Input Data (all currency in US$)

Budgeted Sales Expected

April (units) 2,500
May (units) 6,000
June (units) 3,000
July (units) 2,500
August (units) 2,000

Selling Price/Unit $120.00

Cash Collection Pattern

Month of sale 40%
Following month 55%
Uncollectible 5%

Cash Payments for Materials

Month of purchase 40%
Following month 60%

Production Requirements
Raw material per unit (lb.) 5
Raw material cost per lb. $7.00
Direct labor hours per unit 0.5
Direct labor rate per hour $40.00
Variable MOHD per direct labor hour $10.00
Fixed MOHD per month $57,950
Depreciation in fixed MOHD $20,000

Selling & Administrative (S&A) Costs

Variable S&A cost per unit sold $1.25
Fixed S&A cost per month $63,000
Depreciation in fixed S&A cost $10,000

Other Cash Outflows

Cash dividends paid each month $15,000
Equipment purchases May $47,820
Equipment purchases June $154,600

Desired Ending Inventory

Finished goods 20%
Raw materials 40%
Cash $30,000

Beginning Account Balances as of March 31

Cash $37,745
Accounts receivable $132,000
Finished goods inventory $30,750
 Finished goods cost per unit $75.00
Finished goods inventory (units) 410
Raw materials inventory $32,200
Raw materials (lb.) 4,600
Accounts payable $55,000

Land $520,000
Buildings and equipment $1,800,000
Accumulated depreciation ($750,000)
Common stock $500,000
Retained earnings $1,247,695
Yellow-use only cell references Little Annin Flagmakers
Blue-may type numbers here Sales Budget (US$)
April May June July
Budgeted sales (units) 2,500 6,000 3,000 2,500
Selling price per unit $120 $120 $120 $120
Total Sales $ 300,000 $ 720,000 $ 360,000 $ 300,000

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Schedule of Expected Cash Collections (US$)
April May June July
Accounts receivable
Beginning balance $132,000

April sales $ 120,000 $ 165,000

May sales $ 288,000 $ 396,000

June sales $ 144,000 $ 198,000

$ 120,000
Total Cash Collections $ 252,000 $ 453,000 $ 540,000

Accounts Receivable as of June 3 $ 198,000

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Production Budget
April May June July
Budgeted sales 2,500 6,000 3,000 2,500
Add: Desired ending inventory 1,200 600 500 400
Total needs 3,700 6,600 3,500 2,900
Less: Beginning inventory 410 1,200 600 500
Required Production 3,290 5,400 2,900 2,400

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Direct Materials Budget (US$)
April May June
Required production in units 3,290 5,400 2,900
Raw materials per unit (lbs.) 5 5 5
Production needs (lbs.) 16,450 27,000 14,500
Add: Desired ending inventory 10,800 5,800 4,800
Total needs 27,250 32,800 19,300
Less: Beginning inventory 4,600 10,800 5,800
Raw materials to be purchased 22,650 22,000 13,500
Cost of raw materials $7.00 $7.00 $7.00
Total Cost of Raw Materials $ 158,550 $ 154,000 $ 94,500

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 Schedule of Expected Cash Disbursements for Material (US$)
April May June
Accounts payable
Beginning balance $ 55,000

April purchases $ 63,420 $ 95,130

May purchases $ 61,600 $ 92,400

June purchases $ 37,800 $ 56,700

Total Cash Disbursements for

Materials $ 118,420 $ 156,730 $ 130,200

Accounts Payable as of June 30 $ 56,700

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Direct Labor Budget (US$)
April May June
Units to be produced 3,290 5,400 2,900 11,590
Direct labor hours per unit 0.5 0.5 0.5
Total direct labor hours needed 1,645 2,700 1,450
Direct labor cost per hour $40.00 $40.00 $40.00
Total Direct Labor Cost $ 65,800 $ 108,000 $ 58,000

