MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

PRESIDIO MANUFACTURING
Master Budget

Budgeted Sales
Selling price per unit
Budget Sales

Sales Budget
January
February
8300
9900
$12
$12
$99,600
$118,800

March
9600
$12
$115,200

April
9000
$12
$108,000

Cash Collections Budget

January
February
$34,860
$41,580
$46,150
$64,740
$81,010
$106,320

March
$40,320
$77,220
$117,540

Quarter
$116,760
$188,110
$304,870

Production Budget
January
February
$8,300
$9,900
$990
$960
$9,290
$10,860
$830
$990
$8,460
$9,870

March
$9,600
$900
$10,500
$960
$9,540

Quarter
April
$27,800
$900
$28,700
$830
$27,870

December
5917
$12
$71,000

Cash Sales
Credit Sales
Total Cash Collections

Unit Sales
Plus:Desired ending inventory
Total needed
Less: Beginning inventory
Number of units to produce

Chapter 9: The Master Budget

May
8600
$12
$103,200

$9,000
$860
$9,860
$900
$8,960

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MANAGERIAL ACCOUNTING - Fourth Edition

Direct Materials Budget
January
February
Units to be produced
$8,460
$9,870
Multiply by: Quantity of DM needed per
$3
$3
unit (lbs)
Quantity needed for production
$25,380
$29,610
Plus:Desired ending inventory of DM
$5,922
$5,724
Total quanity needed
$31,302
$35,334
Less:Beginning inventory of DM
$5,076
$5,922
Quantity to purchase
$26,226
$29,412
Multiply by: Cost per pound
$2
$2
Total cost of DM purchases
$52,452
$58,824

Solutions Manual

March
$9,540
$3

Quarter
$27,870
$3

april
$8,960
$3

$28,620
$5,376
$33,996
$5,724
$28,272
$2
$56,544

$83,610
$17,022
$100,632
$5,076
$95,556
$2
$191,112

$26,880

Cash Payments for Direct Material Purchases Budget

January
February
March
20% of current month DM purchases
$10,490
$11,765
$11,309
80% of current month DM purchases
$43,000
$41,962
$47,059
Total cash payments
$53,490
$53,726
$58,368

Quarter
$33,564
$132,021
$165,585

Production in units
DL labor hours per unit
Labor hours required
Direct labor cost per hour
Total cost of direct labor

Cash Payments for Direct Labor Budget

January
February
$8,460
$9,870
$0.05
$0.05
$423
$494
$9
$9
$3,807
$4,442

Chapter 9: The Master Budget

March
$9,540
$0.05
$477
$9
$4,293

Quarter
$27,870
$0.05
$1,394
$9
$12,542

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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Cash Payments for Manufacturing Overhead Budget

January
February
March
Variable manufacturing overhead costs
$9,306
$10,857
$10,494
Rent
$5,500
$5,500
$5,500
Other fixed MOH
$2,900
$2,900
$2,900
Cash payments for manufacturing
$17,706
$19,257
$18,894
overhead

Cash Payments for Operating Expenses Budget

January
February
March
Variable operating expenses
$10,375
$12,375
$12,000
Fixed operating expenses
$1,800
$1,800
$1,800
Cash payments for operating expenses
$12,175
$14,175
$13,800

Combined Cash Budget

January
February
$4,600
$4,432
$81,010
$106,320
$85,610
$110,752

Beginning cash balance

Plus: Cash collections
Total cash available
Less: Cash payments
Direct material purchases
Direct Labor
Manufacturing overhead costs
Operating Expenses
Tax payment
Equipment purchases
Total cash payments
Ending cash balance before financing
Financing:
Plus: New borrowings
Less: Debt repayments
Less: Interest payments
Ending cash balance

Chapter 9: The Master Budget

$53,490
$3,807
$17,706
$12,175
$5,000
$92,178
-$6,568

$53,726
$4,442
$19,257
$14,175
$10,000
$12,200
$113,800
-$3,048

$11,000

$8,000

$4,432

$4,952

Quarter
$30,657
$5,500
$2,900
$39,057

Quarter
$34,750
$1,800
$36,550

March
$4,952
$117,540
$122,492

Quarter
$4,600
$304,870
$309,470

$58,368
$4,293
$18,894
$13,800
$16,600
$111,955
$10,537

$165,585
$12,542
$39,057
$36,550
$10,000
$33,800
$297,533
$11,937

$6,000
$490
$4,047

$19,000
$6,000
$490
$24,447

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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Budgeted Manufacturing Cost per Unit

Direct materials 3 lbs. each * $2 per lb.
Direct labor cost per unit
Variable manufacturing overhead costs per unit
Fixed manufacturing overhead costs per unit
Budgeted cost of manufacturing one unit

$6.00
$0.05
$1.10
$0.70
$7.85

Budgeted Income Statement

Sales revenue
Less: Cost of goods sold
Gross profit
Less: Operating expense
Less: Depreciation expense
Operating Income
Less: Interest expense
Less: Income tax expense
Net income

Chapter 9: The Master Budget

$333,600
-218230
$115,370
$36,550
4600
$74,220
$490
$22,119
$51,611

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