ACCT 1B Lecture 26: ACCT_1B_notes_26

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amaranthgrasshopper262

29 Aug 2020

School

Irvine Valley College

Department

Accounting

Course

ACCT 1B

Professor

johnson

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Document Summary

A detailed plan showing the number of units that must be produced during a period to meet both sales and inventory. Note merchandising firms have to prepare a merchandise purchase budget. Merchandise purchase budget shows goods purchases rather that goods to be produced. A detailed plan showing the amount of raw materials that must be purchased during a period to meet both production and inventory needs. Shows indirect production costs that will be incurred over a specific time period. To calculate predetermined overhead rate for the year: total manufacturing overhead / budgeted direct labour-hours. A budget showing the dollar amount of cost expected to appear on the balance sheet unsold units at the end of a period. The cash budget , which is composed of four sections: Disbursements section: consists of all cash payments that are planned for the budget period, eg. direct materials, direct labour, mfg. Financing section: detailed account of the borrowings and loan repayments.

Related Questions

1). XYZ Company paid for its purchases of inventory 25% in the quarter of purchase and 75% in the following quarter. XYZ had purchases of $100,000 in the first quarter, $200,000 in the second quarter, and $300,000 in the third quarter. How much cash was paid to suppliers in the second quarter?

A. $125,000

B. $175,000

C. $200,000

D. $275,000

2). Which of the following budgets must be completed before the Raw Material Purchases Budget?

A. Cash Disbursements Budget

B. Cash Collections Budget

C. Sales Budget

D. Selling and Administrative Budget

3). The monthly manufacturing overhead budget at ABC Corporation includes the following:

Variable Manufacturing Overhead (based on direct labor-hours)	$9 per direct labor hour
Fixed Manufacturing Overhead (including depreciation of $3,270)	$43,040

In September there were 2,200 direct labor hours worked. What is the budgeted cash disbursements for manufacturing overhead for September?

A. $39,320

B. $19,800

C. $62,840

D. $59,570

4). ABC Corporation makes and sells cell phone covers. Each cell phone cover requires 6 minutes of direct labor at the standard rate of $18.00 per direct labor-hour. What is the budgeted direct labor cost per cell phone cover?

A. $1.80 per cell phone cover

B. $3.00 per cell phone cover

C. $1.08 per cell phone cover

D. $18.00 per cell phone cover

5). ABC Corporation is in the process of preparing its annual budget. The following beginning and ending finished goods inventory levels are planned for the year

	Beginning Inventory	Ending Inventory
Finished goods (units)	20,000 units	70,000 units

If the company plans to sell 600,000 finished goods units during the year, the number of units it would have to manufacture during the year would be:

A. 580,000 units

B. 600,000 units

C. 650,000 units

D. 670,000 units

Show your work

Preparing a Comprehensive Budget

Ginnie Springs Company has been bottling and selling water since1940. The companyâs current owner would like to know how a newproduct would affect the companyâs rent income in the comingyear.

Required

Calculate Ginnie Springs net income for the new product in thecoming year by completing the operating budgets and budgeted incomestatement that follow. Assume that the selling price will remainconstant.

Sales budget

Ginnie Springs Company

Sales Budget

Forthe year Ended December 31

Quarter

	1	2	3	4	Year
Sales in Units	40,000	30,000	50,000	55,000	175,000
Selling price per unit	X $1	X ?	X ?	X ?	X ?
Totals Sales	40,000	$ ?	X ?	X ?	X ?

2. Production Budget:

Ginnie SpringsCompany

ProductionBudget

For the year Ended December31_____________

Quarter

	1	2	3	4	Year
Sales in Units	40,000	?	?	?	?
Plus desired units of ending finished goods inventory*	30,000	?	?	6000	6000
Desired total Units	43000	?	?	?	?
Less desired units of ending finished goods inventory*	4000	?	?	?	4000
Total Production units	39,000	?	?	?	?

*Desired units of ending finished goods inventory = 10% of nextquarterâs budgeted production needs in ounces. Desired ounces ofbeginning direct materials inventory = 20% of current quartersbudgeted production needs in ounces.

3.DirectMaterials Purchases budget

Ginnie SpringsCompany

Direct Materials PurchaseBudget

For the year Ended December31_____________

Quarter

	1	2	3	4	Year
Total production units	39,000	32,000	50,500	55,500	?
Ounces per unit	X 20	X 20	X 20	X 20	X 20
Total production needs in ounces	780,000	?	?	?	?
Plus desired ounces of ending direct materials inventory*	128,000 908,000	? ?	? ?	240,000 ?	240,000 ?
Less desired ounces of ending direct materials inventory*	156,000	?	?	?	156,000
Total ounces of direct material to be purchased	752,000	?	?	?	?
Cost per ounce	X $0.01	X ?	X ?	X ?	X ?
Total cost of direct materials purchases	$7520	?	?	?	?

Desired ounces of ending direct material inventory =20% of nextquarters budgeted production needs in ounces.

