MANAGERIAL ACCOUNTING

Master Budget

Sales Budget
December January February March April May
Bugeted Sales (# of units) 8900 9900 9200 9500 8600
Selling Price $ 9.00 $ 9.00 $ 9.00 $ 9.00 $ 9.00 $ 9.00
Budgeted Sales Revenue $ 76,000 $ 80,100 $ 89,100 $ 82,800 $ 85,500 $ 77,400

Cash Collections Budget

January February March Quarter 28000
Cash Sales 30% $ 24,030.0 $ 26,730.0 $ 24,840.0 $ 75,600
Credit Sales 70% $ 53,200.0 $ 56,070.0 $ 62,370.0 $ 171,640

Total Cash Collections $ 77,230.0 $ 82,800.0 $ 87,210.0 $ 247,240

Production Budget
January February March Quarter
Unit Sales 8,900 9,900 9,200 28,000 9500
Plus: Desired Ending Inventory 8,910 8,280 8,550 8,550 7740
Total Needed 17,810 18,180 17,750 36,550 17240
Less Beginning Inventory (15,600) (8,910) (8,280) (15,600) (8,550)
Number of Units to produce 2,210 9,270 9,470 20,950 8,690

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Direct Materials Budget

January February March Quarter 1.5
Units to be Produced 2,210 9,270 9,470 20,950 8,690
Multiply by: Quantity of DM needed per unit 2 2 2 2 2
Quaintity (pounds) needed for Production 4,420 18,540 18,940 41,900 17,380
Plus: Desired Ending Inventory 3,708 3,788 3,476 3,476
Total Quantity Needed 8,128 22,328 22,416 45,376
Less: Beginning Inventory of DM 0 (3,708) (3,788) 0
Quantity to purchase 8,128 18,620 18,628 45,376
Multiply by: Cost per pound 1.50 1.50 1.50 1.50
Total Cost of DM purchases $ 12,192.00 $ 27,930.00 $ 27,942.00 $ 68,064.00

Cash Payments for Direct Material Purchases Budget

January February March Quarter
20% of Current Month DM purchases $ 2,438.40 $ 5,586.00 $ 5,588.40 $ 13,612.80
80% of Prior Month DM purchases $ 43,000.00 $ 9,753.60 $ 22,344.00 $ 75,097.60
Total Cash Payments $ 45,438.40 $ 15,339.60 $ 27,932.40 $ 88,710.40

Cash Payments for Direct Labor Budget

January February March Quarter 0.03
Total Cost of Direct Labor $ 3,510.00 $ 3,834.00 $ 3,600.00 $ 10,944.00

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Cash Payments for Manufacturing Overhead Budget

January February March Quarter
Variable Manufacturing Overhead $ 12,460.00 $ 13,860.00 $ 12,880.00 $ 39,200.00
Rent (fixed) $ 6,500.00 $ 6,500.00 $ 6,500.00 $ 6,500.00
Other Fixed MOH $ 2,900.00 $ 2,900.00 $ 2,900.00 $ 2,900.00
Cash Payments for Manufacturing Overhead $ 21,860.00 $ 23,260.00 $ 22,280.00 $ 48,600.00

Cash Payments for Operating Expenses Budget

January February March Quarter
Variable operating Expenses $ 10,680.00 $ 11,880.00 $ 11,040.00 $ 33,600.00
Fixed operating Expenses $ 1,400.00 $ 1,400.00 $ 1,400.00 $ 1,400.00
Cash Payments for Operating Expenses $ 12,080.00 $ 13,280.00 $ 12,440.00 $ 35,000.00

Combined Cash Budget

January February March Quarter
Beginning Cash Balance $ 4,460.00 $ 26,248.00 $ 18,344.00 $ 4,460.00
Plus: Cash collections $ 77,230.00 $ 82,800.00 $ 87,210.00 $ 247,240.00
Total Cash Available $ 81,690.00 $ 109,048.00 $ 105,554.00 $ 251,700.00
Less Cash Payments
Direct Material Purchases $ 12,192.00 $ 27,930.00 $ 27,942.00 $ 68,064.00
Direct Labor $ 3,510.00 $ 3,834.00 $ 3,600.00 $ 10,944.00
Manufaturing Overhead Costs $ 21,860.00 $ 23,260.00 $ 22,280.00 $ 67,400.00
Operating Expenses $ 12,080.00 $ 13,280.00 $ 12,440.00 $ 37,800.00
Tax Payment $ - $ 10,800.00 $ - $ 10,800.00
Equipment Purchases $ 5,800.00 $ 11,600.00 $ 15,800.00 $ 33,200.00
Total Cash Payments $ (55,442.00) $ (90,704.00) $ (82,062.00) $ (228,208.00)
Ending Cash Balance Before Financing $ 26,248.00 $ 18,344.00 $ 23,492.00 $ 23,492.00
Financing:

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Plus: New Borrowings

Less: Debt Repayments
Less: Interest Payments
Ending Cash Balance $ 26,248.00 $ 18,344.00 $ 23,492.00 $ 23,492.00

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Budgeted Manufacturing Cost per Unit

Direct Materials Cost Per Unit $ 2.43
Direct Labor Cost Per Unit $ 0.39
Variable Manufacturing Overhead Cost Per Unit $ 1.71
Fixed Manufacturing Overhead Cost Per Unit $ 0.70
Budgeted Cost of Manufactuing One Unit $ 5.23

Budgeted Income Statement

Sales Revenue $ 247,240
Less:Cost of Goods Sold $ (146,408)
Gross Profit $ 100,832
Less: Operating Expenses $ (37,800.00)
Less: Deprecation expense $ (4,900.00)
Operating Income $ 58,132.00
Less: Interest Expense
Less: Income Tax Expense $ (17,439.60)
Net Income $ 40,692.40

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