Professional Documents
Culture Documents
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
McGraw-Hill/Irwin
Inc.
9-2
Sales
Budget
Operati
onal
Budgets
Materials
Ending
Budget:
Inventory
Gasoline
Budget:
Gasoline and Related
Products
Labo
r
Budg
et
Overh
ead
Budge
t
Selling and
Administrat
ive Expense
Budget
Cash
Budget
Budgeted
Income
Statement
Budgete
d
Financia
l
Stateme
nts
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Budgeted
Balance
Sheet
Budgeted
Statement
of Cash
Flows
9.7 Application
of
activity-based
costing
to
the
budgeting process yields activity-based budgeting
(ABB).
Under ABB, the first step is to specify the
products or services to be produced and the customers
to be served. Then the activities necessary to produce
these products and services are determined. Finally
the resources needed to perform the specified
activities are determined. ABB differs from traditional
budgeting in the emphasis that it places on activities
and its use of activity-based costing data in the
budgeting process.
9.8 E-budgeting stands for an electronic and enterprisewide budgeting process.
Under this approach the
information needed to construct a budget is gathered
via the Internet from individuals and subunits located
throughout the enterprise. The Internet also is used to
disseminate the resulting budget schedules and
information to authorized users throughout the
enterprise.
9-9 The city of Boston could use budgeting for planning
purposes in many ways. For example, the city's personnel
budget would be important in planning for required
employees in the police and fire departments. The city's
capital budget would be used in planning for the
replacement
of
the
city's
vehicles,
computers,
administrative buildings, and traffic control equipment.
The city's cash budget would be important in planning for
cash receipts and disbursements. It is important for any
organization, including a municipal government, to make
sure that it has enough cash on hand to meet its cash
needs at all times.
9.10 The budget director, or chief budget officer, specifies
the process by which budget data will be gathered,
collects the information, and prepares the master
budget. To communicate budget procedures and
deadlines to employees throughout the organization,
the budget director often develops and disseminates a
budget manual.
McGraw-Hill/Irwin
Inc.
9-4
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
(b)
Preliminary design
(c)
McGraw-Hill/Irwin
Inc.
9-8
(d)
Production
(e)
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
SOLUTIONS TO EXERCISES
EXERCISE 9-21 (20 MINUTES)
1.
40,000
42,000
1.05)
44,100
1.05)
46,305
1.05)
(given)
(40,000
(42,000
Planned Ending
Inventory
(in units)
32,000 (40,000 80%)
(44,100
Sales in units:
2.
July...................................................................
August..............................................................
September........................................................
Total for third quarter.......................................
Add: Desired ending inventory, September 30....
Subtotal............................................................
Deduct: Desired ending inventory, June 30.........
Total required production..................................
40,000
42,000
44,100
126,100
37,044
163,144
32,000
131,144
120,000
McGraw-Hill/Irwin
Inc.
9-10
4
480,000
120,000
600,000
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
140,000
460,000
$1.40
$
644,000
Amount Collected in
October
$150,000 $ 6,000
4%
17,500
175,000
10%
30,000
200,000
15%
157,500
225,000
70%
$211,000
McGraw-Hill/Irwin
Inc.
9-12
Credit
Sales
Octob
er
$225,0 $157,
00 500
250,00
0
212,50
0
$157,
500
Novem
ber
$
33,750
175,00
0
208,7
50
Decem
ber
$
22,500
37,500
148,7
50
$208,7
50
$575,0
00
3.
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
August
Septemb
er
Sales..................................
$240,00
0
Cash receipts:
From cash sales...............
$
120,000b
$270,
000
= $135,000 2
$120,
000
= $240,000 .5
$
90,000c
$270,00
0a
$
135,000
102,000
108,000d
$
228,000
$180,00
0
$
192,000
117,000e
$
252,000
$
= $180,000 .5
90,000
c
$108,
000
$117,
000
2.
McGraw-Hill/Irwin
Inc.
9-14
600,000
euros
2,400,000
euros
(2,200,000)
euros*
800,000
euros
*2,200,000 euros
= 600,000 euros + 2,400,000 euros
800,000 euros
3.
1,700,00
0y
4,500,
000y
(3,900,0
00y)
2,300,0
00y
4.
5.
$1,537,500
300,000
0
$1,837,500
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
405,000
75,000
480,000
2.