Desired ounces of beginning direct materials inventory = 20% ofcurrent quarters budgeted production needs in ounces.

4.Directlabor budget:

Ginnie SpringsCompany

Direct LaborBudget

For the year EndedDecember 31_____________

Quarter

	1	2	3	4	Year
Total production units	39,000	?	?	?	?
Direct labor hours per units	X 0.001	X ?	X ?	X ?	X ?
Total direct labor hours	39.0	?	?	?	?
Direct labor cost per hour	X $8	X ?	X ?	X ?	X ?
Total direct labor cost	$312	$ ?	$ ?	$ ?	$ ?

5.Overheadbudget

Ginnie SpringsCompany

Overhead Budget

For the year EndedDecember 31_____________

Quarter

	1	2	3	4	Year
Variable overhead costs:
Factory supplies ($0.01)	$ 390	$ ?	$ ?	$ ?	$ ?
Employee benefits ($0.05)	1,950	?	?	?	?
Inspection ($0.01)	390	?	?	?	?
Maintenance and repairs($0.02)	780	?	?	?	?
Utilities ($0.01)	390	?	?	?	?
Total Variable overheadcosts	$3900	$ ?	$ ?	$ ?	$ ?
Total fixed overhead costs	1416	?	?	?	?
Total overhead costs	$5,316	$ ?	$ ?	$ ?	$ ?

Note: The figures in parentheses are variable costs perunit.

6.Sellingand administrative expenses budget:

Ginnie SpringsCompany

Selling and Administrative Expenses Budget

For the year EndedDecember 31_____________

Quarter

	1	2	3	4	Year
Variable Selling and Administrative expenses
Delivery expenses ($0.01)	$ 400	$ ?	$ ?	$ ?	$ ?
Sales Commission ($0.02)	800	?	?	?	?
Accounting ($0.01)	400	?	?	?	?
Other administrative expenses($0.01)	400	?	?	?	?
Total Variable selling and administrative exp.	$2,000	$ ?	$ ?	$?	$?
Total fixed selling and administrative exp.	5000	?	?	$?	?
Total selling and administrative expenses	$ 7,000	$ ?	$ ?	$ ?	$ ?

Note: The figures in parentheses arevariable costs per unit

7. Cost of goods manufactured budget:

Ginnie SpringsCompany

Cost of Goods Manufactured Budget

For the year EndedDecember 31_____________

Direct Material Used:

Direct Material Inventory,Beginning

Purchases

Cost of Direct materials available foruse

Less: Direct materials Inventory,ending

Cost of Direct Materialsused

Direct laborcosts:

Overhead costs:

Total manufacturing costs

Work in Process Inventory,beginning*

Less: work in process inventory,ending*

Cost of Goods Manufactured

Units produced

Manufactured cost perunit

It is the companyâs policy to have no units in process at theend of theyear.

8. Budgeted income statement

Ginnie Springs Company

Selling and Administrative Expenses Budget

For the year EndedDecember 31_____________

Sales

Cost of goods sold

Finished goods inventory beginning

Cost of goods manufactured

Cost of Goods available for sale

Less finished goods inventory, ending

Cost of good sold

Gross margin

Selling and administrative expenses

Income from operations

Income taxes expenses (30% tax rate)

