Assignment -
The master budget for 2013 is based on the following information:
1. Projected unit sales for each quarter for 2013 are as follows:
Quarter 1 - 60,000
Quarter 2 - 70,000
Quarter 3 - 80,000
Quarter 4 - 65,000
2. The selling price is $500 per unit. All sales are on credit (no cash sales). 70% of all sales are collected within the quarter they are sold. The other 30% are collected in the following quarter. There are no bad debts.
3. There is no beginning inventory of finished goods. The projected ending finished goods inventories are as follows:
Quarter 1 - 15,000 units
Quarter 2 - 20,000 units
Quarter 3 - 10,000 units
Quarter 4 - 5,000 units
4. There are no beginning or ending inventories of work-in-process.
5. Each unit produced uses 10 hours of direct labor. Laborers are paid $15 per hour.
6. Each unit produced uses 5 units of direct materials. One unit of direct materials costs $50.
7. There are 100,000 units of direct materials in beginning inventory as of January 1, 2013. There is estimated to be 70,000 units of direct materials in beginning inventory as of January 1, 2014 (what is ending inventory December 31, 2013?). At the end of each quarter, the desired ending inventory is 30% of the direct materials needed for production.
8. Direct materials are purchased on account. 60% are paid for in the quarter of purchase, and the remaining 40% are paid for in the next quarter.
9. Fixed overhead totals $500,000 each quarter. Of this total, $100,000 is depreciation. The remaining $400,000 is paid for in cash in the quarter incurred. The fixed overhead rate for the Finished Goods inventory budget is calculated by dividing the year's total fixed overhead by the year's budgeted production in units.
10. Variable overhead is budgeted at $5 per direct labor hour. All variable overhead expenses are paid for in the quarter incurred.
11. Fixed selling and administrative expenses total $200,000 per quarter, including $50,000 depreciation.
12. Variable selling and administrative expenses are budgeted at $10 per unit sold. All selling and administrative expenses are paid for in the quarter incurred.
13. The balance sheet as of December 31, 2012 is
Assets:
Cash $300,000,000
Direct Materials Inventory $5,000,000
Accounts Receivable $3,000,000
Plant & Equip, net $20,000,000
Total Assets $328,000,000
Liabilities & Stockholders' Equity:
Accounting Payable $3,000,000
Capital Stock $175,000,000
Retained Earnings $150,000,000
Total Liab & Stckhldrs' Equity $328,000,000
14. Quarterly dividends of $100,000 will be paid.
15. At the end of Quarter 4, 2013, equipment costing $500,000 will be purchased.
Prepare:
The sales budget for all four quarters and year.
Production budget for all four quarters and year.
Direct materials purchases budget for all four quarters and year.
Direct labor budget for all four quarters and year.
Overhead budget for all four quarters and year and as an aside (the next a., b., c., d., and e. do not affect any budget):
- Calculate the predetermined overhead rate based on direct labor hours.
- Assume there are two product lines. Assume also that you're at December 31, 2013 where the actual amounts of the driver (direct labor hours) is known. Product Line 1 actually consumed 10,000 direct labor hours and Product Line 2 actually consumed 10,500 direct labor hours. Calculate the applied overhead to each product.
- If 1,000 units of each Product Line are produced, what is the unit OH cost for each product line. Using #5 and #6 in the problem and the number of direct labor hours just mentioned in b. (notice that Product Line 2 used more direct labor hours than planned), what is the unit DL cost and unit DM cost for each Product Line? What is the unit product cost for each Product Line?
- Assume that at the end of the year (December 31, 2013), the actual overhead rate should have been $4 per direct labor hour. What is the actual overhead allocated to each Product Line, using the same actual consumption of direct labor hours in Part b?
- Comparing b. & d., is overhead under- or over-applied for each Product Line and by how much?
Selling and administrative expense budget for all four quarters and year
Ending finished goods inventory budget for year ended, December 31, 2013
Cost of goods sold budget for year ended, December 31, 2013
Cash budget for all four quarters and year
Budgeted income statement (using absorption costing) for year ended, December 31, 2013
Budgeted balance sheet for year ended, December 31, 2013
Budgeted income statement using variable costing for year ended, December 31, 2013, and calculate
- Breakeven units
- Breakeven revenue
- Margin of Safety
Attachment:- Assignment.rar