Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows:
Endless Mountain Company | ||||||
Balance Sheet | ||||||
December 31, 2016 | ||||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 46,200 | ||||
Accounts receivable (net) | 260,000 | |||||
Raw materials inventory (4,500 yards) | 11,250 | |||||
Finished goods inventory (1,500 units) | 32,250 | |||||
Total current assets | $ | 349,700 | ||||
Plant and equipment: | ||||||
Buildings and equipment | 900,000 | |||||
Accumulated depreciation | (292,000 | ) | ||||
Plant and equipment, net | 608,000 | |||||
Total assets | $ | 957,700 | ||||
Liabilities and Stockholders’ Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 158,000 | ||||
Stockholders’ equity: | ||||||
Common stock | $ | 419,800 | ||||
Retained earnings | 379,900 | |||||
Total stockholders’ equity | 799,700 | |||||
Total liabilities and stockholders’ equity | $ | 957,700 | ||||
The company’s chief financial officer (CFO), in consultation with various managers across the organization has developed the following set of assumptions to help create the 2017 budget:
QUESTIONS
1. Using the indirect method, calculate Endless Mountain Company’s estimated net cash provided by operating activities for 2017.
2. Prepare the company’s budgeted statement of cash flows for the year ended December 31, 2017.
Finished Goods Production Budget | |||||
Particluars | Q1 | Q2 | Q3 | Q4 | |
Budgeted Sales | 12,000 | 37,000 | 15,000 | 25,000 | |
Add: | Closing
Stock Level (15% of next Quarter Sales) |
5,550 | 2,250 | 3,750 | 1,950 |
Less : | Opening Stock | 1,500 | 5,550 | 2,250 | 3,750 |
Units to be produced | 16,050 | 33,700 | 16,500 | 23,200 |
Raw Material Procurement Budget | |||||
Particluars | Q1 | Q2 | Q3 | Q4 | |
Units to be produced | 16,050 | 33,700 | 16,500 | 23,200 | |
Material
Requirement ( 3.5 Yards per Unit) |
56,175 | 117,950 | 57,750 | 81,200 | |
Add: |
Closing Stock Level (10% of next quarter production needs) |
11,795 | 5,775 | 8,120 | 5,000 |
Less : | Opening Stock | 4,500 | 11,795 | 5,775 | 8,120 |
Material to be Purchased | 63,470 | 111,930 | 60,095 | 78,080 |
Labour Hours and Variable Manufacturing OH Budget | ||||
Particluars | Q1 | Q2 | Q3 | Q4 |
Units to be produced | 16,050 | 33,700 | 16,500 | 23,200 |
Labour
Hours Required ( 0.25 hours per unit) |
4,013 | 8,425 | 4,125 | 5,800 |
Labour Cost @$18 per hour | $ 72,225 | $ 151,650 | $ 74,250 | $ 104,400 |
Variable Manufacturing OH ( @ $3 per hour) |
$ 12,038 | $ 25,275 | $ 12,375 | $ 17,400 |
Particulars | Q1 | Q2 | Q3 | Q4 |
Sales ( Units) | 12,000 | 37,000 | 15,000 | 25,000 |
Budgeted Selling Price | $ 32 | $ 32 | $ 32 | $ 32 |
Budgeted Sales | $ 384,000 | $ 1,184,000 | $ 480,000 | $ 800,000 |
Cash Collection | ||||
Current Quarter | $ 288,000 | $ 96,000 | $ 296,000 | $ 120,000 |
Previous Quarter | $ 260,000 | $ 96,000 | $ 296,000 | $ 120,000 |
Cash Collection | $ 548,000 | $ 192,000 | $ 592,000 | $ 240,000 |
Material to be Purchased ( In Yards) | 63,470 | 111,930 | 60,095 | 78,080 |
Cost per Yard | $ 3 | $ 3 | $ 3 | $ 3 |
Purchases | $ 190,410 | $ 335,790 | $ 180,285 | $ 234,240 |
Paid in current quarter (70%) | $ 133,287 | $ 235,053 | $ 126,200 | $ 163,968 |
Paid in next Quarter (30%) | $ 158,000 | $ 57,123 | $ 100,737 | $ 54,086 |
