C3 THREE-MONTH MASTER BUDGET The balance sheet of Thorny Corp, as of December 31
ID: 2793824 • Letter: C
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C3 THREE-MONTH MASTER BUDGET The balance sheet of Thorny Corp, as of December 31 is as tollows Thorny Corp Balance Sheet at December 31 Assets Cash Accounts receivable Raw materials Finished goods Land Plant and equipment Less: Accumulated depreciation 41,700 192,000 02 240 64 400 $500,000 112,000 388000 Liabilities and Stockholders' Equity Accounts payable to suppliers Common stock Retained earnings 40,000 100,000 698340 798240 The following information has been extracted from Thorny's records 1. Thorny manufactures and sells Gizmos. The company has projected unit sales for ts product for the next five months as follows: rdas for as Tho January February March April May Units 7,000 8,000 10,000 8,000 7,000 aaroe? eies the All sales are made on account. Gizmos sell for $60 each. Forty percent of all sales are collected in the month of sale. The remaining 60% are collected in the following month. ach $1 nventory for Gizmos at 20% of te following month's sales. Thorny's December 31 finished goods inventory consists of 1,400e Gizmos 2. Management desires to maintain the finished goods i 3. In order to produce one Gizmo, the following units of raw materials are used: Units Raw Material What Huh 3 The price of What has recently risen and is now $4 per uni. The price of Hut is $2 80 per Huh at 25% of the following month's production needs. Thorny's December 31 raw materal 196 ventory for both What and unit. Management desires to maintain the ending raw materials inExplanation / Answer
Thorny Corp. Sales Budget Months Jan Feb Mar Quarter Budgeted unit sales=(A) 7000 8000 10000 25000 Selling Price Per unit(B) $ 60.00 $ 60.00 $ 60.00 $ 60.00 Total sales=(A)*(B) $ 420,000.00 $ 480,000.00 $ 600,000.00 $ 1,500,000.00 Schedule of expected cash collections Months Sales Jan Feb Mar Quarter Accounts Receivable $ 192,000.00 $ 192,000.00 $ 192,000.00 Jan Sales=($420000*40%) in Jan and ($420000*60%) in Feb $ 420,000.00 $ 168,000.00 $ 252,000.00 $ 420,000.00 Feb sales=($480000*40%) in Feb and ($480000*60%) in March $ 480,000.00 $ 192,000.00 $ 288,000.00 $ 480,000.00 Mar Sales=($600000*40%) in March $ 600,000.00 $ 240,000.00 $ 240,000.00 Total Cash collections $ 1,692,000.00 $ 360,000.00 $ 444,000.00 $ 528,000.00 $ 1,332,000.00 Mercendise Purchase Budget Jan Feb Mar Quarter April Budgeted Unit Sales 7000 8000 10000 25000 8000 Add:Ending Inventory=(8000*20%) in Jan,(10000*20%) in Feb,(8000*20%) in March 1600 2000 1600 1600 1400 Total Units required to be produced=(Units Sales+Ending Inventory) 8600 10000 11600 26600 9400 Less: Opening Inventory 1400 1600 2000 1400 1600 Production 7200 8400 9600 25200 7800 Raw Material---What Jan Feb Mar Quarter April Production(A) 7200 8400 9600 25200 7800 Raw Material required per unit(B) 5 5 5 5 5 Raw Material required for production(A)*(B) 36000 42000 48000 126000 39000 Add:Ending Inventory 10500 12000 9750 9750 Total Needs 46500 54000 57750 135750 Less: Opening Inventory 18000 10500 12000 18000 Required Purchases=(Total Needs-Opening Inv) 28500 43500 45750 117750 Cost of Purchase Per Unit $ 4.00 $ 4.00 $ 4.00 $ 4.00 Total Cost of Purchase $ 114,000.00 $ 174,000.00 $ 183,000.00 $ 471,000.00 Raw Material---Huh Jan Feb Mar Quarter April Production 7200 8400 9600 25200 7800 Raw Material required per unit 3 3 3 3 3 Raw Material required for production 21600 25200 28800 75600 23400 Add:Ending Inventory 6300 7200 5850 5850 Total Needs 27900 32400 34650 81450 Less: Opening Inventory 10800 6300 7200 10800 Required Purchases 17100 26100 27450 70650 Cost of Purchase Per Unit $ 2.80 $ 2.80 $ 2.80 $ 2.80 Total Cost of Purchase $ 47,880.00 $ 73,080.00 $ 76,860.00 $ 197,820.00 Jan Feb March Total Raw Material Cost What $ 114,000.00 $ 174,000.00 $ 183,000.00 Huh $ 47,880.00 $ 73,080.00 $ 76,860.00 Total Raw Material Cost $ 161,880.00 $ 247,080.00 $ 259,860.00 Budgeted Cash disbursement of Mercendise Purchase Months Jan Feb March Quarter Accounts Payable $ 40,000.00 $ 40,000.00 Jan=($161880*70%) in Jan,($161880*30%) in Feb $ 113,316.00 $ 48,564.00 $ 161,880.00 Feb=($247080*70%) in Feb ,($247080*30%) in Mar $ 172,956.00 $ 74,124.00 $ 247,080.00 Mar=($259860*70%) in Mar $ 181,902.00 $ 181,902.00 Total Cash Payments $ 153,316.00 $ 221,520.00 $ 256,026.00 $ 630,862.00 Direct Labor Budget Months Jan Feb March Quarter Production=(A) 7200 8400 9600 25200 Direct Labor Hours per unit=(30/60)=(B) 0.5 0.5 0.5 0.5 Total Direct Labor hours required=(A)*(B) 3600 4200 4800 12600 Rate Per Direct Labor Hours $ 24.00 $ 24.00 $ 24.00 $ 24.00 Direct Labor Cost=labor Hour*Rate Per Hours $ 86,400.00 $ 100,800.00 $ 115,200.00 $ 302,400.00 Thorny Corporation Manufacturing Overhead Budget Months Jan Feb March Quarter Production 7200 8400 9600 25200 Direct Labor Hours per unit 0.5 0.5 0.5 0.5 Total Direct Labor hours required 3600 4200 4800 12600 Variable Overhead Rate per hours $ 12.00 $ 12.00 $ 12.00 $ 12.00 Total Variable Overhead $ 43,200.00 $ 50,400.00 $ 57,600.00 $ 151,200.00 Depreciation=($12000/12)=$1000 per month $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 3,000.00 Cash paid for manufacturing Overhead $ 42,200.00 $ 49,400.00 $ 56,600.00 $ 148,200.00 Thorny Corporation Selling & Administerative Expenses Months Jan Feb March Quarter Sales $ 420,000.00 $ 480,000.00 $ 600,000.00 $ 1,500,000.00 Variable Selling Expenses=10% of sales $ 42,000.00 $ 48,000.00 $ 60,000.00 $ 150,000.00 Fixed Selling & Administrative Overhead $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 30,000.00 Total Overhead $ 52,000.00 $ 58,000.00 $ 70,000.00 $ 180,000.00
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