Question

Having issues with 9,10,11

Problem 9-73 Understanding Relationships, Master Budget, Comprehensive Review Optima Company is a high-technology organization that produces a mass-storage system. The design of Optima's system is unique and represents a breakthrough in the industry. The units Optima produces combine positive features of both compact and hard disks. The company is completing its fifth year of operations and is preparing to build its master budget for the coming year (20X1). The budget will detail each quarter's activity and the activity for the year in total. The master budget will be based on the following information: a. Fourth-quarter sales for 20X0 are 55,000 units. b. Unit sales by quarter (for 20X1) are projected as follows: First quarter Second quarter Third quarter Fourth quarter 65,000 70,000 75.000 90,000 The selling price is $400 per unit. All sales are credit sales. Optima collects 85% of all sales within the quarter in which they are realized; the other 15% is collected in the following quarter. There are no bad debts. c. There is no beginning inventory of finished goods. Optima is planning the following ending finished goods inventories for each quarter: First quarter 13,000 units Second quarter 15.000 units Third quarter 20,000 units Fourth quarter 10,000 units (Continued)

Answer 1

Entire answer is given below to understand the flow of budgets and do Income statement and Balance Sheet.

Schedule 1 Sales Budget | Sales units Selling price Sales value Quarter 65,000 $400 $26,000,000 Quarter II | Quarter III Quarter IV Full year 70,000 75,000 90,000 300,000 $400 $400 $400 $28,000,000 $30,000,000 $36,000,000 $120,000,000 $400 Schedule of Cash collected from Customers Quarter | Quarter II Quarter III Quarter IV Full year $22,100,000 $3,900,000 $23,800,000 Collection from Customers Quarter Quarter 11 Quarter III Quarter IV Opening Accounts Receivable Cash received from Debtors $26,000,000 $4,200,000 $28,000,000 $25,500,000 $4,500,000 $30,000,000 $30,600,000 $30,600,000 $3,300,000 $29,700,000 $35,100,000 $117,900,000 $3,300,000 $25,400,000 $27,700,000 Schedule 2 Production Budget - Units Budgeted Unit sales Add: Desired Closing inventory Total Needs Less Opening Stock Total Production in units Quarter 65,000 13,000 78,000 Quarter II 70,000 15,000 85,000 13,000 72,000 Quarter III 75,000 20,000 95,000 15,000 80,000 Quarter IV 90,000 10,000 100,000 20,000 80,000 Full year 300,000 10,000 310,000 78,000 310,000 Schedule 3 Direct Material Purchase Budget Quarter Quarter II Quarter III Quarter IV Full year Units needed per unit of output Units needed for production Production X 3) Add: Desired Closing inventory 234,000 64,800 298,800 65,700 233,100 $80 $18,648,000 216,000 72,000 288,000 64,800 223,200 Less Opening Stock Total Purchase Budget Purchase Price per unit Purchase value budget 240,000 240,000 930,000 72,000 65,700 65,700 312,000 305,700 995,700 72,000 72,000 65,700 240,000 233,700 930,000 $80 $80 $19,200,000 $18,696,000 $74,400,000 $80 $80 $17,856,000 Schedule of Cash payment for purchases Quarter $18,648,000 Quarter II $17,856,000 Quarter III Quarter IV $19,200,000 $18,696,000 Full year $74,400,000 $9,324,000 $9,324,000 $8,928,000 Purchases Payment Quarter I purchase Quarter II purchase Quarter III purchase Quarter IV purchase Opening Accounts Payable balance Total payment for purchases $8,928,000 $9,600,000 $9,600,000 $9,348,000 $18,648,000 $17,856,000 $19,200,000 $9,348,000 $7,248,000 $72,300,000 $7,248,000 $16,572,000 $18,252,000 $18,528,000 $18,948,000 Schedule 4 Direct Labor Budget Production units Direct labor hour per unit Total Direct labor hours Direct Labor rate per hour Total Direct Labor cost Budget Quarter 78,000 5.00 390,000 $10 $3,900,000 Quarter II 72,000 5.00 360,000 Quarter III 80,000 5.00 400,000 $10 $4,000,000 Quarter IV 80,000 5.00 400,000 Full year 310,000 5.00 1,550,000 $10 $15,500,000 $10 $10/ $3,600,000 $4,000,000 Schedule 5 Manufacturing Overhead budget Variable Overhead - $6 per Direct labor hour Fixed