MANAGERIAL ACCOUNTING

Master Budget

Sales Budget
January February March Quarter
Unit sales (cases) 8,900 9,900 9,200 28,000
Multiply by: Sales price per case 9 9 9 9
Total sales revenue 80,100 89,100 82,800 252,000

Cash Collections Budget

January February March Quarter
Cash collection (30%) 24030 26730 24840 75600
Credit collection (70%) 56070 62370 57960 176400
Total cash collections 80100 89100 82800 252000
Unit sales= Sale in dollars / Selling price per unit

Production Budget
January February March Quarter
Unit sales * 8,900 9,900 9,200 28,000
Plus: Desired ending inventory 990 920 950 950
Total needed 9,890 10,820 10,150 28,950
Less: Beginning inventory 890 990 920 890
Units to produce 9,000 9,830 9,230 28,060
10% * April sale= 9500 * 10%= 9500 units

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Direct Materials Budget

January February March Quarter
Units to be produced 9,000 9,830 9,230 28,060
x x x x
Multiply by: Quanity of DM needed per unit 2 2 2 2
Quanity of DM needed for production 18000 19660 18460 56120
Plus: Desired ending inventories of DM 3932 3692 3764 3764
Total quanity of DM needed 21932 23352 22224 59884
Less: Beginning inventory of DM 3600 3932 3692 3600
Quantity of DM to purchase 18332 19420 18532 56284
Multiply by: Cost per found 1.5 1.5 1.5 1.5
Total cost of DM purchase 27498 29130 27798 84426
20% DM that needed for April production

Cash Payments for Direct Material Purchases Budget

January February March Quarter
December purchases (From Account Payable) $43,000 $43,000
January purchases 5500 21998 $27,498
February purchases 5826 23304 $29,130
March purchases 5560 $5,560
Total cash payments 48500 27824 28864 $105,188
20 % for current month, 80% for prior month

Cash Payments for Direct Labor Budget

January February March Quarter
Units to be produced $3,510 $3,834 $3,600 $10,944
Multiply by: Direct labor hours per unit 0.03 0.03 0.03 0.03
Total hours required $105 $115 $108 $328
Multiply by: Direct labor cost per hour $13 $13 $13 $13
Total direct labor hour 1369 1495 1404 4268

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Cash Payments for Manufacturing Overhead Budget

January February March Quarter
Rent (Fixed) $6,500 $6,500 $6,500 $19,500
Other MOH (Fixed) $2,900 $2,900 $2,900 $8,700
Variable manufacturing overhead cost 12600 13762 12922 $39,284
Cash payments for manufacturing overhead $22,000 $23,162 $22,322 $67,484

Cash Payments for Operating Expenses Budget

January February March Quarter
Variable opering expenses 10680 11880 11040 33600
Fixed operating expenses $1,400 $1,400 $1,400 4200
Cash payments for operating expenses 12080 13280 12440 37800
Units solds x variable operating expenses per unit sold ($1.20)

Combined Cash Budget

January February March Quarter
Beginning cash balance $4,460 $5,180 $5,344 $4,460
Plus: Cash collections 80100 89100 82800 252000
Total cash avaiable $84,560 $94,280 $88,144 $256,460
Less cash payments:
Direct material purchases 48500 27824 28864 105188
Manufacturing overhead costs $22,000 $23,162 $22,322 $67,484
Operating expenses 12080 13280 12440 37800
Tax payment $10,800 $10,800
Equipment purchases $5,800 $11,600 $15,800 $33,200
Total cash payments 88380 86666 79426 254472
Ending cash balance before financing ($3,820) $7,614 $8,718 $1,988
Financing:

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Plus: New borrowings 9000 9000

Less: Debt repayments -2000 -3000 -5000
Less: Interest payments -270 -270 -540
Total financing 9000 -2270 -3270 3460
Ending cash balance $5,180 $5,344 $5,448 $5,448
Interest: $9000 x 1% x 3 months= 270 $270
Total interest $270

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Budgeted Manufacturing Cost per Unit

Direct materials cost per unit (2lbs.each x $1.5 per lb.) 3
Direct labor cost per unit 0.03
Variable manufacturing overhead costs per unit 1.4
Fixed manufacturing overhead costs per unit 0.7
Budgeted cost manufacturing one unit 5.13

Budgeted Income Statement

Sale revenue 252,000
Less: Cost of goods sold* ($5.13 x units sold) -143640
Gross profit 108,360
Less: Operating expenses 37800
Less: Depreciation expense -4900
Operating income 65,660
Less: Interest expense -270
Less: Income tax expense (30%) 19617
Net income 45,773

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