Managerial Accounting

WASATCH MANUFACTURING
Master Budget
Sales Budget
December January February March April
Unit Sales $ 8,444 $ 8,900 $ 9,900 $ 9,200 $ 9,500
Price per Unit $ 9 $ 9 ### $ 9 $ 9
Sales Revenue $ 76,000 $ 80,100 $ 89,100 $ 82,800 $ 85,500

Cash Collections Budget

January February March Quarter
Cash Sales 25% $ 20,025 $ 22,275 $ 20,700 $ 63,000
Credit Sales $ 57,000 $ 60,075 $ 66,825 $ 183,900
Total Cash Collections $ 77,025 $ 82,350 $ 87,525 $ 246,900

Production Budget
January February March Quarter
Unit Sales $ 8,900 $ 9,900 $ 9,200 $ 28,000
Plus: Desired Ending Inventory $ 1,485 $ 1,380 $ 1,425 $ 1,425
Total Needed $ 10,385 $ 11,280 $ 10,625 $ 29,425
Less: Beginning Inventory $ (1,335) $ (1,485) $ (1,380) $ (1,335)
Units to Produce $ 9,050 $ 9,795 $ 9,245 $ 28,090

Direct Materials Budget

January February March Quarter
Units to be Produced 9,050 9,795 9,245 28,090
Multiply by: Quantity of DM needed per unit (lbs.) 2 ### 2 2
Quantity of DM needed for productions (lbs.) 18,100 19,590 18,490 56,180
Plus:Desired ending inventory of Dm (lbs.) 1,959 1,849 1,873 1,873
Total Quantity of DM needed (lbs.) 20,059 21,439 20,363 58,053
Less: Beginning Inventory of DM (lbs.) (1,810) (1,959) (1,849) (1,810)
Quantity of DM to purchase (lbs.) 18,249 19,480 18,514 56,243
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Multiply by: Cost per Pound $ 1.50 ### $ 1.50 $ 1.50
Total Cost of DM Purchases
$ 27,374 $ 29,220 $ 27,771 $ 84,365

Cash Payments for Direct Material Purchases Budget

January February March Quarter
December Purchases (from A/P) $ 22,000 $ 22,000
January Purchases $ 8,212 $ 19,161 $ 27,373
February Purchases $ 8,766 $ 20,454 $ 29,220
March Purchases $ 8,331 $ 8,331
Total Cash Payments $ 30,212 $ 27,927 $ 28,785 $ 86,924

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Cash Payments for Direct Labor Budget
January February March Quarter
Units Produced 9,050 9,795 9,245 28,090
Multiply by: Hours per Unit 0.03 ### 0.03 0.03
Direct labor Hours 272 294 277 843
Multiply by: Direct Labor Rate per Hour $ 13.00 ### $ 13.00 $ 13.00
Direct Labor Cost $ 3,530 $ 3,820 $ 3,606 $ 10,955

Cash Payments for Manufacturing Overhead Budget

January February March Quarter
Rent (Fixed) $ 6,500 ### $ 6,500 $ 19,500
Other manufacturing Overhead (fixed) $ 2,100 ### $ 2,100 $ 6,300
Variable Manufacturing Overhead Costs $ 12,670 $ 13,713 $ 12,943 $ 39,326
Cash Payments for Manufacturing Overhead $ 21,270 $ 22,313 $ 21,543 $ 65,126

Cash Payments for Operating Expenses Budget

January February March Quarter
Variable Operating Expenses $ 10,680 $ 11,880 $ 11,040 $ 33,600
Fixed Operating Expenses $ 1,400 ### $ 1,400 $ 4,200
Cash Payments for Operating Expenses $ 12,080 $ 13,280 $ 12,440 $ 37,800

Combined Cash Budget

January February March Quarter
Cash Balance, Beginning $ 6,000 $ 4,933 $ 5,143 $ 16,076
Plus: Cash Collections $ 77,025 $ 82,350 $ 87,525 $ 246,900
Total Cash Available $ 83,025 $ 87,283 $ 92,668 $ 262,976
Less Cash Payments:
DM Purchases $ 30,212 $ 27,927 $ 28,785 $ 86,925
Direct Labor $ 3,530 $ 3,820 $ 3,606 $ 10,955
Manufactruing Overhead Costs $ 21,240 $ 22,313 $ 21,543 $ 65,126
Operating Expenses $ 12,080 $ 13,280 $ 12,440 $ 37,800
Tax Payment $ - $ 10,800 $ - $ 10,800
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Equipment Purchases $ 15,000 $ 6,000 $ 4,000 $ 2,500
Total Cash Payments $ 82,062 $ 84,140 $ 70,374 $ 214,106
Ending Cash Before Financing $ 963 $ 3,143 $ 22,294 $ 48,870
Financing:
Borrowings: $ 4,000 $ 2,000 $ - $ 6,000
Repayments: $ - ### $ (6,000) $ (6,000)
Interest Payments: $ - ### $ (240) $ (240)
Cash Balance, Ending $ 4,000 $ 2,000 $ (6,240) $ (240)

Budgeted Manufacturing Cost per Unit

Direct Materials Cost per Unit $ 3.00
Direct Labor Cost per Unit $ 0.39
Variable Manufacturing Cost per Unit $ 1.40
Fixed manufacturing Overhead per Unti $ 0.60
Cost of Manufacturing Each Unit $ 5.39

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Budgeted Income Statement
Sales Revenue $ 252,000
Less: Cost of Goods Sold $ (150,920)
Gross Profit $ 101,080
Less: Operating Expenses $ (37,800)
Less: Depreciation Expense $ (5,200)
Operating Income $ 58,080
Less: Interest Expense. $ (240)
Less:Income Tax Expense $ (16,195)
Net Income $ 41,645

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Managerial Accounting

May
$ 8,600
$ 9
$ 77,400

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