Question

URLUuuy PIUDICT V2 Rand Co., a new startup business, is preparing budgets for the first quarter 2020 ending March 31. • Budgeted sales of the company's only product for the next five months are: January February March April May 9,100 units 5,000 units 6,600 units 4,100 units 4,600 units • The selling price is $85 per unit. Prepare the following elements of the master budget for this problem: 1. Sales budget (with a schedule of expected cash collections). 2. Production budget. 3. Direct materials budget (with a schedule of expected cash disbursements for materials). Direct labor budget. Manufacturing overhead budget. Ending finished goods inventory budget. Selling and administrative expense budget. Cash budget. 9. Budgeted income statement. 10. Budgeted balance sheet. 4.

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Answer 1

Answer with working is given below

1. Sales Budget Budgeted Units Budgeted Selling price Budgeted Sales (value) | January 9,100 $85.00 $773,500 February 5,000 $85.00 $425,000 March Quarter 6,600 20,700 $85.00 $85.00 $561,000 $1,759,500 Expected Cash Collection | January February March Quarter $464,100 Credit Sales January Sales February Sales March Sales Total Cash Collections $309,400 $255,000 $773,500 $170,000 $425,000 $336,600 $336,600 $506,600 $1,535,100 $464,100 $564,400 Production Budget January February 9,100 5,000 750 9,850 Sales Add: Closing inventory Total Needs Less: Opening Inventory Production Budget Closing stock of month will be opening stock of next month 990 5,990 7501 5,240 March 6,600 615 7,215 9901 6,225 Quarter 20,700 615 21,315 0 0 2 1,315 April 4,100 690 4,790 615 4,175 OM 9,850 3. Raw material purchase Budget 8.2 Production Budget Raw material needed per unit | Raw material needed for production Add: Closing inventory Total Needs Less: Opening Inventory Purchase Budget (Units) Purchase cost per pound Total purchase cost of Material January 9,850 8.2 80,770 8,594 89,364 February 5,240 8.2 42,968 10,209 53,177 8,594 44,583 $0.62 $27,642 March 6,225 8.2 51,045 6,847 57,892 10,209 47,683 $0.62 $29,563 Quarter | April 21,315 4,175 8.2 174,783 34,235 6,847 181,630 0 89,364 $0.62 $55,405 181,630 $0.62 $112,611 Expected Cash disbursements for Materials Purchases March January $36,014 February $19,392 $17,967 January Purchase February Purchase March Purchase Total purchase payment to Vendors $9,675 $19,216 $28,891 Quarter $55,405 $27,642 $19,216 $102,263 $36,014 $37,359 4. Direct Labor cost Budget February 5,240 March 6,225 0.92 0.92 Production units Direct labor hours per unit Total Direct labor hours needed Direct labor hour rate Total Direct Labor cost January 9,850 0.92 9,062 $10.50 $95,151 Quarter 21,315 0.92 19,610 $10.50 $205,903 5,7271 4,821 $10.50 $50,618 $10.50 $60,134 Manufacturing Overhead Budget Variable Manufacturing Overhead Budget Fixed Manufacturing Overhead Total manufacturing Overhead in cash Depreciation Total Manufacturing Overhead Budget January $30,811 $114,500 $145,311 $6,500 $151,811 February $16,391 $114,500 $130,891 $6,500 $137,391 March $19,472 $114,500 $133,972 $6,500 $140,472 Quarter $66,673 $343,500 $410,173 $19,500 $429,673 6. Ending Finished Goods Budget Direct Material Consumed Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Total Manufacturing Cost Closing Inventory (Units) Closing Inventory Value (Units * Unit Cost) Cost per Unit $5.08 $9.66 $3.13 $17.03 $34.90 Total Cost $108,365 $205,903 $66,673 $363,000 $743,942 615.00 $21,465 Fixed Cost is $363,000 allocated based on Direct Labor hours - $18.51 per Direct Labor hour $18.51 0.92 hours per unit Selling and administrative Budget Variable Selling and administration Overhead Fixed Selling and administration Overhead Total Selling and admn overhead in cash Depreciation Total Selling and admn overhead January $23,660 $91,000 $114,660 $12,000 $126,660 February $13,000 $91,000 $104,000 $12,000 $116,000 March $17,160 $91,000 $108,160 $12,000 $120,160 Quarter $53,820 $273,000 $326,820 $36,000 $362,820 8. January $18,000 $464,100 $482,100 February $30,965 $564,400 $595,365 March Quarter $30,497 $18,000 $506,600 $1,535,100 $537,097 $1,553,100 Cash Budget Opening Balance Add: cash collections Total cash available Less: cash disbursements For inventory purchase For Direct Labor For Manufacturing Overhead For selling and administrative expense excluding depreciation Purchase of Equipment Dividend Total cash disbursement Excess (deficiency of) of cash available over disbursements Financing Borrowings Repayments Interest (at 16% per annum) Total financing Closing Cash Balance $36,014 $95,151 $145,311 $114,660 $87,000 $37,359 $50,618 $130,891 $104,000 $336,000 $18,000 $676,868 $81,503 $28,891 $102,263 $60,134 $205,903 $133,972 $410,173 $108,160 $326,820 $423,000 $18,000 $331,156 $1,486,160 $205,940 $66,940 $478,135 $3,965 $27,000 $112,000 $139,000 $139,000 - $139,000 -$4,067 - $4,067 $143,067 $4,067 $62,874 $62,874 $27,000 $30,965 $112,000 $30,497 Interest on short term borrowing @ 16% per annum Month Borrowing interest January $27,000 $1,080 Interest for 3 month February $112,000 $2,987 Interest for 2 month $4,067

Budgeted Income Statement for March 31st Absorption costing Format Sales Les: Cost of Goods Sold $1,759,500 Direct Material Consumed Direct Labor Manufacturing Overhead Goods available for Sale Less: Closing Stock - 615 units Cost of Goods sold $108,365 $205,903 $429,673 $743,942 $21,465 $722,477 $1,037,023 Gross Margin Less: Operating expenses Selling and administrative expense Interest on Short term borrowing Net Operating Income $362,820 $4,067 $670,137 Budgeted Balance Sheet for March 31st Assets Current Assets Cash Accounts receivable Raw Material Inventory Finished Goods Inventory $62,874 $224,400 $4,245 $21,465 $312,984 $300,000 Fixed Assets Land Equipment Add : Additions $162,000 $423,000 $585,000 $55,500 Less: Depreciation during the Quarter $529,500 $1,142,484 $10,347 Total Assets Liabilities and Stockholders' Equity Current Liabilities Accounts payable Stockholders' Equity Common stock Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity $480,000 $652,137 $1,132,137 $1,142,484 Retained Earnings balance Opening balance Add: Net profit Less: Dividend paid Closing balance of Retained earnings $670,137 $18,000 $652,137