MANAGERIAL ACCOUNTING

Master Budget

Sales Budget
December January February March April May
Budgeted Sales (units) 7,000 8,000 9,200 9,900 9,700 8,500
Selling Price Per Unit $ 10 $ 10 $ 10 $ 10 $ 10 $ 10
Budget Sales (dollars) $ 70,000 $ 80,000 $ 92,000 $ 99,000 $ 97,000 $ 85,000

Cash Collections Budget

January February March Quarter
December Sales: 70% of $ 70,000 $ 49,000 $ 49,000
January Sales: 30% of $ 80,000 $ 24,000 $ 24,000
70% of $ 80,000 $ 56,000 $ 56,000
February Sales: 30% of $ 92,000 $ 27,600 $ 27,600
70% of $ 92,000 $ 64,400 $ 64,400
March Sales: 30% of $ 99,000 $ 29,700 $ 29,700
Total Cash Collections $ 73,000 $ 83,600 $ 94,100 $ 250,700

Production Budget
January February March Quarter April
Sales in units 8,000 9,200 9,900 27,100 9,700
Added ending inventory 2,300 2,475 2,425 2,425 2,125.00
Total units needed 10,300 11,675 12,325 29,525 11,825.00
Less beginning inventory 2,000 2,300 2,475 2,000 2,425
Production in units 8,300 9,375 9,850 27,525 9,400.00

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Direct Materials Budget

January February March Quarter April
Production in units 8,300 9,375 9,850 27,525 9,400.00
* Materials per unit (lbs) 2 2 2 2 2
Production needs (lbs) 16,600 18,750 19,700 55,050 18,800.00
Add ending inventory (lbs) 1,875 1,970 1,880 1,880
Total needs (lbs) 18,475 20,720 21,580 56,930
Less beginning inventory (lbs) 1,660 1,875 1,970 1,660
Material to be purchased (lbs) 16,815 18,845 19,610 55,270

Cash Payments for Direct Material Purchases Budget

January February March Quarter
Materials purchases (lbs) 16,815 18,845 19,610 55,270
Cost per lb $ 2 $ 2 $ 2 $ 2
Total cost of purchases $ 33,630 $ 37,690 $ 39,220 $ 110,540

December purchases $ 42,400

January purchases
20% of $ 33,630 $ 6,726.0 $ 6,726
70% of $ 33,630 $ 23,541.0 $ 23,541
February purchases
20% of $ 37,690 $ 7,538.0 $ 7,538
70% of $ 37,690 $ 26,383 $ 26,383
March purchases
20% of $ 39,220 $ 7,844 $ 7,844
Total cash payments for materials $ 49,126 $ 31,079 $ 34,227 $ 114,432

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Cash Payments for Direct Labor Budget

January February March Quarter
Production in units 8,300 9,375 9,850 27,525
Direct labor hours per unit $ 0.01 $ 0.01 $ 0.01 $ 0.01
Labor hours required 83 94 99 275
Direct labor cost per hour $ 12 $ 12 $ 12 $ 12
Total direct labor cost $ 996 $ 1,125 $ 1,182 $ 3,303

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Cash Payments for Manufacturing Overhead Budget

January February March Quarter
Production in units 8,300 9,375 9,850 27,525
Variable MOH rate $ 1.20 $ 1.20 $ 1.20 $ 1.20
Variable MOH costs $ 9,960 $ 11,250 $ 11,820 $ 33,030
Fixed MOH costs $ 8,000 $ 8,000 $ 8,000 $ 24,000
Total MOH costs $ 17,960 $ 19,250 $ 19,820 $ 57,030
Cash MOH costs $ 17,960 $ 19,250 $ 19,820 $ 57,030

Cash Payments for Operating Expenses Budget

January February March Quarter
Sales in units 8,000 9,200 9,900 27,100
Variable selling & admin rate $ 1.00 $ 1.00 $ 1.00 $ 1.00
Variable selling & admin expense $ 8,000 $ 9,200 $ 9,900 $ 27,100
Fixed selling & admin expense $ 1,000 $ 1,000 $ 1,000 $ 3,000
Total selling & admin expense $ 9,000 $ 10,200 $ 10,900 $ 30,100
Cash payments for selling & admin $ 9,000 $ 10,200 $ 10,900 $ 30,100

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Combined Cash Budget

January February March Quarter
Cash balance, beginning $ 4,500 $ 4,418 $ 5,349 $ 4,500
Add cash collections from sales $ 73,000 $ 83,600 $ 94,100 $ 250,700
Total cash available $ 77,500 $ 88,018 $ 99,449 $ 255,200
Less disbursements:
Materials purchases $ 49,126 $ 31,079 $ 34,227 $ 114,432
Direct labor $ 996 $ 1,125 $ 1,182 $ 3,303
MOH $ 17,960 $ 19,250 $ 19,820 $ 57,030
Selling & admin $ 9,000 $ 10,200 $ 10,900 $ 30,100
Equipment purchases $ 5,000 $ 12,000 $ 16,000 $ 33,000
Total disbursements $ 82,082 $ 73,654 $ 82,129 $ 237,865
Excess (deficiency) of cash $ (4,582) $ 14,364 $ 17,320 $ 17,335
Financing:
Borrowing $ 9,000 $ 9,000
Repayments $ (9,000) $ (9,000)
Interest $ (15) $ (15)
Total financing $ 9,000 $ (9,015) $ - $ (15)
Cash balance, ending $ 4,418 $ 5,349 $ 17,320 $ 17,320

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Budgeted Manufacturing Cost per Unit

Budgeted Income Statement

Sales (net of 5% uncollectibles) $ 287,950
Less COGS
Gross Margin
Less selling & admin expenses $ 30,100
Net operating income
Less interest expense $ (15)
Less tax expense
Net income

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