Question

Data Regarding Ballard Corporation's are listed below:

-Sales are budgeted at 25,000 units for November;25,000 units for December; 24,000 for January; and 22,000 for February.

-Collections are expected to be 40% in the month of the sale; 59% in the month following the sale; and 1% uncollectible

-Each unit is sold for $11.00

-The company desires an ending finished goods inventory equal to 30% of the following months sales

-The November beginning balance in the accounts receivable account is $100,000 which is all expected to be collected in November

-The October finished goods ending inventory was 15,000 units

-It takes four feet of Material A to make one finished unit

-The cost of material A is $2.50 per foot

-The company wants to maintain monthly ending inventories of Material A equal to 20% of the following months production needs

-The October ending inventory of Material A was 22,000 feet

-25% of a months purchases are paid for during the month of the purchase;35% in the month following the sale; and the remainder is paid in the 2nd month following the purchase

-Accounts payable as of the end of October was $255,000. September purchases were $150,000 and October purchases were $260,000.

Prepare a sales budget and a schedule of expected cash collections for November and December. Prepare a production budget for November and December. Prepare a Direct materials budget and a schedule of expected cash disbursements for November and December.

Answer 1

Calculation Nov Dec Ballard Corporation Sales Budget Req 1 Sales (Units) Selling price per unit Total budgeted sales Nov 25,000 Dec 25,000 11 11 275,000 275,000 =25,000*11 =25,000*11 Dec Nov Dec Schedule of cash collections Req 1A Accounts Receivable Nov sales Dec sales Total collections Nov 100,000 110,000 =275,000*40% 162,250 110,000 272,250 = 275,000*59% =275,000*40% 210,000 Nov Dec Production budget Req 2A Budgeted Next Months Sales (Units) Ratio of inventory to future sales Budgeted Ending Inventory (Units) Budgeted Sales (Units) Inventory Needed Less Beginning Inventory Required Production (Units) =25,000*30% -24,000*30% -22,000*30% Nov 25,000 30% 7,500 25,000 32,500 15,000 17,500 Dec Jan 24,000 22,000 30% 30% 7,200 6,600 25,000 24,000 32,200 30,600 7,500 7,200 24,700 23,400 End Inv of Nov End Inv of Dec Nov Dec Nov 17,500 Dec 24,700 Jan 23,400 93,600 =23,400*4 Raw Materials budget Req 2B Required Production (Units) Materials required per unit Raw Material Required Add Ending Inventory Raw Materials Needed Less Beginning Inventory Raw Material Purchased Raw Material Cost per unit Budgeted Raw Material Cost =17,500*4 =98,800*20% =24,700*4 =93,600*20% 70,000 19,760 89,760 22,000 67,760 2.50 169,400 98,800 18,720 117,520 19,760 97,760 2.50 244,400 End Inv of Apr =67,760*2.50 =97,760*2.50 Dec Schedule of Cash disbursements Req 20 Sep Purchases Oct Purchases Nov Purchases Dec Purchases Total cash disbursements Nov 60,000 91,000 42,350 =150,000*40% = 260,000*35% =169,400*25% 104,000 59,290 61,100 224,390 =260,000*40% = 169,400*35% =244,400*25% 193,350