3,360,0
00
350,000
560,0
00
3,150,0
00
McGraw-Hill/Irwin
Inc.
9-16
7,000,0
00
315,000
245,0
00
7,070,0
00
2
.
Sales
$150,000
195,000
165,000
Percent
9%
20%
70%
Expected
Collections
$ 13,500
39,000
115,500
$168,000
3
.
$135,00
0
2,700
$132,30
0
36,000
$168,30
0
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
$
55,000
168,000
168,300
$
54,700
2
.
Collections in December
$400,000 $152,000
38%
264,000
440,000
60%
$416,000
$440,00
0
330,00
0
$110,00
0
McGraw-Hill/Irwin
Inc.
9-18
$
8,800
36,000
45,200
90,000
$20,000
Month
December.......
January...........
Sales
$440,0
00
400,00
0
Cost of
Goods
Sold
$330,0
00
300,00
0
Amount Purchased in
December
$
$330,000
66,000
20%
300,000
80%
240,000
Total December
purchases.....
$306,00
0
Therefore, the December 31 balance in accounts payable
will be $306,000.
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Today
To:
McGraw-Hill/Irwin
Inc.
9-20
$
14,250*
150,0
00
40,000*
*
$
204,250
$
$
14,250
14,250
195,00 240,000
0
52,0 64,000
00
$261,2
50
$318,25
0
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
800 hours
1,600 hours
2,400 hours
$ 90
$216,00
0
McGraw-Hill/Irwin
Inc.
9-22
May
3,200
$60
June
3,200
$60
$192,00 $192,00
0
0
800
800
$105
$105
$
$84,000
84,000
$276,00
0
$276,00
0
10%
$
27,600
90%
$248,40
0
$276,00
0
McGraw-Hill/Irwin
Inc.
9-24
SOLUTIONS TO PROBLEMS
PROBLEM 9-31 (30 MINUTES)
1.
Januar
y
2.
March
$
33,00
0
Febru
ary
270,
000
$303,
000
$157,
500
324,
000
$189,
000
$481,
500
333,
000
15,
000
$537,
000
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Febru
ary
March
$
66,00
0
189,
000
$
81,00
0
($300,000):
70% in February; 30% in
March...................................
210,
000
McGraw-Hill/Irwin
Inc.
9-26
93,
000
$348,
000
72,
000
$363,
000
$
90,00
0
294,
000
135,
000
$519,
000
Beginning cash
balance.
Total
receipts
.
Subtotal
.
Less: Total
disbursements
Cash excess (deficiency)
before financing
Financing:
Borrowing to maintain
$60,000 balance..
Loan principal
repaid
Loan interest
paid..
Ending cash
balance
Januar Februar
y
y
March
$
60,00
0
303,
000
$
60,000
$132,
900
481,50
0
537,
000
$363,
000
348,
000
$
15,00
0
$541,50
0
363,00
0
$178,50
0
$669,
900
519,
000
$150,
900
45,
000
$
60,00
0
-0(45,00
0)
(6
00)*
$132,90
0
-0-0$150,
900
* $45,000 x 8% x 2/12
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Sales (units)...........................
Add: Ending inventory*...........
Total needs............................
Deduct: Beginning inventory. .
Units to be produced..............
Direct-labor hours per unit.....
Total hours of direct labor
time needed........................
Direct-labor costs:
Wages ($16.00 per DLH).....
Pension contributions
($.50 per DLH)..................
Workers' compensation
insurance ($.20 per DLH). .
Employee medical insurance
($.80 per DLH)..................
Employer's social security
(at 7%).............................
McGraw-Hill/Irwin
Inc.
9-28
Januar
y
20,00
0
32,
000
52,00
0
32,
000
20,00
0
20,00
0
Month
Februa March Quart
ry
er
24,000 16,00 60,000
0
25,0
27,
27,0
00
000
00
49,000 43,00 87,000
0
32,0
25,
32,0
00
000
00
17,000 18,00 55,000
0
1
.75
17,0
00
13,
500
50,5
00
$320, $272,0
000
00
$216, $808,0
000
00
10,00
0
8,500
6,750 25,250
4,000
3,400
2,700 10,100
16,00 13,600
0
10,80 40,400
0
22,
400
19,0
40
15,
120
56,5
60
$372, $316,5
400
40
$251, $940,3
370
10
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Sales budget
Cost-of-goods-sold budget
Selling and administrative expense budget
Components of the master budget, other than the
production budget and the direct-labor budget, that would
also use the production data include the following:
Direct-material budget
Manufacturing-overhead budget
Cost-of-goods-sold budget
Components of the master budget, other than the
production budget and the direct-labor budget, that would
also use the direct-labor-hour data include the following:
Cost-of-goods-sold budget
Cash budget
Budgeted income statement
McGraw-Hill/Irwin
Inc.
