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:
Fourth-quarter sales for 20X0 are 55,000 units.
Unit sales by quarter (for 20X1) are projected as follows:
First quarter | 65,000 | ||
Second quarter | 70,000 | ||
Third quarter | 75,000 | ||
Fourth quarter | 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.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 |
Each mass-storage unit uses 5 hours of direct labor and three units of direct materials. Laborers are paid $10 per hour, and one unit of direct materials costs $80.
There are 65,700 units of direct materials in beginning inventory as of January 1, 20X1. At the end of each quarter, Optima plans to have 30% of the direct materials needed for next quarter's unit sales. Optima will end the year with the same amount of direct materials found in this year's beginning inventory.
Optima buys direct materials on account. Half of the purchases are paid for in the quarter of acquisition, and the remaining half are paid for in the following quarter. Wages and salaries are paid on the 15th and 30th of each month.
Fixed overhead totals $1 million each quarter. Of this total, $350,000 represents depreciation. All other fixed expenses are paid for in cash in the quarter incurred. The fixed overhead rate is computed by dividing the year's total fixed overhead by the year's budgeted production in units.
Variable overhead is budgeted at $6 per direct labor hour. All variable overhead expenses are paid for in the quarter incurred.
Fixed selling and administrative expenses total $250,000 per quarter, including $50,000 depreciation.
Variable selling and administrative expenses are budgeted at $10 per unit sold. All selling and administrative expenses are paid for in the quarter incurred.
The balance sheet as of December 31, 20X0, is as follows:
Assets | |||
Cash | $ 250,000 | ||
Direct materials inventory | 5,256,000 | ||
Accounts receivable | 3,300,000 | ||
Plant and equipment, net | 33,500,000 | ||
Total assets | $42,306,000 |
Liabilities and Stockholders’ Equity | |||
Accounts payable | $ 7,248,000* | ||
Capital stock | 27,000,000 | ||
Retained earnings | 8,058,000 | ||
Total liabilities and stockholders’ equity | $42,306,000 | ||
* For purchase of direct materials only. |
Optima will pay quarterly dividends of $300,000. At the end of the fourth quarter, $2 million of equipment will be purchased.
*Please complete Schedule 6 through 9 using the previous parts completed.* REVIEW THE CHECK FIGURES INDICATED ON THE SELLING AND ADMINISTRATIVE EXPENSE BUDGET AND ENDING FINISHED GOODS INVENTORY BUDGET FOR ACCURACY!
Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
6.Selling Expense Budget: | |||||||
Q1 | Q2 | Q3 | Q4 | Total | |||
Sales planned units | 65,000 | 70,000 | 75,000 | 90,000 | 300,000 | ||
Variable Selling expense | $ 10.0 | $ 10.0 | $ 10.0 | $ 10.0 | $ 10.0 | ||
Total Variable Expense | $ 650,000 | $ 700,000 | $ 750,000 | $ 900,000 | $ 3,000,000 | ||
Fixed Expense | $ 250,000 | $ 250,000 | $ 250,000 | $ 250,000 | $ 1,000,000 | ||
Total Budgeted Selling Expense | $ 900,000 | $ 950,000 | $ 1,000,000 | $ 1,150,000 | $ 4,000,000 | ||
7. Ending finished goods inventory budget: | |||||||
Unit cost computation: | |||||||
Direct material | 3*$80 | 240.00 | |||||
Direct Labor | 5*$10 | 50.00 | |||||
Overhead: | |||||||
Variable Overhead | $9,300,000/310,000 | 30.00 | |||||
Fixed Overhead | $4,000,000/310,000 | 12.90 | |||||
Total cost per unit of finished goods | 332.90 | ||||||
Total Finished goods inventory | $332.90*10,000 | $ 3,329,000 | |||||
8. Cost of Goods Sold Budget | |||||||
Direct Material used | 930,000*$80 | $ 74,400,000 | |||||
Direct Labor used | $ 15,500,000 | ||||||
Overhead | $ 13,300,000 | ||||||
Budgeted manufacturing cost | $ 103,200,000 | ||||||
Add: Beginning Invnetory of Finished goods | $ - | ||||||
Cost of goods available for sale | $ 103,200,000 | ||||||
Less: Ending inventory of finished goods | $ (3,329,000) | ||||||
Budgeted Cost of goods sold | $ 99,871,000 | ||||||
9. Cash Budget: | |||||||
Q1 | Q2 | Q3 | Q4 | Total | |||
Beginning Balance | $ 250,000 | $ 4,938,000 | $ 10,376,000 | $ 17,248,000 | $ 250,000 | ||
Collections: | |||||||
Credit Sales: | |||||||
Current quarter | $ 22,100,000 | $ 23,800,000 | $ 25,500,000 | $ 30,600,000 | $ 102,000,000 | ||
Prior quarter | $ 3,300,000 | $ 3,900,000 | $ 4,200,000 | $ 4,500,000 | $ 15,900,000 | ||
Cash Available | $ 25,650,000 | $ 32,638,000 | $ 40,076,000 | $ 52,348,000 | $ 118,150,000 | ||
Less: Disbursment | |||||||
Direct Materials: | |||||||
Current quarter | |||||||
Prior quarter | $ 9,324,000 | $ 8,928,000 | $ 9,600,000 | $ 9,348,000 | $ 37,200,000 | ||
Direct Labor | $ 7,248,000 | $ 9,324,000 | $ 8,928,000 | $ 9,600,000 | $ 35,100,000 | ||
Overheads | Excluding Depreciation | $ 2,990,000 | $ 2,810,000 | $ 3,050,000 | $ 3,050,000 | $ 11,900,000 | |
Selling and Admin | Excluding Depreciation | $ 850,000 | $ 900,000 | $ 950,000 | $ 1,100,000 | $ 3,800,000 | |
Dividends | $ 300,000 | $ 300,000 | $ 300,000 | $ 300,000 | $ 1,200,000 | ||
Equipment | $ 2,000,000 | $ 2,000,000 | |||||
Total Cash Needs | $ 20,712,000 | $ 22,262,000 | $ 22,828,000 | $ 25,398,000 | $ 91,200,000 | ||
Ending Cash Balance | $ 4,938,000 | $ 10,376,000 | $ 17,248,000 | $ 26,950,000 | $ 26,950,000 |
Optima Company is a high-technology organization that produces a mass-storage system. The design of Optima's system...
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...
01. 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...
Optima Company is a high-technology organisation 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 (2017). The budget will detail each quarter's activity and the activity for the year in total. The master budget will be...
02. 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...
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...
11. 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...
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...
Having issues with 6,7,and 8 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...
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...
SelfKlin Company is a high-technology organisation that produces Robotic Vacuum. The company is completing its tenth year of operations and is preparing to build its master budget for the coming year (2019). 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 2018 are 65 000 units. b Unit sales by quarter (for 2019) are projected as follows: First quarter 65...