Budgeting Project

E-Lan Electronics
Sales Budget
Quarter 1
January February March Quarter 1
Budgetd Sales 230,000.00 308,200.00 276,000.00 814,200.00
Selling price per case $38.00 $38.00 $38.00 $38.00
Toatal sales $8,740,000.00 $11,711,600.00 $10,488,000.00 $30,939,600.00

115%
Last year This Year
January 200,000.00 230,000.00
February 268,000.00 308,200.00
March 240,000.00 276,000.00
April 210,000.00 241,500.00
May 230,000.00 264,500.00
 April May
241,500.00 264,500.00
$38.00 $38.00
$9,177,000.00 $10,051,000.00
Budget Project
E-Lan Electronics 115%
Last year This Year
January 200,000.00 230,000.00
February 268,000.00 308,200.00
March 240,000.00 276,000.00
April 210,000.00 241,500.00
May 230,000.00 264,500.00

Desired ending inventory 10%

Production Budget January February March Total April Mayo
Budgeted Unit Sales 230,000.00 308,200.00 276,000.00 814,200.00 241,500.00 264,500.00
+ desired ending inventory 30820 27,600.00 24,150.00 24,150.00 26,450.00
total needs 260,820.00 335,800.00 300,150.00 838,350.00 267,950.00 264,500.00
-beginning inventory 23,000.00 30,820.00 27,600.00 23,000.00 24,150.00 26,450.00
Required production 237,820.00 304,980.00 272,550.00 815,350.00 243,800.00 238,050.00
 30% Gizmo
Direct Materials Budget January February March Quarter 1
Required production 237,820 304,980 272,550 815,350
Raw materials Needed 1 1 1 1
Production Needs 237,820 304,980 272,550 815,350
Desired ending inventory 91,494 81,765 73,140 73,140
Total Needs 329,314 386,745 345,690 888,490
Beginning Inventory 71,346 91,494 81,765 71,346
Raw materials 257,968 295,251 263,925 817,144
Cost of raw Materials $7.00 $7.00 $7.00 $7.00
Cost of Raw materials to be purchased $1,805,776.00 $2,066,757.00 $1,847,475.00 $5,720,008.00
Flob
Direct Materials Budget January February March Quarter 1
Required production 237,820.00 304,980.00 272,550.00 815,350.00
Raw materials Needed 3 3 3 3
Production Needs 713,460 914,940 817,650 2,446,050
Desired ending inventory 274,482 245,295 219,420 219,420
Total Needs 987,942 1,160,235 1,037,070 2,665,470
Beginning Inventory 214,038 274,482 245,295 214,038
Raw materials 773,904 885,753 791,775 2,451,432
Cost of raw Materials $2.50 $2.50 $2.50 $2.50
Cost of Raw materials to be purchased 1,934,760.00 2,214,382.50 1,979,437.50 6,128,580.00
Total Raw materials $3,740,536.00 $4,281,139.50 $3,826,912.50 $11,848,588.00
 April
243,800
1
243,800
511,980
243,800

April
243,800.00
3
731,400
548550
731,400
219,420 1,060,530
511,980
$2.50

$0.00 30% $1,148,073.75

 E-Lan Electronics
Direct Labor Budget
Quarter 1
January February March Q1
Required Production 237,820.00 304,980.00 272,550.00 815,350.00
Direct Labor-hours 0.8 0.8 0.8 0.8
Direct Labor-hours needed 190,256.00 243,984.00 218,040.00 652,280.00
Direct Labor cost per hour $ 18.00 $ 18.00 $ 18.00 $ 18.00
Total direct labor cost $3,424,608.00 $4,391,712.00 $3,924,720.00 $11,741,040.00
 E-Lan Electronics
Manufacturing overhead
Quarter 1
January February March Q1
Budgeted Production 237,820.00 304,980.00 272,550.00 815,350.00
Variable manufacturing overhead rate $2.70 $2.70 $2.70 $2.70
Variable manufacturing overhead 642,114 823,446 735,885 2,201,445
Fixed manufacturing overhead $255,000.00 $255,000.00 $255,000.00 $255,000.00
Total manufacturing overhead 897,114.00 1,078,446.00 990,885.00 2,966,445.00
Less depreciation $27,000.00 $27,000.00 $27,000.00 $81,000.00
Cash disbursments for manufacturing overhead 870,114.00 1,051,446.00 963,885.00 2,885,445.00

