Solution For C. Alvarez Manufacturing

C.
Alvarez Manufacturing
Sales Budget
For the period April 1 - June 30, 2021
Budgeted sales in units

Multiple by: Selling price per unit
Budgeted sales revenue
C. Alvarez Manufacturing
Schedule of Cash Collections on Sales
From Accounts Receivable, March 31

On April Sales
70% x $200,000
25% x $200,000
On May Sales
70% x $500,000
25% x $500,000
On June Sales
70% x $300,000
Total cash collections
Production Budget

Add: Desired ending inventory
Total units needed
Less: Beginning inventory
Total production needed
Direct Materials Budget
Production needed
Multiply by: Materials needed per unit (lbs.)
Total materials needed in production
Add: Desired ending inventory
Total needed materials
Less: Beginning inventory
Material purchases needed (units)
Material purchases needed (units)

Multiply by: Material cost per unit
Material purchases
Schedule of Cash Disbursements on Material Purchases
From Accounts Payable, March 31

On April material purchases:
50% x $56,000
50% x $56,000
On May material purchases:
50% x $88,600
50% x $88,600
On June material purchases:
50% x $56,800
Total cash disbursements for material purchases
Direct Labor Budget
Production needed
Multiply by: Direct labor required per unit (hrs.)
Required labor hours for production
Compare with: Labor hours guaranteed paid
Labor hours for payment
Multiply by: Direct labor cost per hour
Total direct labor cost
Manufacturing Overhead Budget
Budgeted direct labor hours

Multiply by: Variable manufacturing OH rate
Variable manufacturing overhead cost
Add: Fixed manufacturing overhead cost
Total manufacturing overhead cost
Total manufacturing overhead cost

Less: Noncash manufacturing overhead
Total cash disbursements for overhead
Overhead application rate
Selling and Administrative Expenses Budget

Multiply by: Variable S&A rate
Variable S&A Expenses
Add: Fixed S&A Expenses
Total selling and administrative expenses
Total selling and administrative expenses

Less: Noncash selling and administrative expenses
Total cash disbursements for S&A expenses
Cash Budget
Beginning cash balance

Add: Cash collections made
Total cash available
Less: Cash disbursements on -
Materials
Direct labor
Manufacturing overhead
Selling and administrative expense
Equipment purchase
Dividends
Total cash disbursements
Excess cash (deficiency in cash)
Financing needed (payments needed)
Borrowing
Repayments
Interest
Total financing needed (payments needed)
Ending cash balance
Cost of Goods Sold Budget
Materials:
April - 20,000 units x 5 lbs. x $0.40
May - 50,000 units x 5 lbs. x $0.40
June - 30,000 units x 5 lbs. x $0.40
Labor:
April - 20,000 units x 0.05 hrs. x $10
May - 50,000 units x 0.05 hrs. x $10
June - 30,000 units x 0.05 hrs. x $10
Overhead:
April - 20,000 units x $2.49
May - 50,000 units x $2.49
June - 30,000 units x $2.49
Total Cost of Goods Sold
Budgeted Income Statement
Sales
Less: Cost of goods sold
Gross Profit
Less: Selling and Administrative Expenses
Operating Income
Less: Interest Expense
Net Income
Budgeted Statement of Retained Earnings
Retained Earnings, beginning

Add: Net income
Less: Dividends declared and paid
Retained Earnings, ending
Budgeted Schedule of Accounts Receivable
Accounts Receivable, beginning
Add: Credit Sales
Less: Collections on accounts receivable
Accounts Receivable, ending
Less: Bad debts
Net realizable value of accounts receivable
Budgeted Schedule of Raw Materials
Desired materials ending inventory

Multiply by: Material cost per unit
Raw materials inventory
Budgeted Schedule of Finished Goods
Desired ending inventory

Multiply by: Unit cost $4.99 ($2 + $0.5 + $2.49)
Finished Goods Inventory
Budgeted Schedule of Accounts Payable
Accounts Payable, beginning

Add: Credit Purchases
Less: Payments made
Accounts Payable, ending
Budgeted Balance Sheet
June 30, 2021
ASSETS
Cash
Accounts Receivable
Raw Materials Inventory
Finished Goods Inventory
Land
Equipment
Total assets
LIABILITIES AND EQUITY

Accounts Payable
Common Stock
Retained Earnings
Total liabilities and equity
April May June Quarter 2
20,000 50,000 30,000 100,000
$ 10 $ 10 $ 10 $ 10
$ 200,000 $ 500,000 $ 300,000 $ 1,000,000

$ 30,000 $ 30,000
140,000 140,000
$ 50,000 50,000
350,000 350,000
$ 125,000 125,000
210,000 210,000
$ 170,000 $ 400,000 $ 335,000 $ 905,000
April May June Quarter 2 July August

20,000 50,000 30,000 100,000 25,000 15,000
10,000 6,000 5,000 5,000 3,000
30,000 56,000 35,000 105,000 28,000
4,000 10,000 6,000 4,000 5,000
26,000 46,000 29,000 101,000 23,000
April May June Quarter 2 July

26,000 46,000 29,000 101,000 23,000
5 5 5 5 5
130,000 230,000 145,000 505,000 115,000
23,000 14,500 11,500 11,500
153,000 244,500 156,500 516,500
13,000 23,000 14,500 13,000
140,000 221,500 142,000 503,500
140,000 221,500 142,000 503,500

