Question

Dana Ruapla Kanisha Patel AC 204 Introduction to Accounting CHAPTER 8: MASTER BUDGETING IN-CLASS PRACTICE PROBLEM SALES BUDGET TO MANUFACTURING OVERHEAD BUDGET SCHEDULES 1-10) The following information pertains to the budgeting process for Tulip, Inc. SALES Tulip In Bellone type of decorative basket for $25 per basket. Based on various ses forecasting models Tulpects to sell 11. 000 units in quarter 1, 10,000 in quarter 2. 12.000 in quarter and 9.000 in quarter The beginning accounts recevable balance was $5,000. Assuming sales are made on credit of the quarterly sales are collected in that are the remaining are collected in the following quarter PRODUCTION (UNITS Tu would like for ending inventory for each quarter to be 15 of the following are's sales Beginning of varietary included its Assume desired inventory at the end of the year 1.600 units DIRECT MATERIALS Tulip needs pounds of material for each basket produced Each pound of material costs $250 Ending raw material inventory should equal of the following quarter's production Be g r a te inventory is 900 pounds Desired end-of-year inventory is 1.000 pounds Begin accounts payable is $37.000 for purchases, assume Soare paid for the same are purchase, we paid for in the following Quarter DIRECTLABOR Direct labor hours per Direct labor cost per hour $15. MANUFACTURINGLOVERHEAD Based on estimates and research the variable overhead rate is 52 per hour Total fixed manufacturing overhead is $104,000. Assume this is spread evenly over the four quarters Depreciation on all factory assets - $41.000. ENDWNG FINISHED GOODS INVENTORY BUDGET See Tulip's previous budget schedules for information needed to prepare this schedule SELLING AND ADMINISTRATIVE EXPENSE BUDGET O Tulip estimates that the variable selling and administrative expenses will be $1.85 per unit. The following fired expenses were provided by Tulip's various departments: advertising $85,000 salaries $102,000; Insurance $41.000, legal and professional fees $19.000; taxes $48.000; depreciation $26.000 CASH BUDGET Tulip's cash policy requires a minimum cach balance of $25,000 Per a loan agreement with the local bank, Tulip must pay 4% per quarter interest on any borrowings. Assume that borrowings occur on the first day of the period and repayments occur on the last day of the period. Borrowings must be made in $1,000 increments, and interest is paid when the loan repayments are made. The cash balance at the beginning of the year was 584,000 Tulip is expecting to purchase new machinery costing $135,000 in the second quarter Tulip is expecting to pay dividends of $25.000 in the fourth quarter BUDGETED INCOME STATEMENT See Tulip's previous budget schedules for information needed to prepare this schedule. BUDGETED BALANCE SHEET Beginning Buildings & Equipment - $490,000, Beginning Accumulated Depreciation = $275.000 (assume no foxed assets were sold) Common stock balance is $40,000 this did not change throughout the year) Beginning of year retained earnings $291,139 BASED ON THE ABOVE BUDGETING ASSUMPTIONS, PREPARE THE FOLLOWING: 1. SALES BUDGET 2. PRODUCTION BUDGET 3. DIRECT MATERIALS BUDGET 4. DIRECT LABOR BUDGET 5. MANUFACTURING OVERHEAD BUDGET 6. ENDING FINISHED GOODS INVENTORY BUDGET 7. SELLING AND ADMINISTRATIVE EXPENSE BUDGET 8. CASH BUDGET 9. BUDGETED INCOME STATEMENT 10. BUDGETED BALANCE SHEET

Answer 1

1.

Sales Budget
	1st	2nd	3rd	4th	Year
Budgeted unit sales	11000	10000	12000	9000	42000
Sale price per unit	$             25.00	$             25.00	$             25.00	$             25.00	$                25.00
Budgeted sales	$ 2,75,000.00	$ 2,50,000.00	$ 3,00,000.00	$ 2,25,000.00	$ 10,50,000.00
Expected cash collection
	1st	2nd	3rd	4th	Year
Accounts Receivable	$     58,000.00				$       58,000.00
First quarter sales	$ 2,06,250.00	$     68,750.00			$    2,75,000.00
Second quarter sales		$ 1,87,500.00	$     62,500.00		$    2,50,000.00
Third quarter sales			$ 2,25,000.00	$     75,000.00	$    3,00,000.00
Forth quarter sales				$ 1,68,750.00	$    1,68,750.00
Total	$ 2,64,250.00	$ 2,56,250.00	$ 2,87,500.00	$ 2,43,750.00	$ 10,51,750.00

2.

Production Budget
	1st	2nd	3rd	4th	Year
Budgeted sales units	11000	10000	12000	9000	42000
Add: Closing inventory	1500	1800	1350	1600	1600
Required units	12500	11800	13350	10600	43600
Less: Beginning Inventory	700	1500	1800	1350	700
Budgeted Production units	11800	10300	11550	9250	42900

3.

Direct Material Budget
	1st	2nd	3rd	4th	Year
Units to be produced	11800	10300	11550	9250	42900
Material reguired for each unit	0.5	0.5	0.5	0.5	0.5
Total material required for prooduction	5900	5150	5775	4625	21450
Ending raw material inventory	515	577.5	462.5	1000	1000
Less: Beginning Raw material	900	515	577.5	462.5	900
Raw material purchases required	5515	5212.5	5660	5162.5	21550
Cost per pound	$               2.60	$               2.60	$               2.60	$               2.60	$                  2.60
Total cost of raw material purchases	$     14,339.00	$     13,552.50	$     14,716.00	$     13,422.50	$       56,030.00
Expected Cash payments - Raw Materials
	1st	2nd	3rd	4th	Year
beginning accounts payable	$     37,000.00				$       37,000.00
First quarter purchases	$       7,169.50	$       7,169.50			$       14,339.00
Second quarter purchases		$       6,776.25	$       6,776.25		$       13,552.50
Third quarter purchases			$       7,358.00	$       7,358.00	$       14,716.00
Forth quarter purchases				$       6,711.25	$          6,711.25
Total cash payments	$     44,169.50	$     13,945.75	$     14,134.25	$     14,069.25	$       86,318.75

4.

Direct Labor Budget
	1st	2nd	3rd	4th	Year
Units to be produced	11800	10300	11550	9250	42900
Labor hour required per unit	0.5	0.5	0.5	0.5	0.5
Total labor hours required	5900	5150	5775	4625	21450
Labor cost per hour	$             15.00	$             15.00	$             15.00	$             15.00	$                15.00
Total labor cost	$     88,500.00	$     77,250.00	$     86,625.00	$     69,375.00	$    3,21,750.00

As per HOMEWORKLIB POLICY only first four parts are required to be solve.