Manufacturing Overhead - Cash Total Manufacturing Overhead paid in cash Depreciation Total Manufacturing overhead budget Quarter $2,340,000 $650,000 $2,990,000 $350,000 $3,340,000 Quarter 11 $2,160,000 $650,000 $2,810,000 $350,000 $3,160,000 Quarter III Quarter IV $2,400,000 $2,400,000 $650,000 $650,000 $3,050,000 $3,050,000 $350,000 $350,000 $3,400,000 $3,400,000 Full year $9,300,000 $2,600,000 $11,900,000 $1,400,000 $13,300,000 Schedule 6 Selling and Administration Expense Budget Variable Selling Expense Fixed Selling expenses Total S & A Overhead paid in Cash Depreciation Total Selling and administration Expense Budget Quarter $650,000 $200,000 $850,000 $50,000 $900,000 Quarter II $700,000 $200,000 $900,000 $50,000 $950,000 Quarter III Quarter IV $750,000 $900,000 $200,000 $200,000 $950,000 $1,100,000 $50,000 $50,000 $1,000,000 $1,150,000 Full year $3,000,000 $800,000 $3,800,000 $200,000 $4,000,000 $240.00(80*$3) $50.00 (5*$10) Schedule 7 Unit Cost Computation Direct Material Direct Labor Overhead Variable Overhead Fixed Overhead Total cost per unit of Finished Goods Finished goods inventory units Total cost of Finished Goods Inventory $30.00 (5*$6) $12.90 ($4,000,000/310,000) $332.90 10,000 $3,329,032 Schedule 8 Cost of Goods Sold Budget Direct Material used Direct Labor used Overhead Budgeted Manufacturing Cost Add: Beginning finished goods inventory Cost of Goods available for Sale Less: Ending Finished Goods inventory Budgeted Cost of Goods Sold $74,400,000 (310,000*$240) $15,500,000 (310,000*$50) $13,300,000 (310,000*$30) +$4,000,000 $103,200,000 $103,200,000 $3,329,032 As calculated above $99,870,968 Schedule 9 Cash Budget Quarter $250,000 Quarter II $1,038,000 Quarter III $2,876,000 Quarter IV $5,748,000 Total $250,000 Beginning balance Collections Credit sales Current Quarter Prior Quarter $22,100,000 $3,300,000 $23,800,000 $3,900,000 $25,500,000 $30,600,000 $102,000,000 $4,200,000 $4,500,000 $15,900,000 $25,650,000 $28,738,000 $32,576,000 $40,848,000 $118,150,000 Cash available for disbursement Cash disbursements Direct Material Current Quarter Prior Quarter Direct Labor Manufacturing overhead Selling and administration expenses Equipment purchase Dividends Cash paid for disbursements Ending cash balance $9,324,000 $7,248,000 $3,900,000 $2,990,000 $850,000 $8,928,000 $9,324,000 $3,600,000 $2,810,000 $900,000 $9,600,000 $9,348,000 $37,200,000 $8,928,000 $9,600,000 $35,100,000 $4,000,000 $4,000,000 $15,500,000 $3,050,000 $3,050,000 $11,900,000 $950,000 $1,100,000 $3,800,000 $2,000,000 $2,000,000 $300,000 $300,000 $1,200,000 $26,828,000 $29,398,000 $106,700,000 $5,748,000 $11,450,000 $11,450,000 $300,000 $24,612,000 $1,038,000 $300,000 $25,862,000 $2,876,000 $120,000,000 Optima Company Budgeted Income Statement For the Year Ended December 31, 20X1 Sales Less: Cost of Goods sold Cost of Goods sold Gross Profit Selling and administration expenses Operating Income $99,870,968 $20,129,032 $4,000,000 $16,129,032 Optima Company Budgeted Balance Sheet For the Year Ended December 31, 20X1 Assets Current Assets Cash Accounts receivable Raw Material Inventory Finished Goods Inventory Fixed Assets Plant and Equipment Add: Purchases $11,450,000 $5,400,000 $5,256,000 $3,329,032 $25,435,032 $33,500,000 $2,000,000 $35,500,000 -$1,600,000 $33,900,000 $59,335,032 Less :Accumulated Depreciation Total Assets Liabilities and Stockholders' Equity Current liabilities Accounts payable $9,348,000 Stockholders' equity Common stock Retained earnings Total Liabilities and Stockholders' Equity $27,000,000 $22,987,032 $59,335,032 Budgeted Statement of Retained Earnings Retained earnings Add: Net profit Less: Dividend paid Closing balance of Retained earnings $8,058,000 $16,129,032 -$1,200,000 $22,987,032 Accounts receivable closing balance Opening Balance Add : Sales Less: Collection Closing Balance $3,300,000 $120,000,000 -$117,900,000 $5,400,000 Accounts payable closing balance Opening Balance Add: Purchases Less: Payment Closing Balance $7,248,000 $74,400,000 -$72,300,000 $9,348,000