a. This will be the first year of operation for Okay Company. b. Budgeted unit s

Question

a. This will be the first year of operation for Okay Company. b. Budgeted unit sales by quarter for 2019 are projected as follows: First quarter 6,500, Second quarter 6,000, Third quarter 6,100 & Fourth quarter 6,250. First and second quarter 2020 budgeted sales units is 6,300 each quarter The selling price is $50 per unit. Sales are estimated to be collected 70% in cash and 30% credit Of the credit sales, 80% are estimated to be collected in the quarter following the sale and 20% are collected in the second quarter following the sale. c. d. Since this is the first year of operations there is no beginning inventory of finished goods at the beginning of the year. Okay's ending finished good inventory policy is 40% of the following quarter's unit sales needs. Each unit uses 0.75 hours of direct labor and 2 units of direct materials. Laborers are paid $10 per hour and one unit of direct materials costs $5 Since this is the first year of operations there is no beginning inventory of direct materials at the beginning of the year. Okay plans to have 30% of the direct materials needed for the next quarter's production units on hand at the end of cach quarter. Okay buys direct materials on account. 90% of the purchases are paid for in the quarter of acquisition, and the remaining 10% are paid for in the following quarter Fixed overhead totals $25,000 each quarter. Of this total, S5,000 represents depreciation. All other fixed expenses are paid for in cash in the quarter incurred Variable overhead is budgeted at $3 per direct labor hour. All variable overhead expenses are paid for in the quarter incurred Fixed selling and administrative expenses total S15,000 per quarter, including $2,500 depreciation e. f. h. i. j. k. Variable selling and administrative expenses are budgeted at $1.25 per unit sold. All selling and administrative expenses are paid for in the quarter incurred Okay will pay quarterly dividends of S10,000. During the first quarter, $55,000 of equipment will be purchased 1.

Explanation / Answer

1. Sales Budget:

2. Cash Collection of Sales:

3. Production Budget:

4. Direct Materials Purchases Budget:

5. Cash Payments of Direct Materials:

6. Direct Labor Budget:

7. Overhead Budget:

8. Operating Expenses Budget:

9. Cash Budget:

First Quarter Second Quarter Third Quarter Fourth Quarter Budgeted Unit Sales 6,500 6,000 6,100 6,250 Unit Selling Price $ 50 $ 50 $ 50 $ 50 Budgeted Dollar Sales $ 325,000 $ 300,000 $ 305,000 $ 312,500

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