9-30
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Febru
ary
March Quarter
$
60,000
$
72,000
$48,0 $180,000
00
90,000
76,500
210,00
0
$360,00
0
178,50
0
$327,00
0
81,00 247,500
0
141,
530,250
750
$270, $957,750
750
2.
Darol
Norex
120,000 80,000
50,000
_10,400 _5,600
130,400 85,600
_4,800
54,800
9,600
6,400
120,800 79,200
4,000
50,800
McGraw-Hill/Irwin
Inc.
9-32
8,456
7,920
_8,128
24,504
Conversion
cost
budget $490,08
(24,504 x $20)....................
0
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
4.
McGraw-Hill/Irwin
Inc.
9-34
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
$
441,07
2
490,
080
$
(49,008
)
$
152,63
2
2.
3.
12,6
00
x
10
126,
000
25
5,04
0
5
1,
008
McGraw-Hill/Irwin
Inc.
9-36
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Sales budget
2.
August
5,000
$60
6,000
$60
$300,00
0
$360,00
0
Septem
ber
7,500
$60
$450,00
0
Sales..................................
Add: Desired ending
inventory............................
Total requirements..............
Less: Projected beginning
inventory............................
Planned production.............
3.
July
July
August
5,000
1,200
6,000
1,500
Septem
ber
7,500
1,500
6,200
1,000
7,500
1,200
9,000
1,500
5,200
6,300
7,500
Raw-material purchases
July
August
5,200
6,300
Septem
ber
7,500
10
10
10
52,000
63,000
75,000
6,300
7,500
8,000
58,300
70,500
83,000
5,200
6,300
7,500
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
53,100
64,200
75,500
$.60
$.60
$.60
$
31,860
$
38,520
$
45,300
Direct-labor budget
5.
July
August
5,200
1.5
7,800
$21
6,300
1.5
9,450
$21
Septem
ber
7,500
1.5
11,250
$21
$163,80
0
$198,4
50
$236,25
0
McGraw-Hill/Irwin
Inc.
9-40
2.
3.
4.
5.
6.
7.
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
balance,
January $
2009 The McGraw-Hill Companies,
9-41
22,50
0
Add:
January
receipts
184,
($108,000 + $76,000)..
000
Subtotal
$206,
500
Less:
January
195,
payments
000
Cash
balance
before $
financing.
11,50
0
McGraw-Hill/Irwin
Inc.
9-42
The
budgeting
process
communication and coordination.
promotes
internal
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
b. Subsequent Schedule
Production Budget
Selling Expense Budget
Budgeted Income Statement
Production Budget
Direct-Material Budget
Direct-Labor Budget
Manufacturing-Overhead
Budget
Direct-Material Budget
Cost-of-Goods-Manufactured
Budget
Direct-Labor Budget
Cost-of-Goods-Manufactured
Budget
Manufacturing-Overhead
Budget
Cost-of-Goods-Manufactured
Budget
Cost-of-Goods-Manufactured
Budget
Cost-of-Goods-Sold Budget
Cost-of-Goods-Sold Budget
(includes ending inventory in
dollars)
Administrative Expense
Budget
McGraw-Hill/Irwin
Inc.
9-44
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Units
60,000
Price
$130
Heavy coils.................................
40,000
$190
$
7,800,0
00
7,600
,000
$15,400
,000
Light
Coils
60,000
Heavy
Coils
40,000
25,000
85,000
20,000
9,000
49,000
8,000
65,000
41,000
Projected sales...........................
2
.
Projected sales.........................................
Add: Desired inventories,
December 31, 20x3................................
Total requirements...................................
Deduct: Expected inventories, January 1,
20x3.........................................................
Production required (units).......................
3
.
Total
260,000 130,000
__
205,000 123,000
41,000
465,000 253,000
36,000 32,000
41,000
7,000
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
501,000 285,000
48,000
32,000 29,000
469,000 256,000
6,000
42,000
Raw
Material
Raw Material
Required
(units)
Sheet metal...............................
