Darley Manufacturing is preparing its master budget for the first quarter of the

Question

Darley Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Darley

1. Prepare a schedule of cash collections for January, February, and March, and for the quarter in total. 2. Prepare a production budget. (Hint: Unit sales Sales in dollars/Selling price per unit.) 3. Prepare a direct materials budget. 4. Prepare a cash payments budget for the direct material purchases from Requirement 3. 5. Prepare a cash payments budget for direct labor. 6. Prepare a cash payments budget for manufacturing overhead costs. . Prepare a cash payments budget for operating expenses. 8. 9. Prepare a combined cash budget. Calculate the budgeted manufacturing cost per unit (assume that fixed manufacturing overhead is budgeted to be $0.70 per unit for the year). 10. Prepare a budgeted income statement for the quarter ending March 31. (Hint: Cost of goods sold Budgeted cost of manufacturing one unit x Number of units sold.)

Explanation / Answer

Sales Budget January February March Total Budgeted Sales 80100 89100 82800 252000 Unit sellling price 9 9 9 9 Budgeted unit sales 8900 9900 9200 28000 1. Schedule of cash collections: January February March Total Cash Sales 24030 26730 24840 75600 Collections from: December Sales 53200 53200 January Sales 56070 56070 February Sales 62370 62370 Total Collections 77230 82800 87210 247240 2. Producion Budget January February March Total Budgeted Unit Sales 8900 9900 9200 28000 Add: Desired ending inventory 990 920 950 950    (10% of next month's sales) Total unis neded 9890 10820 10150 28950 Less: Beginning Inventory 890 990 920 890 Budgeted production units 9000 9830 9230 28060 3. Direct material budget January February March Total Budgeted Production units 9000 9830 9230 28060 Direct material per unit of production (Pounds) 2 2 2 2 Direct material required for production 18000 19660 18460 56120 Add: desired ending inventory     (20% of next month's production requirements) 3932 3692 3802 3802 Total direct material needed 21932 23352 22262 59922 Less: Beginning Inventory 3600 3932 3692 3600 Direct material purchases - pounds 18332 19420 18570 56322 Direct material cost per pound - $ 1.50 1.50 1.50 1.50 Budgeted direct material purchases - $ 27498 29130 27855 84483 4.   Cash payment budget for direct material purchases January February March Total Payment for :    December purchases 43000 43000    January purchases 5500 21998 27498    February purchases 5826 23304 29130    March Purchases 5571 5571    Total payments for direct materials 48500 27824 28875 105199 5.   Cash payment budget for direct labor January February March Total Cash payment for direct labor 3510 3834 3600 10944 6. Cash payment budget for manufacturing overheads January February March Total Variable manufacturing overhead per unit prodn. $1.40 $1.40 $1.40 $1.40 Variable manufacturing for the month 12600 13762 12922 39284 Factory rent 6500 6500 6500 19500 Other manufacturing overhead 2900 2900 2900 8700 Total manufacturing overhead 22000 23162 22322 67484 7. Cash payment budget for operating expenses January February March Total Variable operating expenses per unit of sale $1.20 $1.20 $1.20 $1.20 Variable manufacturing for the month 10680 11880 11040 33600 Fixed operating expenses 1200 1200 1200 3600 Total operating expenses 11880 13080 12240 37200

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