Introduction to Management Accounting

Solutions Manual

Problems: Set A
Name: Stephanie Luis
Class: Managerial Accounting
(60 min.) P 9-59A
e-Portfolio Project
P9-59A Comprehensive budgeting problem (Learning Objectives 2 & 3)
Requirements
1. Prepare a schedule of cash collections for January, February, and March, and for the quarter
in total.
2. Prepare a production budget.
3. Prepare a direct materials budget.
4. Prepare a cash payments budget for the direct material purchases from Requirement 3.
5. Prepare a cash payments budget for conversion costs.
6. Prepare a cash payments budget for operating expenses.
7. Prepare a combined cash budget.
8. Calculate the budgeted manufacturing cost per unit.
9. Prepare a budgeted income statement for the quarter ending March 31.

Solution:
Given
Sales Budget
December
Unit sales

January

7,000

Unit selling price

Total sales Revenue

8,000

10 $
70,000

February

9,200

10 $
80,000

March
9,900

10 $

10

92,000 $

99,000

Req. 1

Cash Sales (30%)

Cash Collections
January
$24,000

Chapter 9: The Master Budget and Responsibility Accounting

February
$27,600

March
$29,700

Quarter
$81,300

Introduction to Management Accounting

Credit Sales (70%)
Total Cash Collections

Solutions Manual
$49,000
$73,000

$56,000
$83,600

$64,400
$94,100

$169,400
$250,700

Req. 2

Unit Sales*
Plus: Desired Ending Inventory
Total Needed
Less: Beginning Inventory
Units to Produce

Production Budget
January
8,000
2,300
10,300
2,000
8,300

February
9,200
2,475
11,675
2,300
9,375

March
9,900
2,425
12,325
2,475
9,850

Quarter
27,100
2,425
29,525
2,000
27,525

Req. 3

Units to be Produced
x Quantity of DM Needed per Unit
Quantity of DM Needed for Production
Plus: Desired Ending Inventory of DM
Total Quantity of DM Needed
Less: Beginning Inventory of DM
Quantity of DM to Purchase
x Cost per pound
Total Cost of DM Purchased

Direct Materials Budget

January
February
8,300
9,375
2
2
16,600
18,750
1,875
1,970
18,475
20,720
1,660
1,875
16,815
18,845
2
2
$33,630
$37,690

Chapter 9: The Master Budget and Responsibility Accounting

March
9,850
2
19,700
1880
21,580
1,970
19,610
2
$39,220

Quarter
27,525
2
55,050
1,880
56,930
1,660
55,270
2
$110,540

Introduction to Management Accounting

Unit Sales
Plus: Desired End Inventory (25%)
Total Needed
Less: Beginning Inventory
Units to Produce
x DM Needed per Unit
DM Needed for Production
x 10% of DM

Solutions Manual

April
9,700
2,125
11,825
2,425
9,400
2
18,800
1,880

May
8,500

Req. 4
Schedule of Expected Cash DisbursementsMaterial Purchases
January
February
March
December Purchases {From Accounts Payable}
January Purchases
February Purchases
March Purchases
Total Disbursements

$42,400
$6,726

$49,126

Chapter 9: The Master Budget and Responsibility Accounting

$26,904
$7,538
$34,442

$30,152
$7,844
$37,996

Quarter
$42,400
$33,630
$37,690
$7,844
$121,564

Introduction to Management Accounting

Solutions Manual

Req. 5
Schedule of Expected Cash DisbursementsConversion Costs
January
February
March
Rent (Fixed)
$5,000
$5,000
$5,000
Other MOH (Fixed)
$3,000
$3,000
$3,000
Variable Conversion Costs (DL + MOH)
9960
11250
11820
Total Disbursements
$17,960
$19,250
$19,820

Quarter
$15,000
$9,000
$33,030
$57,030

Req. 6
Schedule of Expected Cash Disbursements -- Operating Expenses
January
February
March
Variable Operating Expenses
8,000
9,200
9,900
Fixed Operating Expenses
$1,000
$1,000
$1,000
Total Disbursements
9,000
10,200
10,900

Quarter
27,100
3,000
30,100

Req. 7

Cash Balance, Beginning

Add Cash Collections (req. 1)
Total Cash Available
Less Cash Disbursements:
For Materials (req. 4)
For Conversion Costs (req. 5)
For Operating Expenses (req. 6)
For Equipment
For Taxes
Total Disbursements

Combined Cash Budget

January
February
$4,500
$4,414
73,000
83,600
77,500
88,014
49,126
17,960
9,000
5,000
81,086

Chapter 9: The Master Budget and Responsibility Accounting

34,442
19,250
10,200
12,000
10,000
85,892

March
$4,122
94,100
98,222

Quarter
$4,500
250,700
255,200

37,996
19,820
10,900
16,000

121,564
57,030
30,100
33,000
10,000
251,694

84,716

Introduction to Management Accounting

Solutions Manual

Excess (deficiency) of Cash

Financing:
Borrowings
Repayments
Interest
Total Financing
Cash Balance, Ending
Interest: $8000*1%*3 months
$2000*1%*2 months = 40
Total interest

-3,586

2,122

8,000

2,000

8,000
$4,414

2,000
$4,122

13,506

3,506

-9,000
-280
-9,280
$4,226

10,000
-9,000
-280
720
$4,226

240
40
$280

Req. 8
Budgeted Manufacturing Cost per Unit
Direct Materials: 2 lbs. each x $2 per lb.
$4.00
Conversion Costs: $1.20 each
$1.20
Fixed MOH: $0.80 each
$0.80
Cost of Manufacturing each Unit
$6.00
Req. 9
Silverman Manufacturing
Budgeted Income Statement
For the Quarter Ended March 31
Sales
Cost of goods sold ($6.00 x units sold)
Gross profit
Operating Expenses
Depreciation Expenses
Operating Income
Less: Interest Expense
Less: Provision for Income tax @ 30%

271,000
-162,600
108,400
30,100
4,800
73,500
-280
21,966

Chapter 9: The Master Budget and Responsibility Accounting

Introduction to Management Accounting

Net Income

Solutions Manual
$51,254

Chapter 9: The Master Budget and Responsibility Accounting

Introduction to Management Accounting

April

Solutions Manual

May

9,700

8,500

10

10

97,000

85,000

Chapter 9: The Master Budget and Responsibility Accounting

Introduction to Management Accounting

Chapter 9: The Master Budget and Responsibility Accounting

Solutions Manual

Introduction to Management Accounting

Chapter 9: The Master Budget and Responsibility Accounting

Solutions Manual

Introduction to Management Accounting

Chapter 9: The Master Budget and Responsibility Accounting

Solutions Manual

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Introduction to Management Accounting

Chapter 9: The Master Budget and Responsibility Accounting

Solutions Manual

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Introduction to Management Accounting

Chapter 9: The Master Budget and Responsibility Accounting

Solutions Manual

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