469,0
00
Copper wire...............................
256,0
00
Platforms...................................
42,00
0
Total
.
5.
Total
10
$
7,504,000
2,560,000
___252,000
$10,316,00
0
Light coils..................
Project
ed
Produc
tion
(units)
65,000
Heavy coils................
41,000
Total..........................
6.
Anticipa
ted
Purchas
e Price
$16
Hours
per
Unit
4
6
Total
Hour
s
Rate
260,0
00
246,0
00
$15
20
Total
Cost
$3,900,0
00
4,920,0
00
$8,820,0
00
Cost
Driver
Rate
Budgete
d Cost
$.50 $362,50
0
$8.00 848,000
Shipping.................................... 100,000c
General manufacturing overhead 506,000
hr. d
Total manufacturing overhead....
$2.00 200,000
$6.00
3,036,
000
$4,446,
500
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Sales budget:
Box C
Box P
500,0 500,00
00
0
$1.35
$1.95
$675, $975,0
000
00
Total
$1,650,0
00
Sales..................................................
Add: Desired ending inventory............
Total units needed..............................
Deduct: Beginning Inventory...............
Production requirements....................
3.
Box
Box
C
P
500,000 500,000
5,000 15,000
505,000 515,000
10,000 20,000
495,000 495,000
Raw-material budget:
CORRUGATING MEDIUM
Production requirements (number
of boxes).....................................
Raw material required per box
(pounds).....................................
Raw material required for
production (pounds)..................
McGraw-Hill/Irwin
Inc.
9-50
Box C Box P
495,0 495,00
00
0
.
.2
3
Total
148,50 247,50
99,00
0
0
0
2009 The McGraw-Hill Companies,
Solutions Manual
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
10,000
257,50
0
5,000
252,50
0
$.15
$
37,875
$183,
375
Box C
Box P
495,0 495,00
00
0
. .
3
7
5,000
500,00
0
15,000
485,00
0
$.30
$145,
500
Direct-labor budget:
Production requirements (number
of boxes)
Direct labor required per box
(hours)........................................
Direct labor required for
production (hours)
Direct-labor rate..........................
Total direct-labor cost.................
5.
Total
Box C Box P
495,0 495,00
00
0
.
.
0025
005
1,23
7.5
2,475
Total
3,712.
5
$18
$66,8
25
Manufacturing-overhead budget:
McGraw-Hill/Irwin
Inc.
9-52
Indirect material................................................
Indirect labor....................................................
Utilities.............................................................
Property taxes..................................................
Insurance..........................................................
Depreciation.....................................................
Total overhead..................................................
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
$
15,750
75,000
37,500
27,000
24,000
43,50
0
$222,75
0
7.
$112,50
0
22,500
135,000
39,000
6,00
0
$315,00
0
$157,
500
322,
Box P: 500,000 $.645* .....................
500
Gross margin.....................................................
Selling and administrative expenses..................
Income before taxes..........................................
Income tax expense (35%).................................
Net income........................................................
$1,650,
000
480,
000
$1,170,
000
315,
000
$
855,000
299,
250
$
555,750
budgeted
manufactur
ingoverhead
volume
ofdirect
-laborhours
$222,750
= (495,000)(
.0025)+(495,000)(
.005)
McGraw-Hill/Irwin
Inc.
9-54
$222,750
= $60perhour
= 3,712.5
hours
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
McGraw-Hill/Irwin
Inc.
9-56
Box P
$.090
$.210
.030
.045
.045
.090
.150
___
$.315
.300
$.645
$
956,250
936,
000
$1,892,
250
20,
000
$1,912,
250
$1,021,
300
115,750
186,000
80,000
150,
000
$1,553,
050
$
359,200
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Compu
ter
System
Consult
ing
Third Quarter:
Revenue...........................................
Hourly billing rate............................
Billable hours...................................
Number of consultants.....................
Hours per consultant........................
Fourth-quarter planned increase..........
Billable hours per consultant................
Number of consultants.........................
Billable hours......................................
Billing rate..........................................
Projected revenue...............................
McGraw-Hill/Irwin
Inc.
