The Bottled Water Company has been bottling and selling water since 1940. Bob Dr

Question

The Bottled Water Company has been bottling and selling water since 1940. Bob Drink, the current owner of The Bottled Water Company, would like to know how a new product would affect the company’s net income in the coming year. The Bottled Water Company Budget Committee provided the footnotes at the bottom of a budget. Your task as my Managerial Accounting Department team members: compile Master Budget (Operating Budgets), a Budgeted Income Statement and recommend whether the company should produce the new product.

Calculate individual budgets and create income statement and at the end give the recommendation. It is the master

First quarter is given and the rest needs to be calculated

ACCT 200 MBC Team ACCOUNTING 200 REQUIRED CLASS BUDGET PROJECT THE BOTTLED WATER COMPANY The Bottled Water Company has been bottling and selling water since 1940. Bob Drink, the current owner of The Bottled Water Company, would like to know how a new product would affect the company's net income in the coming year. The Bottled Water Company Budget Committee provided the footnotes at the bottom of a budget. Your task as my Managerial Accounting Department team members: compile Master Budget (Operating Budgets), a Budgeted Income Statement and recommend whether the company should produce the new product. THE BOTTLED WATER COMPANY SALES BUDGET FOR YEAR ENDING DECEMBER 31, 2017 Quarter 2 3 4 Year 40,000 x $1 40,000 80,000 27,000 28,000 175,000 Sales in Units X Selling Price/Unit Total Sales 80,000 27,000 28,000 175,000

Explanation / Answer

Production Budget Quarter 1 2 3 4 year Sales in units 40000 80000 27000 28000 175000 add: desired ending inventory of FG 8000 2700 2800 6000 19500 desired total units 48000 82700 29800 34000 194500 Less: desired beginning inventory of FG 4000 8000 2700 2800 17500 Total production units 44000 74700 27100 31200 177000 Direct material Purchase Budget Quarter 1 2 3 4 year Total production x 20 ounce per unit 880000 1494000 542000 624000 3540000 add: desired ending inventory of RM 298800 108400 124800 240000 772000 Less: desired beginning inventory of RM 156000 298800 108400 124800 688000 Total Ounces of DRM to be purchased 1022800 1303600 558400 739200 3624000 Total cost of DRM to be purchased (@$0.01/Ounce)($)    10,228    13,036    5,584    7,392    36,240 Direct labour Budget Quarter 1 2 3 4 year Total production units 44000 74700 27100 31200 177000 Direct labour hour per unit 0.001 0.001 0.001 0.001 Total direct labour hours required 44 74.7 27.1 31.2 177 cost of direct labour per hour ($) 8 8 8 8 Total cost of direct labour ($) 352 597.6 216.8 249.6 1416 Overhead Budget Quarter 1 2 3 4 year Production Units 44000 74700 27100 31200 177000 Variable overhead costs: Factory Supply($0.01 per unit) 440 747 271 312 1770 Employee benefits ($0.05 per unit) 2200 3735 1355 1560 8850 Inspection ($0.01 per unit) 440 747 271 312 1770 Maintenance and Repair ($0.02 per unit) 880 1494 542 624 3540 Utilities ($0.01 per unit) 440 747 271 312 1770 Total variable Overhead Costs ($) 4400 7470 2710 3120 17700 Total Fixed Overhead Costs ($) 1500 1500 1500 1500 6000 Total Overhead Costs ($) 5900 8970 4210 4620 23700 Selling & Administrative expense Budget Quarter 1 2 3 4 year Sales in units 40000 80000 27000 28000 175000 Delivery Expense @ $0.01/unit ($) 400 800 270 280 1750 Sales Commission @ $0.02 / unit ($) 800 1600 540 560 3500 Accounting @ $0.01/unit ($) 400 800 270 280 1750 Other administrative expenses @$0.01/unit ($) 400 800 270 280 1750 Total variable selling & admin. Expense ($) 2000 4000 1350 1400 8750 Total fixed selling & admin. Expense ($) 5000 5000 5000 5000 20000 Total selling & admin expense ($) 7000 9000 6350 6400 28750 Cost of goods Manufactured Quarter 1 2 3 4 year Direct material used Beginning Inventory($) 1560 2988 1084 1248 Purchase($) 10288 13036 5584 7392 total available for use($) 11848 16024 6668 8640 ending inventory($) 2988 1084 1248 2400 Cost of direct material used($) 8860 14940 5420 6240 35460 Direct labour Costs($) 352 597.6 216.8 249.6 1416 Overhead Costs($) 5900 8970 4210 4620 23700 Total manufacturing Costs($) 15112 24507.6 9846.8 11110 60576 WIP inventory- beginning 0 0 0 0 0 less: WIP -ending 0 0 0 0 0 Cost of goods manufactured($) 15112 24507.6 9846.8 11110 60576 Units produced 44000 74700 27100 31200 Manufacturing cost per unit ($) 0.34345 0.32808 0.3634 0.3561

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