Accounting 3413Cost Accounting Spreadsheet AssignmentSpring 2012 This assignment will help you to better understand the interaction

between the components of a master budget. Prepare problem 61 from Chapter 8 in your Cost Accounting textbook as an interactive spreadsheet workbook. Make the following changes to the problem assumptions: Change the name of the company to Panhandle Paint Corporation. Change the assumptions to the following: The sales price per gallon is $15. Monthly sales are as follows: January 9,500 units February 11,300 units March 16,800 units April 13,600 units May 12,500 units Income Tax Rate is 40% Assumptions WorksheetThis worksheet should be an area where all the assumptions of the problem are entered. Label this tab as Assumptions. Here is a sample of what it should look like. Please note that subsequent sheets will have cell references that use this sheet. When the project is completed, you should be able to change assumptions on this sheet and have them carry through to all future sheets. Using color-coding to highlight related cells in the worksheets will enhance your understanding of the relationships between the budgets and the pro-forma financial statements. When choosing your colors, make sure that you use the same color for all cells referring to the same financial statement item. For example, the color that you choose for unit sales should appear on the assumptions page and also on the sales budget. The template below is an example of how an assumptions worksheet should appear:

PANHANDLE PAINT CORPORATION Budget Data Minimum ending cash balance Selling price Recent and forecast sales: November (Actual) December (Actual) January February March April May

Desired ending inventories (percentage of next month's sales) Beginning Inventory--Finished Goods-Units Cost of dye Number of gallons per unit Desired ending inventories of raw materials (percentage of next month's production Beginning Inventory--Raw Materials--units Direct Labor Hours per Unit Direct Labor Rate Manufacturing Overhead Hours per Unit Variable Overhead Rate Fixed Overhead Budget Salaries Utilities Insurance Depreciation Purchases paid as follows: In month of purchase In following month Collection on sales: Sales collected current month Sales collected following month

Sales collected 2nd month following Purchases: December Fixed Selling and Administrative S&A Equipment purchases in March Balance sheet at December 31 Assets Cash Accounts receivable Raw Materials Inventory Finished Goods Inventory Prepaid insurance Building Accumulated Depreciation Total assets

Liabilities and Stockholders' Equity Accounts payable Notes payable Dividends payable Capital stock Paid in Capital Retained earnings Total liabilities and equity Annual interest Income Tax Rate

Sales BudgetLabel this tab as Sales Budget. This should contain your sales figures for the quarter as well as for future months that will have an effect on other aspects of the budget. Be sure to reference your cells to other sheets; it should not be necessary for you to have to enter any data here. Below is an example of what this sheet should look like:
PANHANDLE PAINT CORPORATION Sales Budgets January Sales budget: Budgeted sales in units selling price per unit Total sales February March Quarter April

Cash CollectionsLabel this tab as Cash Collections. Create your formulas in such a way that you will have to do no direct data entry onto this sheet. Below is an example:
PANHANDLE PAINT CORPORATION Expected Cash Collections January Schedule of expected cash collections: November sales December sales January sales February sales March sales Total cash collections February March Quarter

Inventory BudgetsLabel this tab as Inventory Budgets. Create your formulas in such a way that you will have to do no direct data entry. Below is an example:
PANHANDLE PAINT CORPORATION Inventory Budgets

Production Budget January Budgeted unit sales Add desired ending inventory Total needs Less beginning inventory Total Production Direct Materials Budget Production Gallons Total needs Desired Ending Inventory Less beginning inventory Purchases Cost per gallon Cost of purchases Direct Labor Budget Production DLH per unit Total DLH DL Rate Total Cost Variable OH Budget Production MH per unit Total MHs VOH Rate VOH Cost Fixed Overhead Budget Salaries Utilities Insurance Depreciation FOH Cost February March Total April May

Cash Disbursements for PurchasesLabel this tab as Cash Disbursements for Purchases. Create your formulas in such a way that you will have to do no direct data entry. Below is an example.
PANHANDLE PAINT CORPORATION Cash Disbursements for Purchases Expected cash payments for merchandise purchases: January February March December purchases January purchases February purchases March purchases Total cash payments

Total

Cash BudgetLabel this tab as Cash Budget. Create your formulas in such a way that you will have to do no direct data entry except for investing, borrowing, and repayment decisions. Below is an example.
PANHANDLE PAINT CORPORATION Cash Budget For the Three Months Ending March 31 January Cash balance Add collections from customers Total cash available Less disbursements: Raw Materials purchases Direct Labor Variable Factory Overhead Fixed Factory Overhead Selling and Administrative Equipment purchases Total disbursements Excess (deficiency) of receipts over disbursements Minimum Balance Cash Available Financing: Borrowing Repayments Dividends paid Investing Interest Paid Interest Earned Total financing Cash balance, ending February March Quarter