9-58
Manage
ment
Consulti
ng
$843,7 $630,00
50
0
$180
$150
5,625
3,500
10
15
375
350
50
50
425
400
13
15
6,375
5,200
$180
$150
$956,2 $936,00
50
0
$
92,000
$
23,000
2,300
$
25,300
15
$379,50
0
-0$379,50
0
151,80
0
$531,30
0
Manage
ment
Consulti
ng
$100,00
0
$
25,000
2,500
$27,500
10
$275,00
0
75,000
$350,00
0
140,00
0
$490,00
0
6,375
5,200
11,575
$10
$115,75
0
$186,00
93%)...............................................
Corporate expense allocation ($100,000
150%).............................................
*Third-quarter
travel expense
0
$150,00
0
hour = rate
s
$91,250 9,12
5
= $10.00
2
.
McGraw-Hill/Irwin
Inc.
9-60
2.
Objective
Increase sales by 12%
($1,700,000 1.12 =
$1,904,000)
Attained
/
Not
Attained
Not
attained
Calculations
($1,895,500$1,700,000)/
$1,700,000 = 11.5%
Increase
before-tax
income by 15%
($210,000 1.15 =
$241,500)
Attained
($241,500$210,000)/$210,000
= 15%
Attained
$616,000/$4,100,000
(rounded)
Not
attained
$1,339,000*/$1,895,500
70.6% (rounded)
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
15%
3.
manufacturing
cost
McGraw-Hill/Irwin
Inc.
9-62
Sales budget:
20x0
Total sales..........
Cash sales*.........
Sales on account
20x1
Decem Januar
ber
y
$800,0 $880,
00
000
200,00 220,0
0
00
600,00 660,0
0
00
Febru March
ary
$968, $1,064,
000
800
242,0 266,20
00
0
726,0 798,60
00
0
First
Quarte
r
$2,912,
800
728,20
0
2,184,6
00
*25% of total
sales.
75% of total
sales.
2.
Cash receipts
budget:
20x1
Januar Februa March
y
ry
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
First
Quarter
Cash sales.......................
Cash collections from
credit
sales made during
current
month*.........................
Cash collections from
credit
sales made during
preceding
month..........................
Total cash receipts..........
$220, $242,0
000
00
$266,
$
200 728,200
66,00 72,600
0
79,86 218,460
0
540,0 594,00
00
0
$826, $908,6
000
00
653,4
00
$999,
460
1,787,
400
$2,734,
060
McGraw-Hill/Irwin
Inc.
9-64
Purchases
budget:
20x0
Budgeted cost
of
goods sold. .
Add: Desired
ending
inventory........
Total goods
needed........
Less: Expected
beginning
inventory....
Purchases.......
20x1
Decem
ber
Januar
y
Februa
ry
March
First
Quarter
$560,0
00
$616,
000
$677,6
00
$745,3
60
$2,038,9
60
308,00
0
338,8
00
372,68
0
372,68
0*
372,680
$868,0
00
280,0
00
$588,0
00
308,0
00
$646,
800
338,80
0
$711,4
80
372,68
0
$745,3
60
308,000
**
$2,103,6
40
*Since April's expected sales and cost of goods sold are the
same as the projections for March, the desired ending
inventory for March is the same as that for February.
The desired ending inventory for the quarter is equal to
the desired ending inventory on March 31, 20x1.
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Cash disbursements
budget:
20x1
Januar Februa March
y
ry
Inventory purchases:
Cash payments for
purchases
during the current
month*............................
Cash payments for
purchases
during the preceding
month.....................
Total cash payments for
inventory purchases.....
Other expenses:
Sales salaries...............
Advertising and
promotion.......................
Administrative salaries.
Interest on bonds**......
Property taxes**..........
Sales commissions.......
First
Quarter
$258, $284,5
720
92
$298,
$
144 841,456
352,8 388,08
00
0
426,8
88
1,167,
768
$611, $672,6
520
72
$725,
032
$2,009,
224
$
42,00
0
32,00
0
42,00
0
30,00
0
-0
8,800
$
$
42,00 126,000
0
32,00
96,000
0
42,00 126,000
0
-030,000
$
42,000
32,000
42,000
-010,800
9,680
$154, $136,4
800
80
$766, $809,1
320
52
-0
10,64
8
10,800
29,128
$126,
$
648 417,928
$851, $2,427,
680
152
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
McGraw-Hill/Irwin
Inc.
