Introduction

to Management Accounting Solutions Manual

WASATCH MANUFACTURING
Master Budget
Sales Budget
December January
Unit sales 5,067 5,340
Unit selling price $ 15 $ 15
Total sales Revenue $ 76,000 $ 80,100

Req. 1

Cash Collections Budget

January February
Cash sales $24,030 $26,730
Credit sales $53,200 56070
Total collections $77,230 $82,800

Req. 2

Production Budget
January February
Unit sales 5,340 5,940
Plus: Desired ending inventory 594 552
Total needed 5,934 6,492
Less: Beginning inventory 507 594
Units to produce 5,427 5,898

Req. 3

Direct Materials Budget

January February
Units to be produced 5,427 5,898
Multiply by: Quantity of DM needed per unit 2 2
Quantity of DM needed for production 10,854 11,796
Plus: Desired ending inventory of DM 2,359 2,215
Total quantity of DM needed 13,214 14,011
Less: Beginning inventory of DM 2,072 2,359
Quantity of DM to purchase 11,187 11,652
Multiply by: Cost per pound $ 1.50 $ 1.50
Total cost of DM purchases $16,781 $17,478

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April May
Unit Sales 5,700 5,160
Plus: Desired End Inventory 516
Total Needed 6,216
Less: Beginning Inventory 570
Units to produce 5,646
DM needed per unit 2
Quantity of DM needed for production 11,292

Req. 4

Cash Payments for Direct Material Purchases Budget

January February
December purchases (From AP) $43,000
January purchases $3,356 $13,452
February purchases $3,496
March purchases
Total disbursements $46,356 $16,920

Req. 5

Cash Payments for Direct Labor Costs

January February
Direct Labor $2,117 $2,300

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Req. 6

Cash Payments for Manufacturing Overhead Budget

January February
Rent (fixed) $6,500 $6,500
Other MOH (fixed) $2,900 $2,900
Variable manufacturing overhead $ 7,598 $ 8,257
Total disbursements $16,998 $17,657

Req. 7

Cash Payments for Operating Expenses Budget

January February
Variable operating expenses $ 6,080 $ 6,408
Fixed operating expenses $ 1,400 $ 1,400
Total disbursements $ 7,480 $ 7,808

Req. 8

Combined Cash Budget

January February
Cash balance, beginning $4,460
Plus: cash collections (req. 1) 77,230 82,800
Total cash available 81,690 82,800
Less cash payments:
DM purchases (req. 4) 46356 16,920
Direct labor (req. 5) 2,117 2,300
MOH costs (req 6) 16,998 17,657
Operating expenses (req 7) 7,480 7,808
Tax payment 0 10,800
Equipment purchases 5800
Total cash payments 78,751 55,486
Ending cash before financing 2,939 27,314
Financing:
Borrowings
Repayments
Interest
Total financing
Cash balance, ending

Req. 9

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Introduction to Management Accounting Solutions Manual
Budgeted Manufacturing Cost per Unit
Direct materials cost per unit $3.00
Direct labor cost per unit $0.39
Variable MOH cost per unit $1.40
Fixed MOH per unit (given in problem) $0.80
Cost of manufacturing each unit $5.59

Req. 10

Damon Manufacturing
Budgeted Income Statement
For the Quarter Ended March 31
Sales $ 252,000
Cost of goods sold 93,912
Gross profit 158,088
Operating expenses 23,816
Depreciation expense 4,400
Operating income 129,872
Less: interest expense
Less: provision for income tax
Net income

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 Introduction to Management Accounting Solutions Manual

NUFACTURING
Budget

February March April May

5,940 5,520 5,700 6,160
$ 15 $ 15 $ 15 $ 15
$ 89,100 $ 82,800 $ 85,500 $ 92,400

March Quarter
$24,840 $75,600
62370 $171,640
$87,210 $247,240

March Quarter
5,520 $16,800
570 570
6,090 17,370
552 507
5,538 16,863

March Quarter
5,538 16,863
2 2
11,076 33,727
2,258 2,258
13,334 40,559
2,215 6,601
11,119 33,958
$ 1.50 $ 1.50
$16,679 $50,938

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Budget
March Quarter
$43,000
$16,781
$13,982 $17,478
$3,336 $3,336
$17,318 $80,595

March Quarter
$2,160 $6,577

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Budget
March Quarter
$6,500 $19,500
$2,900 $8,700
$ 7,753 $23,609
$17,153 $51,809

dget
March Quarter
$ 7,128 $ 19,616
$ 1,400 $ 4,200
$ 8,528 $ 23,816

March Quarter

87,210
87,210

17,318
2,160
17,153
8,528
0

45,159
42,051

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Chapter 9: The Master Budget and Responsibility Accounting 8