4. Cash Payments of Materials Purchases: Johnson Inc. purchases raw materials on

Question

4. Cash Payments of Materials Purchases: Johnson Inc. purchases raw materials on account for use in production. Sheets of metal used in production cost $2.00 each. Sixty-five percent of a month's purchases are paid for in the month of purchase; the other thirty-five percent is paid for in the following month. No discount terms are available. The accounts payable balance on June 30 is $24,200. Required: Prepare a cash payments for materials purchases budget and answer the following questions: 1. How much cash is required for payments made on account, payable in the month of July? 2. How much cash is required for payments made on account, payable in the month of August? 3. How much cash is required for payments made on account, payable in the month of September? 4. What is the accounts payable balance on September 30, 2017? Check Figure: Total budgeted cash payments made for materials purchases for the quarter- S282,580 5. Cash Payments for Direct Labor: Each unit produced requires 30 minutes (0.5 hours) of direct labor. Employees are paid at a rate of $7.00 per hour. Required: Prepare a cash payments for direct labor budget, showing total labor cost by month and in total for the quarter. Check Figure: Total budgeted cash payments made for direct labor for the quarter -S167,563 6. Cash Payments for Manufacturing Overhead Variable manufacturing overhead is $1.50 per unit produced and fixed manufacturing overhead is $25,000 per month. Fixed manufacturing overhead includes S10,000 in depreciation which does not require a cash outflow. Required Prepare a cash payments for manufacturing overhead budget, showing total manufacturing overhead cost by month and in total for the quarter. Check Figure: Total budgeted cash payments made for manufacturing overhead for the quarter S116,813

Explanation / Answer

EXPECTED CASH PAYMENTS JULY AUG SEP QUARTER Material Purrchases units 35350 65175 44100 144625 Purchase price per unit 2 2 2 2 Total cost 70700 130350 88200 289250 Beginning Accounts payable 24,200 24,200 July month purchase 45955 24745 70,700 Aug Month Purchase 84728 45622 130,350 Ssep month Purchase 57330 57,330 Total Cash disbursement 70,155 109,473 102,952 282,580 LABOUR COST BUDGETS JULY AUG SEP QUARTER Units to be produced 9,750 23,500 14,625 47,875 Labour required per unit 0.5 0.5 0.5 0.5 Labour hours 4875 11750 7312.5 23937.5 Labuor Rate per hour 7 7 7 7 Budgeted Labour cost in $ 34,125 82,250 51,188 167,563 MANUFACTURIRNG OH COST JULY AUG SEP QUARTER Units to be produced 9,750 23,500 14,625 47,875 Variable OH rate 1.5 1.5 1.5 1.5 Variable Manufacturing OH 14625 35250 21937.5 71812.5 Fixed Manufacturing cost 25000 25000 25000 75000 Total Mnaufacturing OH 39625 60250 46937.5 146812.5 Less: Depreciation 10000 10000 10000 30000 Budgeted Manfacturing OH 29625 50250 36937.5 116812.5 Selling and Admin OH JULY AUG SEP QUARTER Units to be sold 10,000 25,000 15,000 50,000 Variable OH rate 0.5 0.5 0.5 0.5 Vvariable SA OH 5000 12500 7500 25000 Fixed SA Oh 45000 45000 45000 135000 Total Selling and admin OH 50000 57500 52500 160000 Less: Depreciation 8000 8000 8000 24000 Budgeted Ssellingn Admn Ohh -cash 42000 49500 44500 136000 EXPECTED CASH COLLECTIONS JULY AUG SEP QUARTER Budgeted sales units 10000 25000 15000 50000 Price per unit 14 14 14 14 Budgeted Sales revenue 140000 350000 210000 700,000 June Months sales 30,000 15000 45,000 July Month sales 98,000 28000 14000 140,000 Aug month sales 245000 70000 315,000 Sep Month sales 147000 147,000 Total Cash Collections 128,000 288,000 231,000 647,000

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