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Manufacturing Overhead Budget (US$)
April May June
Budgeted direct labor hours 1,645 2,700 1,450
Variable MOHD rate $10 $10 $10
Total variable MOHD $ 16,450 $ 27,000 $ 14,500
Fixed MOHD expense $ 57,950 $ 57,950 $ 57,950
Total MOHD expense $ 74,400 $ 84,950 $ 72,450
Less: Depreciation $ 20,000 $ 20,000 $ 20,000
Cash Disbursements for MOHD $ 54,400 $ 64,950 $ 52,450

MOHD rate $40.00 /direct labor hour

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Unit Product Cost (US$)
Absorption cost per unit Quantity Cost Cost/unit
Direct materials 5 $7.00 $35.00
Direct labor 0.50 $40.00 $20.00
Manufacturing overhead 0.50 $40.00 $20.00
Unit Product Cost $75.00
 Little Annin Flagmakers
Cost of Goods Sold Budget (USD)
Cost of Goods Sold (FIFO) Units Cost/unit Total Cost
Beginning finished goods
inventory 410 $ 75.00 $ 30,750
Add: Cost of goods manufactured 11,590 $ 75.00 $ 869,250
Good available for sale $ 900,000
Less: Ending finished goods
inventory 11,500 $ 75.00 $ 862,500
Cost of Good Sold $ 37,500

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Selling and Administrative Expense Budget (US$)
April May June
Budgeted sales in units 2,500 6,000 3,000
Variable S&A per unit $1.25 $1.25 $1.25
Total variable S&A $ 3,125 $ 7,500 $ 3,750
Total fixed S&A $ 63,000 $ 63,000 $ 63,000
Total S&A expense $ 66,125 $ 70,500 $ 66,750
Less: Depreciation $ (10,000) $ (10,000) $ (10,000)
Cash Disbursements for S&A $ 56,125 $ 60,500 $ 56,750

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Cash Budget (US$)
April May June
Beginning Cash Balance $ 37,745 $ 30,000 $ 30,000
Add: Receipts
Cash collections $ 252,000 $ 453,000 $ 540,000
Total Cash Available $ 289,745 $ 483,000 $ 570,000

Less disbursements
Direct materials $ (118,420) $ (156,730) $ (130,200)
Direct labor $ (65,800) $ (108,000) $ (58,000)
Manufacturing overhead $ (54,400) $ (64,950) $ (52,450)
Selling and administrative $ (56,125) $ (60,500) $ (56,750)
Dividends $ (15,000) $ (15,000) $ (15,000)
Equipment purchases $ (47,820) $ (154,600)
Total Disbursements $ (309,745) $ (453,000) $ (467,000)

Excess (deficiency) of cash

available $ (20,000) $ 30,000 $ 103,000

Financing
Borrowing $ 50,000 -
Repayments $ (50,000)
Interest $ (2,000)
Total Financing $ 50,000 - $ (52,000)
Ending Cash Balance $ 30,000 $ 30,000 $ 51,000

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Budgeted Income Statement (US$)
Quarter Ending June 30
Net sales
Less: Cost of goods sold
Gross margin
Less: S&A expenses
Net operating income
Less: Interest expense
Net income

Computation of Net Sales

Sales $ 1,380,000
Less uncollectible amounts $ 69,000
Net Sales $ 1,311,000

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Budgeted Balance Sheet (US$)

Ending March 31
Current assets
Cash
Accounts receivable
Raw materials inventory
Finished goods inventory
Plant and equipment
Land
Buildings and equipment
Accumulated depreciation
Total Assets

Liabilities
Accounts payable
Stockholder's equity
Common stock
Retained earnings
Total Liabilities and
Stockholder's Equity
 August Quarter
2,000 11,500
$120 $ 120
$ 240,000 1,380,000

Quarter

$ 132,000

$ 285,000

$ 684,000

$ 144,000
$ 165,000
$ 1,245,000

August Quarter
2,000 11,500
0 500
2,000 13,800
-410
11,590

Quarter
11,590
5
57,950
4,800
62,750
(4,600)
58,150
7
407,050
 Quarter

$ 55,000

$ 158,550

$ 154,000

$ 37,800

$ 405,350

Quarter
11,590
0.5
5,795
$40.00
$ 231,800

Quarter
5,795
$10
$ 57,950
$ 57,950
$ 231,800
$ (60,000)
$ 171,800
 Quarter
11,500
$1.25
$ 14,375
$ 189,000
$ 203,375
$ (30,000)
$ 173,375

