Question

Course Project: Master Budget Using Excel Milo-Freeze Company Description This course contains a Course Project, where...

Course Project: Master Budget

Using Excel

Milo-Freeze Company

Description

This course contains a Course Project, where you will be required to submit the final completed project at the end of Week 7. Using the budgeting assumptions provided for Milo-Freeze Company, you will prepare a sales budget, a production budget, a direct materials budget and a schedule of expected cash payments for purchases of materials. An Excel template will be provided and required to use to complete and submit.

Budgeting Assumptions

Milo-Freeze Company manufactures and sells a product that has seasonal variations in demand, with peak sales coming in the third quarter. The following information concerns operations for Year 2- the coming year- and for the first two quarters of Year 3:

  1. The company’s single product sells for $10 per unit. Budgeted sales in units for the next six quarters are as follows:

Year 2 Quarter

Year 3 Quarter

1

2

3

4

1

2

Budgeted unit sales

40,000

60,000

100,000

50,000

70,000

80,000

  1. Sales are collected in the following pattern: 75% in the quarter the sales are made, and the remaining 25% in the following quarter. On January 1, Year 2, the company’s balance sheet showed $65,000 in accounts receivable, all of which will be collected by the end of first quarter. Bad debts are negligible and can be ignored.
  2. The company desires an ending inventory of finished units on hand at the end of each quarter equal to 30% of the budgeted sales for the next quarter. On December 31, Year 1, the company had 12,000 units on hand.

  1. Six pounds of raw materials are required to complete one unit of product. The company requires an ending inventory of raw materials on hand at the end of each quarter equal to 10% of the production needs of the following quarter. On December 31, Year 1, the company had 23,000 pounds of raw materials on hand.

  1. The raw material costs $0.80 per pound. Purchases of raw material are paid for in the following pattern: 60% paid in the quarter the purchases are made, and the remaining 40% paid in the following quarter. On January 1, Year 2, the company’s balance sheet showed $81,500 in accounts payable for raw material purchases, all of which will be paid for in the first quarter of the year.

Overall Requirements

Prepare the following budgets and schedules for the year, showing both quarterly and total figures:

  1. A sales budget.
  2. A cash collections budget.
  3. A production budget.
  4. A direct materials budget.
  5. Cash payments for purchases of materials schedule.

Your final project should be completed and submitted as an Excel file.

Grade Information

The entire project will be graded by the instructor at the end of the final submission in Week 7, and one grade will be assigned for the entire project. The project will count for 20% of your overall course grade.

Category

Points

%

Description

Sales Budget

40

20.0%

A quality sales budget report will have correct calculations of sales. Supporting calculations must be shown, either as a formula, or as text typed into a different cell.

Cash Collections Budget

40

20.0%

A quality cash collections report will have correct calculations of cash collected on credit sales. Supporting calculations must be shown, either as a formula, or as text typed into a different cell.

Production Budget

40

20.0%

A quality production report will have correct calculations of how many units are required to produce. Supporting calculations must be shown, either as a formula, or as text typed into a different cell.

Direct Materials Budget

40

20.0%

A quality direct materials report will have correct calculations of the materials to be purchased. Supporting calculations must be shown, either as a formula, or as text typed into a different cell.

Cash Payments for Purchases

40

20.0%

A quality cash payments report will have correct calculations representing the cash disbursements for purchases. Supporting calculations must be shown, either as a formula, or as text typed into a different cell.

Total

200

100.0%

A quality report will meet or exceed all of the above requirements.

