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to Management Accounting
Solutions Manual
Problems: Set A
Kathryn Buda
P9-59A
Comprehensive
budgeting
problem
(Learning
Objectives
2
&
3)
Requirements
1.
Prepare
a
schedule
of
cash
collections
for
January,
February,
and
March,
and
for
the
quarter
in
total.
2.
Prepare
a
production
budget.
3.
Prepare
a
direct
materials
budget.
4.
Prepare
a
cash
payments
budget
for
the
direct
material
purchases
from
Requirement
3.
5.
Prepare
a
cash
payments
budget
for
conversion
costs.
6.
Prepare
a
cash
payments
budget
for
operating
expenses.
7.
Prepare
a
combined
cash
budget.
8.
Calculate
the
budgeted
manufacturing
cost
per
unit.
9.
Prepare
a
budgeted
income
statement
for
the
quarter
ending
March
31.
Solution:
Given
Unit sales
Sales
Budget
December
January
February
March
April
May
7,000
8,000
9,200
9,900
9,700
8,500
$
10
$
10
$
10
$
10
$
10
$
10
$
70,000
$
80,000
$
92,000
$
99,000
$
97,000
$
85,000
Req. 1
Cash
Collections
January
$24,000
$49,000
$73,000
February
$27,600
$56,000
$83,600
March
$29,700
$64,400
$94,100
Quarter
$81,300
$169,400
$250,700
Production
Budget
January
$8,000
$2,300
$10,300
$800
$9,500
February
$9,200
$2,475
$11,675
$920
$10,755
March
$9,900
$2,425
$12,325
$990
$11,335
Quarter
$27,100
$2,425
$29,525
$800
$28,725
March
11,335
2
22,670
1880
24,550
2,267
22,283
$2.00
$44,566
Quarter
28,725
2
57,450
1,880
59,330
1,900
57,430
$2.00
$114,860
Quarter
Cash
Sales
Credit
Sales
Total
Cash
Collections
Req. 2
Unit
Sales
Plus:
Desired
ending
Inventory
Total
Needed
Less:
Beginning
Inventory
Units
to
Produce
Req. 3
Units
to
produce
Multiply
by:
Quantity(pounds)
of
DM
needed
per
unit
Quantity
(pounds)
needed
for
production
Plus:
Desired
Ending
Inventory
of
DM
Total
Quantity
(pounds)
needed
Less:
Beginning
Inventory
of
DM
Quantity
(pounds)
to
Purchase
Multiply
by:
Cost
per
pound
Total
Cost
of
DM
Purchases
April
9,700
May
8,500
2
19,400
1,700
21,100
1940
19160
2
38,320
2
17000
Req. 4
Solutions Manual
$7,700
$56,000
$63,700
$8,913
$30,802
$39,452
$8,913
$34,602
$43,515
$22,972
$121,403
$144,375
Solutions Manual
Req. 5
Quarter
$37,908
$15,000
$9,000
$61,908
Req. 6
Quarter
$27,100
$3,000
$30,100
Req. 7
$5,598
Interest Owed
$0
Total interest
$280
$43,252
$20,906
$10,200
$12,000
$10,000
$96,358
-$7,160
$12,000
$4,840
$120
March
$4,840
$94,100
$98,940
Quarter
$4,500
$250,700
$255,200
$44,566
$21,602
$10,900
$16,000
$93,068
$5,872
$126,320
$61,908
$30,100
$33,000
$10,000
$261,328
-$6,128
-$1,000
-$1,000
$4,642
$4,642
$110
$230
Req. 8
$5
$6
$1
$4
Req. 9
Silverman
Manufacturing
Budgeted
Income
Statement
For
the
Quarter
Ended
March
31
Sales
Revenue
Less:
Cost
of
Goods
Sold
Gross
Profit
Operating
Expenses
Less:
Depreciation
Expense
Operating
Income
Less:
Interest
Expense
Less:
Income
Tax
Expense
Net
Income
$271,000
($162,600)
$108,400
($30,100)
($4,800)
$73,500
($230)
($21,981)
$51,289