Introduction to Management Accounting Solutions Manual

WASATCH MANUFACTURING
Master Budget

Sales Budget
December January February
Unit sales 5,067 5,340 5,940
Unit selling price $ 15 $ 15 $ 15
Total sales Revenue $ 76,000 $ 80,100 $ 89,100

Req. 1

Cash Collections Budget

January February March
Cash sales $24,030 $26,730 $24,840
Credit sales $ 56,070 $ 62,370 $ 57,960
Total collections $80,100 $89,100 $82,800

Req. 2

Production Budget
January February March
Unit sales 5,340 5,940 5,520
Plus: Desired ending inventory 594 552 570
Total needed 5,934 6,492 6,090
Less: Beginning inventory 534 594 552
Units to produce 5,400 5,898 5,538

Req. 3

Direct Materials Budget

January February March
Units to be produced 5,400 5,898 5,538
Multiply by: Quantity of DM needed per unit 2 2 2
Quantity of DM needed for production 10,800 11,796 11,076
Plus: Desired ending inventory of DM 2,359 2,215 2,258
Total quantity of DM needed 13,159 14,011 13,334
Less: Beginning inventory of DM 2,160 2,359 2,215
Quantity of DM to purchase 10,999 11,652 11,119
Multiply by: Cost per pound $ 1.50 $ 1.50 $ 1.50
Total cost of DM purchases $16,499 $17,478 $16,679

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Introduction to Management Accounting Solutions Manual

April May
Unit Sales 5,700 5,160
Plus: Desired End Inventory 516
Total Needed 6,216
Less: Beginning Inventory 570
Units to produce 5,646
DM needed per unit 2
Quantity of DM needed for production 11,292

Req. 4

Cash Payments for Direct Material Purchases Budget

January February March
December purchases (From AP) $43,000
January purchases $3,299.76 $13,199.04
February purchases $3,495.60 $13,982.40
March purchases $3,335.76
Total disbursements $46,300 $16,695 $17,318

Req. 5

Cash Payments for Direct Labor Costs

January February March
Units Proceduced 5,400 5,898 5,538
Multi by: Hours per Unit 0.03 0.03 0.03
Direct Labor Hours 162 176.94 166.14
Multiply by: Direct Labor Rate per Hour 13 13 13
Direct Labor $2,106 $2,300 $2,160

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Req. 6

Cash Payments for Manufacturing Overhead Budget

January February March
Rent (fixed) $6,500 $6,500 $6,500
Other MOH (fixed) $2,900 $2,900 $2,900
Variable manufacturing overhead $ 23,098 $ 24,469 $ 23,350
Total disbursements $32,498 $33,869 $32,750

Req. 7

Cash Payments for Operating Expenses Budget

January February March
Variable operating expenses $ 6,408 $ 7,128 $ 6,624
Fixed operating expenses $ 1,400 $ 1,400 $ 1,400
Total disbursements $ 7,808 $ 8,528 $ 8,024

Req. 8

Combined Cash Budget

January February March
Cash balance, beginning $4,460 $5,048 $5,168
Plus: cash collections (req. 1) 80,100 89,100 82,800
Total cash available 84,560 94,148 87,968
Less cash payments:
DM purchases (req. 4) 46,300 16,695 17,318
Direct labor (req. 5) 2,106 2,300 2,160
MOH costs (req 6) 32,498 33,869 32,750
Operating expenses (req 7) 7,808 8,528 8,024
Tax payment 10,800
Equipment purchases 5800 11,600 15800
Total cash payments 94,512 83,792 76,052
Ending cash before financing -9,952 10,356 11,916
Financing:
Borrowings 15,000
Repayments -5000 -7000
Interest -187.5 -250
Total financing 15,000 -5,188 -7,250
Cash balance, ending $5,048 $5,168 $4,666

Req. 9

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Introduction to Management Accounting Solutions Manual

Budgeted Manufacturing Cost per Unit

Direct materials cost per unit $3.00
Direct labor cost per unit $0.33
Variable MOH cost per unit $1.20
Fixed MOH per unit (given in problem) $1.40
Cost of manufacturing each unit $5.93

Req. 10

Damon Manufacturing
Budgeted Income Statement
For the Quarter Ended March 31
Sales
Cost of goods sold
Gross profit
Operating expenses
Depreciation expense
Operating income
Less: interest expense
Less: provision for income tax
Net income

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 Introduction to Management Accounting Solutions Manual

TURING
t

March April May

5,520 5,700 5,160
$ 15 $ 15 $ 15
$ 82,800 $ 85,500 $ 77,400

Quarter
$75,600
$ 176,400
$252,000

Quarter
$16,800
570
17,370
534
16,836

Quarter
16,836
2
33,672
2,258
35,930
2,160
33,770
$ 1.50
$50,656

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Introduction to Management Accounting Solutions Manual

Quarter
$43,000
$16,499
$17,478
$3,336
$80,313

Quarter
16,836
0.03
505.08
13
$6,566

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Introduction to Management Accounting Solutions Manual

Quarter
$19,500
$8,700
$70,918
$99,118

Quarter
$ 20,160
$ 4,200
$ 24,360

Quarter
$4,460
252,000
256,460

80,313
6,566
99,118
24,360

33,200
243,556
12,904

15,000
-12,000
-438
2,563
$15,466

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