WASATCH MANUFACTURING

Master Budget

Sales Budget
December January February March
Unit Sales 8445 8900 9900 9200
Price per Unit $ 9.00 $ 9.00 $ 9.00 $ 9.00
Sales Revenue $ 76,000.00 $ 80,100.00 $ 89,100.00 $ 82,800.00

Cash Collections Budget

January February March
Cash Sales (25%) $ 20,025.00 $ 22,275.00 $ 20,700.00
Credit Sales (75%) $ 57,000.00 $ 60,075.00 $ 66,825.00
Total cash collections $ 77,025.00 $ 82,350.00 $ 87,525.00

Production Budget
January February March
Unit sales 8900 9900 9200
Plus: Desired ending inventory 1485 1380 1425
Total needed 10385 11280 10625
Less: Beginning Inventory 1335 1485 1380
Units to produce 9050 9795 9245

Chapter 9: The Master Budget Page 1 of 10

 Direct Materials Budget
January February March
Units to be produced 9050 9795 9245
Multiply by: quantity of DM needed per unit (lbs.) 2 2 2
Quantity of DM needed for production (lbs.) 18100 19590 18490
Plus: Desired ending inventory of DM (lbs.) 1959 1849 937
Total quantity of DM needed (lbs.) 20059 21439 19427
Less: Beginning inventory of DM (lbs.) 1810 1959 1849
Quantity of DM to purchase (lbs.) 18249 19480 17578
Multiply by: Cost per pound $ 1.50 $ 1.50 $ 1.50
Total Cost of DM purchases $ 27,373.50 $ 29,220.00 $ 26,367.00

Cash Payments for Direct Material Purchases Budget

January February March
December Purchases (From A/P) $ 22,000.00
January Purchases $ 8,212.05 $ 19,161.45
February Purchases $ 8,766.00 $ 20,454.00
March Purchases $ 7,910.10
Total Cash Payments $ 30,212.05 $ 27,927.45 $ 28,364.10

Cash Payments for Direct Labor Budget

January February March
Units Produced 9050 9795 9245
Multiply by: Hours per Unit 0.03 0.03 0.03
Direct Labor Hours 271.5 293.85 277.35
Multiply by: Direct Labor Rate per hour $ 13.00 $ 13.00 $ 13.00
Direct Labor Cost $ 3,529.50 $ 3,820.05 $ 3,605.55

Chapter 9: The Master Budget Page 2 of 10

 Cash Payments for Manufacturing Overhead Budget
January February March
Rent (fixed) $ 6,500.00 $ 6,500.00 $ 6,500.00
Other Manufacturing Overhead (fixed) $ 2,100.00 $ 2,100.00 $ 2,100.00
Variable Manufacturing Overhead Costs $ 12,670.00 $ 13,713.00 $ 12,943.00
Cash Payments for Manufacturing Overhead $ 21,270.00 $ 22,313.00 $ 21,543.00

Cash Payments for Operating Expenses Budget

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

Combined Cash Budget

January February March
Cash Balance, Beginning $ 6,000.00 $ 4,933.45 $ 5,142.95
Plus: Cash Collections $ 77,025.00 $ 82,350.00 $ 87,525.00
Total Cash Available $ 83,025.00 $ 87,283.45 $ 92,667.95
Less Cash Payments:
DM Purchases $ 30,212.05 $ 27,927.45 $ 28,364.10
Direct Labor $ 3,529.50 $ 3,820.05 $ 3,605.55
Manufacturing Overhead costs $ 21,270.00 $ 22,313.00 $ 21,543.00
Operating Expenses $ 12,080.00 $ 13,280.00 $ 12,440.00
Tax Payment $ 10,800.00
Equipment Purchases $ 15,000.00 $ 6,000.00 $ 4,000.00
Total Cash Payments $ 82,091.55 $ 84,140.50 $ 69,952.65
Ending Cash before Financing $ 933.45 $ 3,142.95 $ 22,715.30
Financing:
Borrowings $ 4,000.00 $ 2,000.00
Repayments $ (6,000.00)
Interest Payments $ (240.00)

Chapter 9: The Master Budget Page 3 of 10

 Total Financing $ 4,000.00 $ 2,000.00 $ (6,240.00)
Cash Balance, Ending $ 4,933.45 $ 5,142.95 $ 16,475.30

Chapter 9: The Master Budget Page 4 of 10

 Budgeted Manufacturing Cost per Unit
Direct materials cost per unit (2 lbs x 1.50 per unit)
Direct labor cost per unit
Variable manufacturing costs per unit
Fixed manufacturing overhead per unit
Cost of Manufacturing each unit

Budgeted Income Statement

Sales Revenue $ 252,000.00
Less: Cost of Goods Sold $ (140,840.00)
Gross Profit $ 111,160.00
Less: Operating Expenses $ 37,800.00
Less: Depreciation expense $ 5,200.00
Operating Income $ 68,160.00
Less: Interest Expense $ (240.00)
Less: Income Tax Expense $ 19,017.60
Net Income $ 48,902.40

Chapter 9: The Master Budget Page 5 of 10

 April May
9500 8600
$ 9.00 ###
$ 85,500.00 $ 77,400.00

Quarter
$ 63,000.00
$ 183,900.00
$ 246,900.00

Quarter
28000
1425
29425
1335
28090

Chapter 9: The Master Budget Page 6 of 10

 Quarter
28090
2
56180
937
57117
1810
55307
$ 1.50
$ 82,960.50

Quarter
$ 22,000.00
$ 27,373.50
$ 29,220.00
$ 7,910.10
$ 86,503.60

Quarter
28090
0.03
842.7
$ 13.00
$ 10,955.10

Chapter 9: The Master Budget Page 7 of 10

 Quarter
$ 19,500.00
$ 6,300.00
$ 39,326.00
$ 65,126.00

Quarter
$ 33,600.00
$ 4,200.00
$ 37,800.00

Quarter
$ 6,000.00
$ 246,900.00
$ 252,900.00

$ 86,503.60
$ 10,955.10
$ 65,126.00
$ 37,800.00
$ 10,800.00
$ 25,000.00
$ 236,184.70
$ 16,715.30

$ 6,000.00
$ (6,000.00)
$ (240.00)

Chapter 9: The Master Budget Page 8 of 10

$ (240.00)
$ 16,475.30

Chapter 9: The Master Budget Page 9 of 10

$ 3.00
$ 0.03
$ 1.40
$ 0.60
$ 5.03

Chapter 9: The Master Budget Page 10 of 10