9-68
First
Quarter
$2,734,
060
(2,427,
152)
$
306,908
30,000
200,000
(250,00
0)
(200,00
0)
(5,000)
(100,00
0)
$
(18,092
)
70,000
$
51,908
$
70,000
50,000
$
20,000
30,000
$
50,000
250,000
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
$(200,0
00)
$2,912,
800
2,038,9
60
$
873,840
$126,00
0
29,128
96,000
126,000
150,000
15,000
5,000
5,400
552,528
$
321,312
McGraw-Hill/Irwin
Inc.
9-70
$
215,000
321,312
100,000
$
436,312
$
51,908
718,740
372,680
1,352,0
00
$2,495,3
28
$
447,216
10,000
1,800
600,000
1,000,00
0
436,312
$2,495,3
28
$
540,000
2,184,60
0
(2,005,86)
0
$
718,740
$1,252,0
00
250,000
)
(150,000
$1,352,0
00
$
352,800
2,103,64
0
(2,009,22)
4
$
447,216
McGraw-Hill/Irwin
Inc.
9-72
SOLUTIONS TO CASES
CASE 9-43 (35 MINUTES)
1.
Recommendations
The
arbitrary
revision
of The
contingency
budget
approved budgets defeats the should be separate, over and
participatory process.
above
each
departments
original submission.
The division manager holds Managers should be involved
back a percentage of each in the revision of budgets.
budget for discretionary use.
Managers could submit a
budget
with
programs
at
different levels of funding.
Evaluation based on budget Divisional constraints could be
performance
must
be communicated at a budget
accompanied
with
intrinsic kick-off meeting; however,
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
rewards.
McGraw-Hill/Irwin
Inc.
9-74
individual
limits
of
controllable expenses should
be set by each manager.
2.
a.
b.
3.
Financial
analyses
conducted
by
Triple
Fs
management could include a forecast of projected cash
inflows and outflows by months, an income statement
including interest revenue and expense, a cost-volumeprofit analysis, and a cash management plan for excess
cash or cash shortages.
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Sales budget:
S frame
unit
sales.........
S sales
price..........
S frame
sales
revenue.....
L frame
unit
sales.........
L sales
price..........
L frame
sales
revenue.....
20x4
4th
Quarte
r
2nd
Quarte
r
20x5
3rd
Quarte
r
1st
Quarte
r
4th
Quarte
r
Entire
Year
50,000
55,000
60,000
65,000
70,000
$10
$10
$10
$10
x
$10
250,00
0
$10
$
500,00
0
$
550,00
0
$
600,00
0
$
650,00
0
$ $2,500,
700,00
000
0
40,000
45,000
50,000
55,000
60,000
$15
$15
$15
$15
$15
$
600,00
0
$
675,00
0
$
750,00
0
$
825,00
0
210,00
0
$15
$ $3,150,
900,00
000
0
Total sales
revenue..... $1,100, $1,225, $1,350, $1,475, $1,600, $5,650,
000
000
000
000
000
000
Cash sales*.
Sales on
account....
$
440,00
0
$
490,00
0
$
540,00
0
$590,0
00
$640,0 $2,260,
00
000
660,00
0
735,00
0
810,00
0
885,00
0
960,00 3,390,0
0
00
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Cash sales...............
1st
Quarte
r
$
490,00
0
2nd
Quarte
r
$
540,00
0
20x5
3rd
Quarte
r
$
590,00
0
4th
Entire
Quarte
Year
r
$ $2,260,
640,00
000
0
Cash collections
from credit
sales made during
588,00 648,00 708,00 768,00 2,712,0
current
0
0
0
0
00
quarter*................
Cash collections
from credit
sales made during
previous
132,00 147,00 162,00 177,00 618,00
quarter .................
0
0
0
0
0
Total cash receipts. . $1,210, $1,335, $1,460, $1,585, $5,590,
000
000
000
000
000
*80% of current quarter's credit
sales.
McGraw-Hill/Irwin
Inc.
9-78
Production budget:
20x4
4th
Quart
er
1st
Quart
er
2nd
Quart
er
20x5
3rd
4th
Quart Quart
er
er
Entir
e
Year
55,00
0
250,
000
12,00
0
61,00
0
67,00
0
15,0
00
265,
000
10,00
0
11,00
0
Units to be
51,00
produced..............