Quarter
$ 37,745

$ 1,245,000
$ 1,342,745

$ (405,350)
$ (231,800)
$ (171,800)
$ (173,375)
$ (45,000)
$ (202,420)
$ (1,229,745)

$ 53,000

$ 50,000
$ (50,000)
$ (2,000)
$ (2,000)
$ 51,000

$ 1,311,000
$ 862,500
$ 448,500
$ 203,375
$ 245,125
$ (2,000)
$ 243,125

Ending June 30
Yellow-use only cell references Little Annin Flagmakers
Blue-may type numbers here Sales Budget (US$)
April May June July August Quarter
Budgeted sales (units)
Selling price per unit
Total Sales

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Schedule of Expected Cash Collections (US$)
April May June Quarter
Accounts receivable
Beginning balance

April sales

May sales

June sales

Total Cash Collections

Accounts Receivable as of June 30 $ -

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Production Budget
April May June July August Quarter
Budgeted sales
Add: Desired ending inventory
Total needs
Less: Beginning inventory
Required Production
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Direct Materials Budget (US$)
April May June Quarter
Required production in units
Raw materials per unit (lbs.)
Production needs (lbs.)
Add: Desired ending inventory
Total needs
Less: Beginning inventory
Raw materials to be purchased
Cost of raw materials
Total Cost of Raw Materials

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Schedule of Expected Cash Disbursements for Material (US$)
April May June Quarter
Accounts payable
Beginning balance

April purchases

May purchases

June purchases

Total Cash Disbursements for Materials

Accounts Payable as of June 30

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Direct Labor Budget (US$)
April May June Quarter
Units to be produced
Direct labor hours per unit
Total direct labor hours needed
Direct labor cost per hour
Total Direct Labor Cost

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Manufacturing Overhead Budget (US$)
April May June Quarter
Budgeted direct labor hours
Variable MOHD rate
Total variable MOHD
Fixed MOHD expense
Total MOHD expense
Less: Depreciation
Cash Disbursements for MOHD

MOHD rate /direct labor hour

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Unit Product Cost (US$)
Absorption cost per unit Quantity Cost Cost/unit
Direct materials
Direct labor
Manufacturing overhead
Unit Product Cost
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Cost of Goods Sold Budget (USD)
Cost of Goods Sold (FIFO) Units Cost/unit Total Cost
Beginning finished goods inventory
Add: Cost of goods manufactured
Good available for sale
Less: Ending finished goods inventory
Cost of Good Sold

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Selling and Administrative Expense Budget (US$)
April May June Quarter
Budgeted sales in units
Variable S&A per unit
Total variable S&A
Total fixed S&A
Total S&A expense
Less: Depreciation
Cash Disbursements for S&A
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Cash Budget (US$)
April May June Quarter
Beginning Cash Balance
Add: Receipts
Cash collections
Total Cash Available

Less disbursements
Direct materials
Direct labor
Manufacturing overhead
Selling and administrative
Dividends
Equipment purchases
Total Disbursements

Excess (deficiency) of cash available

Financing
Borrowing
Repayments
Interest
Total Financing

Ending Cash Balance

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Budgeted Income Statement (US$)
Quarter Ending June 30
Net sales
Less: Cost of goods sold
Gross margin
Less: S&A expenses
Net operating income
Less: Interest expense
Net income

Computation of Net Sales

Sales
Less uncollectible amounts
Net Sales

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Budgeted Balance Sheet (US$)
Ending March 31 Ending June 30
Current assets
Cash
Accounts receivable
Raw materials inventory
Finished goods inventory
Plant and equipment
Land
Buildings and equipment
Accumulated depreciation
Total Assets
Liabilities
Accounts payable
Stockholder's equity
Common stock
Retained earnings
Total Liabilities and Stockholder's Equity