Net Income

lemonhamster976

Check My Work (2 remaining) eBook Problem-Solving StrategyBudgeted Income Statement and Supporting Budgets The budgetdirector of Gold Medal Athletic Co., with the assistance of thecontroller, treasurer, production manager, and sales manager, hasgathered the following data for use in developing the budgetedincome statement for March 2014: a.Estimated sales for March:b.Estimated inventories at March 1: c.Desired inventories at March31: d.Direct materials used in production: e.Anticipated cost ofpurchases and beginning and ending inventory of direct materials:f.Direct labor requirements: g.Estimated factory overhead costs forMarch: h.Estimated operating expenses for March: i.Estimated otherincome and expense for March: j.Estimated tax rate: 30% Required:1. Prepare a sales budget for March. Enter all amounts as positivenumbers. Gold Medal Athletic Co. Sales Budget For the Month EndingMarch 31, 2014 Unit Sales Volume Unit Selling Price Total SalesBatting helmet $ $ Football helmet Total revenue from sales $ 2.Prepare a production budget for March. Enter all amounts aspositive numbers. Gold Medal Athletic Co. Production Budget For theMonth Ending March 31, 2014 Units Batting helmet Football helmetExpected units to be sold Plus desired inventory, March 31, 2014Total Less estimated inventory, March 1, 2014 Total units to beproduced 3. Prepare a direct materials purchases budget for March.Enter all amounts as positive numbers. Gold Medal Athletic Co.Direct Materials Purchases Budget For the Month Ending March 31,2014 Plastic Foam Lining Total Units required for production:Batting helmet Football helmet Plus desired units of inventory,March 31, 2014 Total Less estimated units of inventory, March 1,2014 Total units to be purchased Unit price $ $ Total directmaterials to be purchased $ $ $ 4. Prepare a direct labor costbudget for March. Enter all amounts as positive numbers. Gold MedalAthletic Co. Direct Labor Cost Budget For the Month Ending March31, 2014 Molding Department Assembly Department Total Hoursrequired for production: Batting helmet Football helmet TotalHourly rate $ $ Total direct labor cost $ $ $ 5. Prepare a factoryoverhead cost budget for March. Enter all amounts as positivenumbers. Gold Medal Athletic Co. Factory Overhead Cost Budget Forthe Month Ending March 31, 2014 Indirect factory wages $Depreciation of plant and equipment Power and light Insurance andproperty tax Total $ 6. Prepare a cost of goods sold budget forMarch. Work in process at the beginning of March is estimated to be$15,300, and work in process at the end of March is desired to be$14,800. Enter all amounts as positive numbers. Gold Medal AthleticCo. Cost of Goods Sold Budget For the Month Ending March 31, 2014SelectDirect materials inventory, March 1, 2014Direct materialsinventory, March 31, 2014Direct materials purchasesFactoryOverheadFinished goods inventory, March 1, 2014Finished goodsinventory, March 31, 2014 SelectDirect materials inventory, March1, 2014Direct materials inventory, March 31, 2014Direct materialspurchasesFactory OverheadWork in process inventory, March 1,2014Work in process inventory, March 31, 2014 Direct materials:SelectDirect materials inventory, March 1, 2014Direct materialsinventory, March 31, 2014Finished goods inventory, March 1,2014Finished goods inventory, March 31, 2014Work in processinventory, March 1, 2014Work in process inventory, March 31, 2014SelectDirect laborDirect materials purchasesFactoryoverheadFinished goods inventory, March 31, 2014Work in processinventory, March 1, 2014Work in process inventory, March 31, 2014Cost of direct materials available for use SelectLess: Directmaterials inventory, March 1, 2014Less: Direct materials inventory,March 31, 2014Less: Finished goods inventory, March 1, 2014Less:Finished goods inventory, March 31, 2014Less: Work in processinventory, March 1, 2014Less: Work in process inventory, March 31,2014 Cost of direct materials placed in production SelectDirectlaborDirect materials purchasesFinished goods inventory, March 1,2014Finished goods inventory, March 31, 2014Work in processinventory, March 1, 2014Work in process inventory, March 31, 2014SelectDirect materials purchasesFactory overheadFinished goodsinventory, March 1, 2014Finished goods inventory, March 31,2014Work in process inventory, March 1, 2014Work in processinventory, March 31, 2014 Total manufacturing costs Total work inprocess during the period SelectLess: Direct materials inventory,March 1, 2014Less: Direct materials inventory, March 31, 2014Less:Finished goods inventory, March 1, 2014Less: Finished goodsinventory, March 31, 2014Less: Work in process inventory, March 1,2014Less: Work in process inventory, March 31, 2014 Cost of goodsmanufactured Cost of finished goods available for sale SelectLess:Direct materials inventory, March 1, 2014Less: Direct materialsinventory, March 31, 2014Less: Finished goods inventory, March 1,2014Less: Finished goods inventory, March 31, 2014Less: Work inprocess inventory, March 1, 2014Less: Work in process inventory,March 31, 2014 Cost of goods sold 7. Prepare a selling andadministrative expenses budget for March. Enter all amounts aspositive numbers. Gold Medal Athletic Co. Selling andAdministrative Expenses Budget For the Month Ending March 31, 2014Selling expenses: Sales salaries expense Advertising expenseTelephone expenseâselling Travel expenseâselling Total sellingexpenses Administrative expenses: Office salaries expenseDepreciation expenseâoffice equipment Telephoneexpenseâadministrative Office supplies expense Miscellaneousadministrative expense Total administrative expenses Totaloperating expenses 8. Prepare a budgeted income statement forMarch. Enter all amounts as positive numbers. Gold Medal AthleticCo. Budgeted Income Statement For the Month Ending March 31, 2014SelectGross profitIncome before income taxInterest expenseInterestrevenueRevenue from sales SelectAdministrative expensesCost ofgoods soldIncome tax expenseInterest expenseSelling expensesSelectGross profitInterest revenueNet incomeNet lossRevenue fromsales Operating expenses: SelectCost of goods soldInterestrevenueNet incomeNet lossSelling expenses SelectAdministrativeexpensesGross profitInterest revenueNet incomeNet loss Totaloperating expenses Income from operations Other income: SelectGrossprofitInterest expenseInterest revenueNet incomeRevenue from salesOther expenses: SelectCost of goods soldGross profitInterestexpenseInterest revenueNet loss Income before income tax SelectCostof goods soldGross profitIncome tax expense (30% rate)InterestrevenueNet loss Net income

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ACCT 1B Lecture 26: ACCT_1B_notes_26

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