$ 291,287 | $ 292,176 | $ 226,937 | $ 218,054 |
Cash Budget | |||||
Particulars | Q1 | Q2 | Q3 | Q4 | |
Opening Cash | $ 46,200 | $ 30,000 | $ 30,000 | $ 30,000 | |
Add : | Cash Collection ( Debtors) | $ 548,000 | $ 192,000 | $ 592,000 | $ 240,000 |
Borrowings | $ 80,350 | $ 579,761 | $ 14,115 | $ 405,330 | |
Total Cash Reciepts | $ 674,550 | $ 801,761 | $ 636,115 | $ 675,330 | |
Less : | Paid for Material Procurement | $ 291,287 | $ 292,176 | $ 226,937 | $ 218,054 |
Labour Cost | $ 72,225 | $ 151,650 | $ 74,250 | $ 104,400 | |
Variable Manufacturing OH | $ 12,038 | $ 25,275 | $ 12,375 | $ 17,400 | |
Variable Selling and Administrative Expenses | $ 15,000 | $ 46,250 | $ 18,750 | $ 31,250 | |
Fixed Manufacturing OH | $ 130,000 | $ 130,000 | $ 130,000 | $ 130,000 | |
Fixed Selling OH | $ 25,000 | $ 25,000 | $ 25,000 | $ 25,000 | |
Fixed Insurance Expenses | $ 12,000 | $ 12,000 | $ 12,000 | $ 12,000 | |
Property Tax | $ 8,000 | $ 8,000 | $ 8,000 | $ 8,000 | |
Executive Salaries | $ 64,000 | $ 64,000 | $ 64,000 | $ 64,000 | |
Dividends Paid | $ 15,000 | $ 15,000 | $ 15,000 | $ 15,000 | |
Interest Expense | $ - | $ 2,410 | $ 19,803 | $ 20,227 | |
Principal Repayment | |||||
$ 644,550 | $ 771,761 | $ 606,115 | $ 645,330 | ||
Closing Balance | $ 30,000 | $ 30,000 | $ 30,000 | $ 30,000 | |
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows: Endless Mountain Company Balance Sheet December 31, 2016 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2022 and reports a balance sheet at December 31, 2021 as follows: Endless Mountain Company Balance Sheet December 31, 2021 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500...
Required information [The following information applies to the questions displayed below.] Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows: Endless Mountain Company Balance Sheet December 31, 2016 Assets Current assets: Cash $ 46,200 Accounts receivable (net)...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout Northern England. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows:Endless Mountain Company Balance SheetDecember 31, 2016AssetsCurrent assets:Cash$ 46,200Accounts receivable (net)260,000Raw materials inventory (4,500 yards)11,250Finished goods inventory (1,500 units) 32,250 Total current assets$ 349,700Plant and equipment:Buildings and equipment900,000Accumulated depreciation (292,000) Plant and equipment, net 608,000 Total...
Required information (The following information applies to the questions displayed below.] Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows: $ 46,200 260,000 11,250 32,250 $349,700 Endless Mountain Company Balance Sheet December 31, 2016 Assets Current assets:...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2022 and reports a balance sheet at December 31, 2021 as follows:Endless Mountain CompanyBalance SheetDecember 31, 2021AssetsCurrent assets:Cash$46,200Accounts receivable (net)260,000Raw materials inventory (4,500 yards)11,250Finished goods inventory (1,500 units)32,250Total current assets$349,700Plant and equipment:Buildings and equipment900,000Accumulated depreciation(292,000)Plant and equipment, net608,000Total assets$957,700Liabilities and...
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