Budgeted Income Statement--Label this tab as Budgeted Income Statement. Create your formulas in such a way that you will have to do no direct data entry. Below is an example. Add expenses as needed.
Panhandle Paint Corporation Budgeted Schedule of Cost of Goods Manufactured For the First Quarter of 2012 Beginning work in process Raw material used: Beginning raw material Purchases Available for use Ending inventory (717 $.80) Cost of raw material used Direct labor Variable factory overhead Fixed factory overhead Total mfg. costs in process Ending work in process Cost of goods manufactured Panhandle Paint Corporation Budgeted Income Statement For the First Quarter of 2012 Sales Cost of Goods Sold Beginning inventory FG Cost of goods manufactured Cost of goods avail. for sale Ending inv.- FG Cost of Goods Sold Gross margin Selling & administrative expenses Operating income Other income and expenses Interest expense Interest revenue Income before taxes Income tax (30%) Net income

Budgeted Balance SheetLabel this tab as Budgeted Balance Sheet. Create your formulas in such a way that you will have to do no direct data entry. Below is an example. Add accounts as needed. Include schedules for Accounts Receivable by month, Accounts Payable by month, and Retained Earnings for the quarter. Below is a partial template for the budgeted balance sheet.
Panhandle Paint Corporation Budgeted Balance Sheet March 31, 2012 Assets Cash Accounts receivable Raw material inventory Finished goods inventory Prepaid insurance Investments Building and machinery Accumulated depreciation* Total Assets Liabilities and Stockholders Equity Liabilities: Accounts payable Income tax payable Note payable equipment Stockholders Equity: Common stock Paid-in capital Retained earnings** Total Liabilities & Stockholders Equity

Guidelines for Spreadsheet Preparation 1. Your worksheet tab titles will govern your formulas. Use the formula building capabilities of the program to help you construct the formulas that cover several sheets. Give your cells and formulas logical names to make your workbook understandable. You can view the formulas by accessing the Formulas tab at the top of the Excel window and selecting Show Formulas or by using the shortcut CTRL-` on the keyboard. A word of caution: When you give your cells and/or formulas unique names, the cells become static and cannot be copied to adjoining cells. Protect your worksheets and unprotect individual cells in which you will enter data. Give the cells in which data will be entered a unique color where you will know that data will be entered there. Also, protect your workbook to prevent the layout from being altered. Format your cells consistently for the type of data that will be entered (text, numbers, or currency). Use the Rounding function to prevent addition errors. Make your budgets and financial statements look professional and easy to read. When preparing your spreadsheet formulas, be sure to troubleshoot your spreadsheet to make sure that the formulas work correctly for different assumptions. Hint: Use the Trace Precedents and Trace Precedents functions under Formula tools to provide a visual verification of the relationships between cells and formulas. If you want to get an overall view of the effects of varying assumptions, use the Watch Window function under Formula tools to set up certain budget elements. For example, set up total sales revenue, ending balance in cash, income tax expense, and net income in a watch window. When you vary the sales in units, all of these assumptions will change.

2.

3. 4. 5.

6.

Instructions for Saving Worksheet. When you have finished your spreadsheet, save it with the following name: LastName,FirstInitial,ClassDay. For example, if your name is John Smith and you are in the Tuesday/Thursday class, save your file as SmithJTTR. Application questionsAnswer these questions by entering the new assumptions on the Assumptions worksheet and observing the changes. You should be able to obtain your answers by entering the changes on the budget assumption sheet and then adjusting the cash repayments and investments manually on the cash budget. Consider each assumption separately. Answer the questions on a separate sheet of paper. 1. Assume that sales of units increase by 15% over current levels for each month of the quarter. What is the effect on net income, ending accounts receivables and ending investments for March 31? 2. Assume that accounts payable are paid 50% in the month of purchase and 50% in the following month starting with the current years purchases. How does this affect cash on hand and ending accounts payable on March 31?

3. Assume that accounts receivable are paid 65% in month of sale, 25% in the month following sale, and 10% in the second month following sale, starting with the current year. How does this affect borrowings and repayments, investments, and the accounts receivable balance on March 31? 4. Assume that the income tax rate is decreased to 35%. How does this change net income for each month and for the entire quarter? Use the Watch Window function under Formula Tools to set up the cells for which you are tracking changes. Hint: if you give certain cells unique names, it will make tracking changes much easier. Instructions for Turning in Assignment Print out the eight sheets and staple them. These should be handed in: one set per group. Email the file to me: one file per group. Put your names and class time in the heading to your email. Attach the answers to the application questions to the back of the assignment. You may contact me if you have questions. You may not contact anyone outside your group for assistance.