0
56,00
0
11,0
00
254,
000
45,00
0
210,
000
10,00
0
55,00
0
61,00 67,00
0
0
13,0
00
223,
000
S frames:
Sales (in units). . . 50,00
0
Add: Desired
ending
11,00
inventory..........
0
Total units needed
Less: Expected
beginning
inventory.............
L frames:
Sales (in units). . . 40,00
0
Add: Desired
ending
9,000
inventory..........
Total units needed
Less: Expected
beginning
inventory.............
49,00
0
9,000
8,000
Units to be
41,00
produced..............
0
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
46,00
0
73,0
00
9,00
0
214,
000
Direct-material budget:*
Metal strips:
S frames to be
produced.......
Metal
quantity per
unit (ft.).........
Needed for S
frame
production.....
L frames to be
produced.......
Metal
quantity per
unit (ft.).........
Needed for L
frame
production.....
Total metal
needed
for
production; to
be purchased
(ft.)...................
Price per
foot...................
Cost of metal
strips to
be purchased:
20x4
4th
Quart
er
1st
Quart
er
51,00
0
56,00 61,000
0
66,00
0
71,00
0
254,00
0
102,0
00
112,0 122,00
00
0
132,0
00
142,0
00
508,00
0
41,00
0
46,00 51,000
0
56,00
0
61,00
0
214,00
0
123,0
00
138,0 153,00
00
0
168,0
00
183,0
00
642,00
0
225,0
00
250,0 275,00
00
0
300,0
00
325,0 1,150,0
00
00
$1
$1
$1
$1
$1
$225,
000
$250, $275,0
000
00
$300,
000
$325, $1,150,
000
000
2nd
Quarte
r
20x5
3rd
4th
Quart Quart
er
er
Entire
Year
$1
Glass sheets:
S frames to be
produced.......
Glass
quantity per
unit (sheets). .
Needed for S
frame
production.....
L frames to be
produced.......
Glass
quantity per
unit (sheets). .
Needed for L
frame
production.....
Total glass
needed
for production
(sheets).........
Add: Desired
ending
inventory.......
Total glass
needs................
Less: Expected
beginning
inventory...........
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
20x
4th
Quart
er
1st
Quart
er
51,00
0
2nd
Quarte
r
3rd
Quart
er
4th
Quart
er
Entire
Year
56,00 61,000
0
66,00
0
71,00
0
254,00
0
.2
5
.2
5
.2
5
.2
5
.2
5
.
25
12,75
0
14,00 15,250
0
16,50
0
17,75
0
63,500
41,00
0
46,00 51,000
0
56,00
0
61,00
0
214,00
0
.
5
. .5
5
.
5
. .
5
5
20,50
0
23,00 25,500
0
28,00
0
30,50
0
107,00
0
33,25
0
37,00 40,750
0
44,50
0
48,25
0
170,50
0
7,400
8,150
8,900
9,650
10,400
40,65
0
45,15 49,650
0
54,15
0
10,40
0
58,65
0
6,650
7,400
8,900
9,650
7,400
8,150
180,90
0
Glass to be
purchased......
Price per
glass
sheet.............
Cost of glass to
be
purchased......
Total rawmaterial
purchases
(metal
and glass)......
McGraw-Hill/Irwin
Inc.
9-82
34,00
0
37,75 41,500
0
45,25
0
49,00
0
173,50
0
$8
$8
$8
$8
$8
$8
$272,
000
$302, $332,0
000
00
$362,
000
$392, $1,388,
000
000
$497,
000
$552, $607,0
000
00
$662,
000
$717, $2,538,
000
000
1st
Quart
er
Raw-material purchases:
Cash payments for
purchases during
the current
$441,
quarter ...................
600
Cash payments for
purchases during
the
preceding
quarter**.................
Total cash
payments for
raw-material
purchases................
Direct labor:
Frames produced
(S and L)............
4th
Quarte
r
Entire
Year
$
$
485,60 529,600
0
$ $2,030,
573,60
400
0
99,40
0
110,40 121,400
0
132,40
0
$541,
000
$
$
596,00 651,000
0
$ $2,494,
706,00
000
0
102,0
00
112,00 122,000
0
132,00
0
468,00
0
.1
.
1
.1
.1
11,200
12,200
13,200
46,800
$20
$20
$20
$20
$
$
224,00 244,000
0
$
264,00
0
$
936,00
0
Direct-labor
hours per
.
frame.................
