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REQUIRMENT 1 AND 2 IS SOLVED. PLEASE SOLVE REQUIREMENT 3,4,5 AND 6.

region, and the company as a WHIC. 2. As the Manitoba region manager, would you investigate the Winnipeg SIO this report? Why or why not? 3. Briefly discuss the benefits of budgeting. Base your discussion on Winnie's World's perfor- mance report. P9-64A Prepare an inventory purchases, and cost of goods sold budget (Learning Objective sy University Logos buys logo-imprinted merchandise and then sells it to university bookstores Sales are expected to be $2,000,000 in September, $2,160,000 in October, $2,376,000 in November, and $2,500,000 in December. University Logos sets its prices to earn an average 30% gross profit on sales revenue. The company does not want inventory to fall below $400,000 plus 15% of the next month's cost of goods sold. Requirement 1. Prepare an inventory. purchases, and cost of goods sold budget for the months of October and November. Problems (Group B) P9-65B Comprehensive budgeting problem (Learning Objectives 2 & 3) Osborne Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Osborne Manufacturing's operations: Current assets as of December 31 (prior year): Cash Accounts receivable, net......... Inventory... Property, plant, and equipment, net ......... Accounts payable... Capital stock........... Retained earnings...... $ 4,640 $ 57,600 $ 15,600 $121,500 $ 42,800 $124,500 $ 22,800 a. Actual sales in December were $72,000. Selling price per unit is projected to remain stable at $12 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows: January .. February.. March April.... May .... $104,400 $108,000 $112,800 $109,200 $105,600 b. Sales are 20% cash and 80% credit. All credit sales are collected in the month follow- ing the sale. C. Osborne Manufacturing has a policy that states that each month's ending inventory of finished goods should be 10% of the following month's sales (in units). d. Of each month's direct material purchases, 20% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Three kilograms of direct material is needed per unit at $2.00 per kilogram. Ending inventory of direct materials should be 30% of next month's production needs. The Master Budget and Responsibility Accounting e. Monthly manufacturing conversion costs are $4.500 for factory rent, $2,800 for other fixed manufacturing expenses, and $1.10 per unit for variable manufacturing overhead. No depreciation is included in these figures. All expenses are paid in the month in which they are incurred. f. Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, Osborne Manufacturing will purchase equipment for $6,000 (cash), while February's cash expenditure will be $12.800, and March's cash expenditure will be $15,600. g. Operating expenses are budgeted to be $1.30 per unit sold plus fixed operating expenses of $1,800 per month. All operating expenses are All operating expenses are paid in the month in which they are incurred. h. Depreciation on the building and equipment for the general and administrative offices is budgeted to be $4.600 for the entire quarter, which includes depreciation on new acquisitions. i. Osborne Manufacturing has a policy that the ending cash balance in each month must be at least $4,200. The company has a line of credit with a The company has a line of credit with a local bank. It can borrow in increments of $1,000 at the beginning of each month, up to a total outstanding loan balance of $130,000. The interest rate on these loans is 2% per month simple interest (not compounded). Osborne Manufacturing pays down on the line of credit balance if it has excess funds at the end of the quarter. The company also pays the accumulated interest at the end of the quarter on the funds borrowed during the quarter. J. The company's income tax rate is proiected to be 30% of operating income less interest expense. The company pays $10,800 cash at the end of February in estimated taxes. Requirements 1. Prepare a schedule of cash collections for January, February, and March, and for the quarter in total. Coming Cash Collections Budget January February March Quarter Cash sales Credit sales Total cash collections main is of 2. Prepare a production budget. (Hint: Unit sales - Sales in dollars / Selling price per unit) Production Budget January February March Quarter Unit sales Plus: Desired ending inventory Total needed Less: Beginning inventory Units to produce 548 Chapter 9 3. Prepare a direct materials budget. Direct Materials Budget Quarter March February January Units to be produced x kg of DM needed per unit Quantity (kg) needed for production Plus: Desired ending inventory of DM Total quantity (kg) necded Less: Beginning inventory of DM Quantity (kg) to purchase x Cost per kg Total cost of DM purchases 4. Prepare a cash payments budget for the direct material purchases from Requirement 3. Cash Payments for Direct Material Purchases Budget January March Quarter December purchases (from Accounts Payable) January purchases February purchases March purchases Total cash payments for DM purchases 5. Prepare a cash payments budget for conversion costs. Cash Payments for Conversion Costs Budget January February March Quarter Variable conversion costs Rent (fixed) Other fixed MOH Total payments for conversion costs 6. Prepare a cash payments budget for operating expenses. Cash Payments for Operating Expenses Budget January February March Quarter Variable operating expenses Fixed operating expenses Total payments for operating expenses 21/12

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