Total Manufacturing overhead 2,966,445.00

Required Unit Production 815,350.00
Predetermined Overhead Rate 3.64
 Variable costs per unit
$ 0.38 Indirect Materials
$ 1.20 Indirect Labor
$ 1.12 Other
$ 2.70 Total

Fixed Overhead Costs

$ 212,000.00 Salaries
$ 16,000.00 Rent
$ 27,000.00 Depreciation
$ 255,000.00 Total
Selling and Administrative Expense Budget Selling and Administrative costs
Salaries
Rent
Advertising
Depreciation
Other
Sales commissions Per unit

E-Lan Electronics
Selling and Administrative Expense Budget
Quarter 1
January February March
Budgeted sales 230,000.00 308,200.00 276,000.00
Variable selling and administrative expense per unit $1.50 $1.50 $1.50
Variable selling and administrative expense $345,000.00 $462,300.00 $414,000.00
Bad debt expense $262,200.00 $351,348.00 $314,640.00
Total $607,200.00 $813,648.00 $728,640.00
Fixed variable and sellilng administrative expenses:
Salaries $15,000.00 $15,000.00 $15,000.00
Rent $17,000.00 $17,000.00 $17,000.00
Advertising $82,000.00 $82,000.00 $82,000.00
Depreciation $18,500.00 $18,500.00 $18,500.00
Other $6,700.00 $6,700.00 $6,700.00
Total fixed selling and administrative expenses $139,200.00 $139,200.00 $139,200.00
Total selling and administrative expenses $746,400.00 $952,848.00 $867,840.00
Bad debt expense $262,200.00 $351,348.00 $314,640.00
Less depreciation $18,500.00 $18,500.00 $18,500.00
Cash disbursements for selling and administrative expenses $465,700.00 $583,000.00 $534,700.00
 Selling and Administrative costs
$15,000.00
$17,000.00
$82,000.00
$18,500.00
$6,700.00
ales commissions Per unit $1.50

Quarter
814,200.00
$1.50
$1,221,300.00
$928,188.00
$2,149,488.00

$45,000.00
$51,000.00
$246,000.00
$55,500.00
$20,100.00
$417,600.00
$2,567,088.00
$928,188.00
$55,500.00
$1,583,400.00
 Capital Expenditures
January February March Quarter 1
Selling and administration equipment $ - $ - $ 180,000.00 $ 180,000.00
Production equipment $ - $ - $ 3,100,000.00 $ 3,100,000.00
Total Expenditures $ - $ - $ 3,280,000.00 $ 3,280,000.00
 Cash Collection Cash disbursments
Month of sale 75% Month of purchase
Following month of sale 22% Month following purchase
Uncollectable 3% Accounts Payable
Accounts Receivable $1,980,000.00
Credit terms (in the First Month) 2% Credit line for operation
Monthly ending
Credit line balance

Schedule of Expected Cash Collections

Sales January February March
December $1,980,000.00
January $6,423,900.00 $1,922,800.00
February $8,608,026.00 $2,576,552.00
March $7,708,680.00

Total Cash collections for Quarter 1 $8,403,900.00 $10,530,826.00 $10,285,232.00

Disbursments by month
Purchases January February March
December $1,640,000.00
January $2,618,375.20 $1,122,160.80
February $2,996,797.65 $1,284,341.85
March $2,678,838.75
Total Cash collections for Quarter 1 $4,258,375.20 $4,118,958.45 $3,963,180.60

