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									Budgeting Assumptions All months March April May June July August Sales Budget Budgeted sales in units 20,000 50,000 30,000 25,000 15,000 Selling price per unit $10.00 Percentage of sales collected in the month of sale 70% Percentage of sales collected in the month after sale 25% Uncollectible 5% Accounts Receivable balance at March 31 $30,000 Production Budget Percentage of next month's sales in ending finished goods inv. 20% # of units on hand at March 31st 4,000 Direct Material Budget Pounds of material required per unit 5 Material cost per pound $0.40 %age of next month's production needs in ending inventory 10% %age of purchases paid in the month purchased 50% %age of purchases paid in the month after purchase 50% Pounds of material on hand at March 31 13,000 March 31 Accounts Payable balance $12,000 . Direct labor budget Hours required per unit (3 minutes) 0.05 Direct labor cost per hour $10.00 "no layoff" policy, all employees paid 40 hours per week Workforce will be paid for a minimum of 1,500 hours per month 1,500 Manufacturing Overhead budget Variable manufacturing overhead per direct labor hour WORKED $20 Fixed manufacturing overhead per month $50,000 Depreciation per month included in amount above $20,000 Selling & Administrative Expense Budget Variable selling & administrative expense per case $0.50 Fixed selling & administrative expense per month $70,000 Depreciation per month included in amount above $10,000 Cash Budget Minimum cash budget $30,000 Equipment purchases $- $143,700 $48,300 $- Dividends $49,000 Simple interest rate (annual) 16% April 1 Cash Balance $40,000 The company reported the following account balances prior to preparing its budgeted financial statements: Land $50,000 Common Stock $200,000 Retained Earnings $146,150 Equipment $175,000

FIND

SALES BUDGET	Months
	April	May	June
Budgeted unit sales	20,000	50,000	30,000
Selling price per unit	$10	$10	$10
Total budgeted sales	$200,000	$500,000	$300,000
	70%	25%
SCHEDULE OF EXPECTED CASH COLLECTIONS
Beginning balance, Accounts Receivable	$200,000	500000	300000
April Sales	140,000	7,500	10,000
May Sales	350,000	50,000	25,000
June Sales	210,000	125,000	15,000
Total Cash Collections
PRODUCTION BUDGET	April	May	June
Budgeted unit sales
Added: Desired units in Ending Finished Goods Inv
Total Needs
Less units in Beginning finished goods inventory
Required Production in units
DIRECT MATERIALS BUDGET
Required Production in units
Pounds
Pounds of raw materials needed to meet production
Add: Desired ending inventory in RM in pounds			11,500
Total pounds of raw materials needed
Less pounds of beginning raw materials inventory
Pounds of raw materials to be purchased
Cost of raw materials per pound
Cost of raw materials to be purchased
EXPECTED CASH DISBURSEMENTS FOR MATERIALS	April	May	June
Beginning balance, Accounts Payable
April purchases
May purchases
June purchases
Total Cash Disbursements	$-	$-	$-
DIRECT LABOR BUDGET	April	May	June
Required Production in Units (see row above)
Direct Labor Hours per unit
Budgeted direct labor hours required
Guaranteeed Labor Hours	1,500	1,500	1,500
Direct labor cost per hour
Total direct labor costs
MANUFACTURING OVERHEAD BUDGET	April	May	June
Budgeted direct labor hours required (see row above)
Variable Manufacturing Overhead rate
Variable Manufacturing Overhead costs
Fixed manufacturing overhead costs
Total Manufacturing Overhead
Less: noncash cost (depreciation)
Cash disbursements for Manufacturing Overhead
TOTAL manufacturing overhead cost
Budgeted direct labor hours worked
Predetermined overhead rate for the year
SELLING & ADMINISTRATIVE EXPENSE BUDGET	April	May	June
Budgeted unit sales
Variable S&A expense per case
Total variable expenses
Fixed Selling & Administrative expenses
Total Selling & Administrative expenses
Less: noncash expenses (depreciation)
Cash disbursement for S&A expenses
CASH BUDGET	April	May	June
Beginning cash balance
Add: Cash Collections
Total Cash Available
Less: Cash disbursements
Materials
Direct Labor
Manufacturing Overhead
Selling & Administrative
Equipment purchases
Dividend
Total disbursements
Excess (deficiency)
Financing:
Borrowing (borrow on first day of month)
Repayment (repay on last day of month able)
Interest (not paid back until loan paid off)
Total financing
Ending cash balance
Record Repayments and interest as negative amounts

FIND

Ending Finished Goods Inventory
absorption costing basis
For the 3 months ended June 30
Item		Quantity			Costs			Total
Production Cost per case:
	Direct materials		pounds			per pound
	Direct labor		hours			per hour
	Manufacturing overhead		hours			per hour
	Unit product cost
Budgeted finished goods inventory
	Ending finished goods inventory in cases								cases
	Unit Product Cost
	Ending finished goods inventory in dollars
						1st Qtr		2nd Qtr
Required Borrowing at the beginning of the quarter
Desired ending cash balance
Plus deficiency of cash available over disbursements
Minimum Required borrowing
Accounts Receivable on 3/31
Sales on Account
LESS Cash Collected
Accounts Receivable on 6/30
Estimated Bad Debt
Accounts Receivable at 6/30, net of allowance for uncollectible accounts

FIND

Company
Budgeted Income Statement
For the 3 months ended June 30
Sales				See sales budget
Cost of goods sold				Cost per unit (see additional calcuations) TIMES # of units sold in quarter
Gross Margin
Selling and administrative expenses				see budget
Net Operating Income
interest expense				see cash budget
Net Income
Company
Budgeted Balance Sheet
For the three months ended June 30
Assets:
Cash				See cash budget
Accounts Receivable				See calculation
Raw materials inventory				Direct Material Budgeted units on June 30 TIMES cost per unit
Finished good inventory				Units in Ending balance of production budget TIMES cost per unit
Land				See assumptions
Equipment				Balance before quarter plus 2 new purchases
Total Assets
Liabilities & Stockholders Equity
Accounts Payable				June purchases of materials TIMES 50%
Common Stock				See assumptions
Retained earnings				Beginning Balance Retained Earning + Net Income - Dividends
Total liabilities & stockholders' equity				Assets = Liabilities + Stockholders' Equity

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