$ 0.40 $ 0.40 $ 0.40 $ 0.40
$ 56,000 $ 88,600 $ 56,800 $ 201,400

$ 12,000 $ 12,000
28,000 28,000
$ 28,000 28,000
44,300 44,300
$ 44,300 44,300
28,400 28,400
$ 40,000 $ 72,300 $ 72,700 $ 185,000

26,000 46,000 29,000 101,000
0.05 0.05 0.05 0.05
1,300 2,300 1,450 5,050
1,500 1,500 1,500
1,500 2,300 1,500 5,300
$ 10 $ 10 $ 10 $ 10
$ 15,000 $ 23,000 $ 15,000 $ 53,000

1,300 2,300 1,450 5,050
$ 20 $ 20 $ 20 $ 20
$ 26,000 $ 46,000 $ 29,000 $ 101,000
50,000 50,000 50,000 150,000
$ 76,000 $ 96,000 $ 79,000 $ 251,000
$ 76,000 $ 96,000 $ 79,000 $ 251,000

20,000 20,000 20,000 60,000
$ 56,000 $ 76,000 $ 59,000 $ 191,000
$251,000 / 5,050 hours $ 49.70

20,000 50,000 30,000 100,000
$ 0.50 $ 0.50 $ 0.50 $ 0.50
$ 10,000 $ 25,000 $ 15,000 $ 50,000
70,000 70,000 70,000 210,000
$ 80,000 $ 95,000 $ 85,000 $ 260,000
$ 80,000 $ 95,000 $ 85,000 $ 260,000

10,000 10,000 10,000 30,000
$ 70,000 $ 85,000 $ 75,000 $ 230,000

$ 40,000 $ 30,000 $ 30,000 $ 40,000
170,000 400,000 335,000 905,000
210,000 430,000 365,000 945,000
40,000 72,300 72,700 185,000

15,000 23,000 15,000 53,000
56,000 76,000 59,000 191,000
70,000 85,000 75,000 230,000
- 143,700 48,300 192,000
49,000 - - 49,000
230,000 400,000 270,000 900,000
- 20,000 30,000 95,000 45,000
50,000 - - 50,000
- - - 50,000 - 50,000
- - - 2,000 - 2,000
50,000 - - 52,000 - 2,000
$ 30,000 $ 30,000 $ 43,000 $ 43,000
$ 40,000
$ 100,000
$ 60,000 $ 200,000
10,000
25,000
15,000 50,000
49,800
124,500
74,700 249,000
$ 99,800 $ 249,500 $ 149,700 $ 499,000

$ 200,000 $ 500,000 $ 300,000 $ 1,000,000
99,800 249,500 149,700 499,000
100,200 250,500 150,300 501,000
80,000 95,000 85,000 260,000
20,200 155,500 65,300 241,000
- - 2,000 2,000
$ 20,200 $ 155,500 $ 63,300 $ 239,000

$ 146,150 $ 117,350 $ 272,850 $ 146,150
20,200 155,500 63,300 239,000
49,000 - - 49,000
$ 117,350 $ 272,850 $ 336,150 $ 336,150
$ 30,000 $ 50,000 $ 125,000 $ 30,000
200,000 500,000 300,000 1,000,000
170,000 400,000 335,000 905,000
60,000 150,000 90,000 125,000
10,000 25,000 15,000 50,000
$ 50,000 $ 125,000 $ 75,000 $ 75,000

23,000 14,500 11,500 11,500
$ 0.40 $ 0.40 $ 0.40 $ 0.40
$ 9,200 $ 5,800 $ 4,600 $ 4,600

10,000 6,000 5,000 5,000
$ 4.99 $ 4.99 $ 4.99 $ 4.99
$ 49,900 $ 29,940 $ 24,950 $ 24,950

$ 12,000 $ 28,000 $ 44,300 $ 12,000
56,000 88,600 56,800 201,400
40,000 72,300 72,700 185,000
$ 28,000 $ 44,300 $ 28,400 $ 28,400
Quarter 2
$ 43,000
75,000
4,600
24,950
50,000
367,000
$ 564,550
$ 28,400
200,000
336,150
$ 564,550

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Budgeted sales in units

From Accounts Receivable, March 31

Budgeted sales in units

Material purchases needed (units)

From Accounts Payable, March 31

Budgeted direct labor hours

Total manufacturing overhead cost

Overhead application rate

Budgeted sales in units

Total selling and administrative expenses

Beginning cash balance

Retained Earnings, beginning

Desired materials ending inventory

Desired ending inventory

Accounts Payable, beginning

LIABILITIES AND EQUITY

April May June Quarter 2

April May June Quarter 2 July August

April May June Quarter 2 July

140,000 221,500 142,000 503,500

April May June Quarter 2

April May June Quarter 2

April May June Quarter 2

$ 76,000 $ 96,000 $ 79,000 $ 251,000

$251,000 / 5,050 hours $ 49.70

April May June Quarter 2

$ 80,000 $ 95,000 $ 85,000 $ 260,000

April May June Quarter 2

40,000 72,300 72,700 185,000

April May June Quarter 2

April May June Quarter 2

April May June Quarter 2

April May June Quarter 2

April May June Quarter 2

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