0 0
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Answer #1
Milo-Freeze Company
Sales Budget Selling Price = $10 per unit
Year 2 Quarter Year 3 Quarter Remarks
1 2 3 4 Total 1 2 Total
Budgeted Unit Sales 40000 60000 100000 50000 250000 70000 80000 150000 Given in the Question
Budgeted Dollar value in Sales $ 400,000.00 $ 600,000.00 $ 1,000,000.00 $ 500,000.00 ############ $ 700,000.00 $ 800,000.00 $1,500,000.00 The Sales value is arrived at by multiplying the Budget Sales unit by the Selling Price Per Unit.
Milo-Freeze Company
Cash Collection Budget
Year 2 Quarter Year 3 Quarter Remarks
1 2 3 4 Total 1 2 Total
Cash Collected from Accounts Receivable $   65,000.00 $ 100,000.00 $    150,000.00 $ 250,000.00 $ 565,000.00 $ 125,000.00 $ 175,000.00 $1,115,000.00 For Qtr 1 the closing balance of accounts receivable is given. For remaining Quarters this is equal to 25% of the Projected Sales of the Previous Quarter
Cash Collected from Quarter Sales $ 300,000.00 $ 450,000.00 $    750,000.00 $ 375,000.00 ############ $ 525,000.00 $ 600,000.00 $3,375,000.00 This is 75% of the Projected Sales for the given Quarter. The Information states to Ingnore the Baddebts.
Total Cash Colleced $ 365,000.00 $ 550,000.00 $    900,000.00 $ 625,000.00 ############ $ 650,000.00 $ 775,000.00 $4,490,000.00
Milo-Freeze Company
Production Budget
Year 2 Quarter Year 3 Quarter Remarks
1 2 3 4 Total 1 2 Total
Budgeted Unit Sales 40000 60000 100000 50000 250000 70000 80000 150000 Given in the Question
Planned Ending Units of Inventory 18000 30000 15000 21000 84000 24000 24000 This equal to 30% of the Projected Sales of the next Quarter
Total Production 58000 90000 115000 71000 334000 94000 80000 174000 Sum total of Budgeted Sales Unit and Planned Ending Units of Inventory.
Beginning Inventory of Finished Goods 12000 18000 30000 15000 75000 21000 24000 45000 Closing Inventory of Last year is taken as the Opening Inventory of Qyarter 1. And the Closing Inventory of the Previous Quarter is taken as the beginning Inventory of Finished Goods.
Units to be Produced 46000 72000 85000 56000 259000 73000 56000 129000
Milo-Freeze Company
Direct Material Budget
Year 2 Quarter Year 3 Quarter Remarks
1 2 3 4 Total 1 2 Total
Units to be Produced (from Production Budget) 46000 72000 85000 56000 259000 73000 56000 129000 Values Taken from Production Budget
Direct Material Per Unit (lbs) 6 6 6 6 6 6 Information Given in Question
Total Direct Material needed for Production (lbs) 276000 432000 510000 336000 1554000 438000 336000 774000 Units to be Produced multiply by direct material required per Unit for production.
Add: Desired ending Direct Material (lbs) 43200 51000 33600 43800 171600 33600 33600 10% of the Production Needs of the Next Quarter.
Less: Beginning Direct Material (lbs) 23000 43200 51000 33600 150800 43800 33600 77400 Closing Inventory of Last year is taken as the Beginning Inventory for Quarter 1. For the remaining, the closing units for previous quarter serves as the opening units for the following Quarter.
Direct Material Purchases (lbs) 296200 439800 492600 346200 1574800 427800 302400 730200 (Total Direct Material neede for Production) + (Desired ending Direct Material) - (Beginning Direct Material)
Cost per Unit $          0.80 $          0.80 $             0.80 $          0.80 $          0.80 $          0.80 Information Given in Question
Cost of Direct Material Purchases $ 236,960.00 $ 351,840.00 $    394,080.00 $ 276,960.00 ############ $ 342,240.00 $ 241,920.00 $   584,160.00 Direct Material Purchases multiply by Material Cost per Unit.
Milo-Freeze Company
Cash Payments for Purchase of Material schedule
Year 2 Quarter Year 3 Quarter Remarks
1 2 3 4 Total 1 2 Total
Cost of Direct Material Purchases $ 236,960.00 $ 351,840.00 $    394,080.00 $ 276,960.00 ############ $ 342,240.00 $ 241,920.00 $   584,160.00 Values from Direct Material Budget
Cash Payments for the Direct Materials purchased for the Quarter $ 142,176.00 $ 211,104.00 $    236,448.00 $ 166,176.00 $ 755,904.00 $ 205,344.00 $ 145,152.00 $   350,496.00 60% of the Value of Direct Material Purchases for the Quarter.
Cash Payments for the Direct Materials purchased for the Previous Quarter $   81,500.00 $   94,784.00 $    140,736.00 $ 157,632.00 $ 474,652.00 $   66,470.40 $ 136,896.00 $   203,366.40 40% of the Value of Direct Material Purchases for the Previous Quarter. Accounts Payable for the Beginning of Quarter 1 is given in the Question.
Total Cash Payments for Purchase of Material $ 223,676.00 $ 305,888.00 $    377,184.00 $ 323,808.00 ############ $ 271,814.40 $ 282,048.00 $   553,862.40 Total of Cash Payments
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