1
Direct-labor hours
to be
10,20
used...................
0
Rate per directlabor
hour...................
$20
Total cash
payments for
$204,
direct labor.........
000
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
2nd
Quarte
r
20 5
3rd
Quarter
463,60
0
McGraw-Hill/Irwin
Inc.
9-84
Manufacturing
overhead:
Indirect material....
Indirect labor........
Other....................
Total cash
payments for
manufacturing
overhead............
Cash payments for
selling
and
administrative
expenses............
Total cash
disbursements.........
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
1st
Quart
er
2nd
Quarte
r
3rd
Quarter
4th
Quarte
r
Entire
Year
$
10,20
0
40,80
0
31,00
0
$
11,200
$
$
12,200 13,200
$
46,800
44,800
48,800
52,800
36,000
41,000
46,000
187,20
0
154,00
0
$
82,00
0
$
$
92,000 102,000
$
112,00
0
$
388,00
0
$100,
000
$
$
$
$
100,00 100,000 100,00 400,00
0
0
0
$927, $1,012, $1,097, $1,182, $4,218,
000
000
000
000
000
20x5
1st
2nd
3nd
4th
Entire
Quarter
Quarter
Quarter
Quarter
Year
$1,210,0 $1,335,0 $1,460,0 $1,585,0 $5,590,0
00
00
00
00
00
1,012,00 1,097,00 1,182,00 4,218,00
927,000
0
0
0
0
$
283,000
(50,000)
$
323,000
$
363,000
(50,000)
(50,000)
$ $1,372,0
403,000
00
(50,000) (200,000
)
1,000,00
0
(1,000,0
00)
(1,000,0
00)
(62,500)
$
109,500
Cash balance,
beginning of period
95,000
53,000
57,250
$
53,000
$
57,250
$
107,750
$
204,500
*$1,000,000 10%
$750,000 10%
$500,000 10%
$250,000 10%
McGraw-Hill/Irwin
Managerial Accounting, 8/e
107,750 95,000
= $25,000
= $18,750
= $12,500
= $6,250
$
204,500
Direct material:
Raw-material inventory, 1/1/x5...........
$
59,200
2,538,00
0
$2,597,2
00
83,200
$2,514,0
00
936,000
Manufacturing overhead:
Indirect material................................
$
46,800
Indirect labor..................................... 187,20
0
Other overhead.................................. 154,00
0
Depreciation......................................
80,000
Total manufacturing overhead............
__ *
468,000
$3,918,0
00
167,000
$4,085,0
00
235,000
$3,850,0
**
00
*In the budget, budgeted and applied manufacturing
overhead are equal. The applied manufacturing overhead
may be verified independently as follows:
Total number of frames produced....... 468,00
0
Direct-labor hours per frame........... .
1
Total direct-labor hours...................... 46,800
Predetermined overhead rate per
hour......................................................
$10
Total manufacturing overhead applied $468,0
00
See next page.
**See next page.
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
Frames produced.................................
Manufacturing cost per unit..............
Total manufacturing cost.....................
Grand total (S frames and L frames)....
S
L
Frames Frames
254,000 214,000
$7
$10
$1,778, $2,140,
000
000
$3,918,000
S
L
Frames Frames
15,000
13,000
$7
$10
$
$
105,000 130,000
$235,000
Frames sold.........................................
Manufacturing cost per unit.................
Cost of goods sold...............................
Total cost of goods sold (S and L).........
S
L
Frames Frames
250,000 210,000
$7
$10
$1,750, $2,100,
000
000
$3,850,000
8.
McGraw-Hill/Irwin
Inc.
9-90
$5,650,
000
3,850,0
00
$1,800,
000
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
$400,00
0
62,500
462,500
$1,337,
500
1
0.
$3,353,
800
1,337,5
00
200,000
$4,491,
300
McGraw-Hill/Irwin
Inc.
9-92
$
204,500
192,000
83,200
235,000
8,920,0
00
$9,634,
700
$
143,400
5,000,0
00
4,491,3
00
$9,634,
700
10,400 units $8
**$8,000,000 + $1,000,000 $80,000
McGraw-Hill/Irwin
Inc.
Managerial Accounting, 8/e
McGraw-Hill/Irwin
Inc.
9-94