The Bandit’s Beagle Company produces wood dog houses that sell for $400 each. Bu
ID: 2522224 • Letter: T
Question
The Bandit’s Beagle Company produces wood dog houses that sell for $400 each. Budgeted sales for the first four months are as follows:
Month Budgeted Sales (units)
January 1,000
February 1,500
March 2,500
April 2,000
Each dog house requires 20 square feet of oak at a cost of $10 per square foot. The company wants to maintain an inventory of dog houses equal to 10% of the following month’s sales. Inventory on January 1 consisted of 80 dog houses.
The company wants to maintain an inventory of oak equal to 20% of next month’s needs. Materials inventory on January 1 consisted of 11,000 square feet of oak. The company estimates an inventory of oak on hand at the end of March to equal 8,000 square feet.
Each dog house requires 5 hours of direct labor at a cost of $8.00 per hour. Variable manufacturing overhead is budgeted at $2 per direct labor hour.
Monthly fixed overhead consists of the following:
Supervisors’ salaries $ 6,000
Insurance $ 2,000
Depreciation on factory equipment $ 500
Depreciation on production facility $10,000
Total $18,500
The company expects 60% of the sales of each month will be collected in that month, with 35% collected in the following month. Five percent of all sales are uncollectible and written off in the following month.
The accounts receivable balance at the beginning of the year is $200,000, which is 40% of last year’s December sales of $500,000.
The company normally pays for 70% of its purchases in the month of purchase. The remaining 30% is paid in the following month.
Accounts payable at the beginning of the year is $54,000, which is 30% if December purchases of $180,000.
Assume variable selling costs equal 5% of sales and are paid in the month following the sale. Fixed Selling, general and administrative costs are $50,000 and, except for $10,000 of depreciation, are paid in the month incurred. Estimated tax payments equal 40% of estimated income for the quarter are made at the end of each quarter.
The company attempts to maintain a cash balance of $100,000 at all times. Any excess is invested in marketable securities of $10,000 denominations earning an 8% return.
Any deficiencies are covered by borrowing from a local bank at 10% interest.
The cash balance at the beginning of the year is $105,000.
Required:
Prepare a sales budget in dollars for each month and in total for the first quarter of the year.
Prepare a production budget in units for each month and in total for the first quarter.
Prepare a purchases budget in dollars for direct materials for each month and in total for the first quarter.
Prepare a direct labor budget for each month and in total for the first quarter.
Prepare a manufacturing overhead budget for each month and in total for the first quarter.
Prepare a schedule of cash collections on accounts receivable for each month and in total for the first quarter.
Prepare a schedule of cash payments on accounts payable for each month and in total for the first quarter.
Prepare a pro-forma income statement for each month and in total for the first quarter.
Explanation / Answer
1) Sales budget in dollars
2) Production Budget in units
3) Purchases budget in dollars
4) Direct labor budget in dollars
January February March Quarter total Sales units 1000 1500 2500 5000 Sales price $400 $400 $400 Budgeted sales $4,00,000 $6,00,000 $10,00,000 $20,00,000Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.