with the lesu CASE 38. Comprehensive Budget Problem LO2,3.4.5,6 Tina\'s Fine Jui
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with the lesu CASE 38. Comprehensive Budget Problem LO2,3.4.5,6 Tina's Fine Juices is a bottler of orange juice located in the Northeast. The company produces bottled orange juice from fruit concentrate purchased from suppliers in Florida, Arizona, and California. The only ingredients in the juice are water and concentrate. The juice is blended, pasteurized, and bottled for sale in 12-ounce plastic bottles. The process is heavily automated and is centered on five machines that control the mixing and bottling of the juice. The amount of labor required is very small per bottle of juice. The average worker can process 10 bottles of juice per minute, or 600 bottles per hour. The juice is sold by a number of grocery stores under their store brand name and in smaller restaurants, delis, and bagel shops under the name of Tina's Fine Juices. Tina's has been in business for several years and uses a sophisticated sales forecasting model based on previous sales, expected changes in demand, and economic factors affecting the industry. Sales of juice are highly seasonal, peaking in the first quarter of the calendar year.Explanation / Answer
A. Sales Budget:
January
February
March
1st Qtr
Proj. sales (bottles)
350,000
425,000
400,000
1,175,000
× price per unit
1.05
1.05
1.05
1.05
Proj. sales ($)
367,500
446,250
420,000
1,233,750
B. Production Budget:
December
January
February
March
April
1st Qtr
Proj. sales (bottles)
370,000
350,000
425,000
400,000
395,000
1,175,000
+ Proj. ending inv.
35,000
42,500
40,000
39,500
37,500
39,500
Projected needs
405,000
392,500
465,000
439,500
432,500
1,214,500
– Proj. beg. inv.
-37,000
-35,000
-42,500
-40,000
-39,500
-35,000
Proj. prod’n (bottles)
368,000
357,500
422,500
399,500
393,000
1,179,500
C. Material Purchases Budget—Concentrate
December
January
February
March
April
1st Qtr
Proj. production (bottles)
368,000
357,500
422,500
399,500
393,000
1,179,500
÷ 32 (bottles per gallon)
/32
/32
/32
/32
/32
/32
Raw material needed for prod’n
11,500
11,172
13,203
12,484
12,281
36,859
+ Proj. ending inventory
2,234
2,641
2,497
2,456
2456
Projected needs
13,734
13,813
15,700
14,941
39,316
– Proj. beginning inventory
-2,300
-2,234
-2,641
-2,497
-2,234
Concentrate needed to purchase
11,434
11,579
13,059
12,444
37,082
× Price per gallon
4.80
4.80
4.80
4.80
4.80
Projected purchases ($)
54,883.20
55,576.80
62,685
59,729.76
177,991.60
Material Purchases Budget—Bottles
December
January
February
March
April
1st Qtr
Proj. production (bottles)
368,000
393,000
+ Proj. ending inventory
71,500
Projected needs
439,500
– Proj. beginning inventory
-73,600
Bottles needed to purchase
365,900
× Price per bottle
0.10
Projected purchases ($)
36,590
D. Direct Labor Budget
January
February
March
1st Qtr
Projected production (bottles)
357,500
422,500
399,500
1,179,500
÷ Bottles per hour
/600
/600
/600
/600
Direct labor hours needed for prod’n
596
704
666
1,966
× Direct labor rate per hour
X 15
X 15
X 15
X 15
Projected direct labor cost
8,937.50
10,562.50
9,987.50
29,487.50
E. Overhead Budget
December
January
February
March
1st Qtr
Projected production (bottles)
368,000
367,500
422,500
399,500
1,179,500
÷ Bottles per hour
/600
/600
/600
/600
/600
Budgeted machine hours
613.33
596
704
666
1,966
× Variable overhead rate
X 54.75
X 54.75
X 54.75
X 54.75
X 54.75
Projected variable overhead
33,580
32,621.88
38,553.13
36,454.38
107,629.38
Projected fixed overhead
123,333
123,333
123,333
123,333
369,999
Total projected overhead
156,913
155,954.88
161,886.13
159,787.38
477,628.38
Less: Depreciation (noncash)
-103,333
-103,333
-103,333
-103,333
-309,999
Budg. cash outflows for overhead
53,580
52,621.88
58,553.12
56,454.38
167,629.38
F. Cash Receipts Budget
January
February
March
1st Qtr
From November sales
59,062.5
59,062.5
From December sales
135,240
57,960
193,200
From January sales
183,750
128,625
55,125
367,500
From February sales
223,125
156,187.50
379,312.50
From March sales
210,000
210,000
Total cash receipts—sales
378,052.50
409,710
421,312.5
1,209,075
Cash Disbursements Budget
January
February
March
1st Qtr
DM purchases—concentrate
December
18,295
18,295
January
27,788.40
27,788.40
55,577
February
31,342.50
31,342.50
62,685
March
29,865
29,865
DM purchases—bottles
December
18,400
18,400
January
17,875
17,875
35,750
February
21,125
21,215
42,250
March
19,975
19,975
Total disbursements for DM
46,083
59,131
61,207
166,422
Total disbursements for DL
36,275
39,000
41,100
116,375
Manufacturing overhead costs
December
26,790
26,790
January
26,311
26,311
52,622
February
29,276.56
29,276.56
58,553
March
19,975
19,975
Total disbursements for OH
53,101
55,588
57,504
166,192
Total disbursements for S&A
100,000
100,000
100,000
300,000
Total cash disbursements
235,459
253,718
259,811
748,989
682041.85
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A. Sales Budget:
January
February
March
1st Qtr
Proj. sales (bottles)
350,000
425,000
400,000
1,175,000
× price per unit
1.05
1.05
1.05
1.05
Proj. sales ($)
367,500
446,250
420,000
1,233,750
B. Production Budget:
December
January
February
March
April
1st Qtr
Proj. sales (bottles)
370,000
350,000
425,000
400,000
395,000
1,175,000
+ Proj. ending inv.
35,000
42,500
40,000
39,500
37,500
39,500
Projected needs
405,000
392,500
465,000
439,500
432,500
1,214,500
– Proj. beg. inv.
-37,000
-35,000
-42,500
-40,000
-39,500
-35,000
Proj. prod’n (bottles)
368,000
357,500
422,500
399,500
393,000
1,179,500
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