning inventory cost $3,936 $6,156
Target ending inventory 370 litres 285 metres

AML uses FIFO cost-flow assumption for materials inventory.

The workers are paid $16 per direct manufacturing labour hour. It takes 3 hours to manufacture
a unit of A+33 and 4 hours for each unit of AA34.

As well as the costs mentioned above, they also have manufacturing overhead costs, and selling,
general and administrative costs. As AML has to change the setup in the facility to switch
between A+33 and AA34 products, they create 50 units in each batch. It takes 2 hours to setup
the factory for a batch of A+33 and it takes 3 hours to setup the factory for a batch of AA34.

AML uses activity-based costing and has classified all manufacturing overhead costs for the
month of October as follows:
Manufacturing Annual
Overhead Categories Annual Denominator
Costs Activity
Setup $68,160 3,408 Setup hours
Processing $570,240 237,600 DMLH
Inspection $47,040 67,200 Units

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 ACCT 338 (In Class Partners Assignment)

AML has selling, general and administrative costs that are 8% of the sales revenue. Shipping
costs are $20 per shipment. The products are sold in quantities of 40 units per shipment.

Part 1. (39 marks)

Prepare each of the following schedules for the operating budget for October:
a. Revenues budget
b. Production budget in units
c. Direct materials usage budget and direct materials purchases budget in both units and
dollars. Round to 2 decimals.
d. Direct manufacturing labour cost budget
e. Manufacturing overhead cost budgets for setup, processing and inspection activities.
f. Budgeted unit cost of ending finished goods inventory
g. Budgeted total costs of ending finished goods inventory and ending direct materials
inventories budget
h. Cost of goods sold budget
i. Selling, general and administration and shipping costs budget
Part 2. (14 marks)
j. Cash budget
From the operating budget schedule of Part 1, prepare a cash budget for AML using the
additional information provided below for October:
 All sales are on account; 65% are collected in the month of the sale, 32% are collected
the following month and 3% are never collected and are written off as bad debts.
 All purchases of materials are on account. AML pays 60% of purchases in the month of
the purchase, and the balance is paid the following month. AML owed $28,175 to the
suppliers at the end of the previous month.
 All other costs are paid in the month incurred.
 30% of setup, processing and inspection costs are depreciated. 15% of selling, general
and administration and shipping costs are depreciated.
 Dividends worth $25,000 will be declared and paid in the month of October.
 AML accrued all expenses monthly. AML plans to pay the income taxes of $95,000
accrued in September on October 15.
 AML is making monthly interest payments based on their long-term loan with a 9%
interest rate on the 1st of the following month. (September interest was accrued and will
be paid on October 1). The value of the long-term debt is $ 220,000.
 AML would like to repay the long-term loan if they have up to $500,000 at the end of the
month. Will you recommend AML to pay back the loan or not, and why?
 Ending cash balance in September is $221,387
 AML received a $2,000 royalty and issued 1000 common shares at $5 per share.

Part 3. (6 marks)
k. Prepare a budgeted income statement for AML for the month-ended October 31.

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ACCT 338 (In Class Partners Assignment)