The problem with the operating line is that they are spending more than they have. They don't have enough for the
equipement that they are wanting to buy. They need to wait to buy the equipment until they are making more money. They
would have to borrow too much money. If they took the 4% credit line they would be able to save $12,981 in interest alone.
 Cash disbursments E-Lan Electronics
70% Cash Budget
30% Quarter 1
$1,640,000.00 Month January
Cash Balance, beginning $ 50,000
$3,000,000.00 Add Receipts:
$50,000.00 Collections $ 8,403,900
$362,000.00 Total cash available $ 8,453,900
Less Disbursments
Direct materials $ 4,258,375
Total Q1 Direct labor $ 3,424,608
$1,980,000.00 Manufacturing overhead $ 870,114
$8,346,700.00 Selling and administrative $ 465,700
$11,184,578.00 Equipment purchases $ -
$7,708,680.00 Total disbursments $ 9,018,797
Excess (deficiency) of cash Available over
$29,219,958.00 Disbursments $ (564,897)
Financing:
Borrowing from previous month $ 362,000
Total Q1 Borrowings $ 614,897
$1,640,000.00 Repayments $ -
$3,740,536.00 Interest $ 3,620
$4,281,139.50 Total Financing $ 980,517
$2,678,838.75 Cash Balance, Ending $ 50,000
$12,340,514.25
Credit Line summary with the 4% interest
ve. They don't have enough for the Financing:
ntil they are making more money. They Borrowing from previous month $ 362,000
able to save $12,981 in interest alone.
Borrowings $ 614,897
Repayments $ -
Interest $ 1,206.67
Total Financing $ 978,104

Interest rate 0.0033333333

Difference $ 12,981
E-Lan Electronics
Cash Budget
Quarter 1
February March Total for Q1
$ 50,000 $ 50,000 $ 50,000

$ 10,530,826 $ 10,285,232 $ 29,219,958

$ 10,580,826 $ 10,335,232 $ 29,269,958

$ 4,118,958 $ 3,963,181 $ 12,340,514

$ 4,391,712 $ 3,924,720 $ 11,741,040
$ 1,051,446 $ 963,885 $ 2,885,445
$ 583,000 $ 534,700 $ 1,583,400
$ - $ 3,280,000 $ 3,280,000
$ 10,145,116 $ 12,666,486 $ 31,830,399

$ 435,710 $ (2,331,254) $ (2,560,441)

$ 980,517 $ 604,613 $ 2,991,913

$ - $ 2,381,254 $ 2,996,151
$ (385,710) $ - $ (385,710)
$ 9,805 $ 6,046 $ 19,471
$ 604,613 $ 2,991,913 $ 2,629,913
$ 50,000 $ 50,000 $ 50,000

ummary with the 4% interest

$ 980,517 $ 604,613 $ 2,991,913

$ - $ 2,381,254 $ 2,996,151
$ (385,710) $ - $ (385,710)
$ 3,268.39 $ 2,015.38 $ 6,490
$ 598,076 $ 2,987,882 $ 2,616,932
 E-Lan Electronics
Budgeted income Statement
Quarter 1

Sales $ 30,939,600
Sales discounts $ 464,094
Cost of Goods sold $ 26,492,641
Gross margin $ 3,982,865
selling and administrative expenses $ 1,583,400
Net operating income $ 2,399,465
Expenses:
Interest Expense $ 19,471
Bad debt $ 928,188
Depreciation $ 55,500
Net income $ 1,396,306
 E-Lan Electronics
Ending Finished Goods Inventory
Quarter 1
Item Quantity Cost Total
Production cost per case:
Direct materials
Gizmo 1 per unit $ 7.00 perunit $ 7.00
Flob 3 per unit $ 2.50 perunit $ 7.50
Direct labor 0.8 per hour $ 18.00 per hour $ 14.40
Manufacturing overhead 1 per unit 3.64 per unit $ 3.64
Unit product $ 32.54

Budegeted finished goods inventory

Ending finished goods inventory in cases 24,150
Unit product cost 32.54
Ending finished goods inventory 785,799
 2%
Discount January February March Quarter
$ 6,555,000 $ 8,783,700 $ 7,866,000 $ 23,204,700
$ 175,674 $ 157,320 $ 464,094
 E-Lan Electronics
Budgeted Balance Sheet
Quarter 1
Current Assets
Cash $ 50,000
Accounts receivable $ 2,307,360
Raw materials inventory $ 1,060,530
Finished goods inventory $ 785,799
Total current assets $ 4,203,689
Plant and equipment
Net plant an equipment $ 7,800,000
Capital expenditures $ 3,280,000
Accumulated depreciation $ (136,500)
Plant and equipment, net $ 10,943,500.00
Total assets $ 15,147,189
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable 1,148,074
Line of credit 2,991,913
Stockholders' equity:
common stock, no par 1,200,000
Retained earnings 9,807,203
Total stockholders' equity 11,007,203
Total liabilities and stockholders' equity $ 15,147,189