Requirement 1. Prepare Tamison's operating budget and cash budget for 2019 by quarter. Required schedules and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Requirement 1. Prepare Tamison's operating budget and cash budget for 2019 by quarter. Required schedules and budgets include: sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, cost of goods sold budget, selling and administrative expense budget, schedule of cash receipts, schedule of cash payments, and cash budget. Manufacturing overhead costs are allocated based on direct labor hours. (Round all calculations to the nearest dollar.) Begin by preparing the sales budget. Budgeted sets to be sold Sales price per unit Total sales Tamison Toy Company Sales Budget For the Year Ended December 31, 2019 First Third Quarter Quarter $ S 1,000 70 Second Quarter 1,050 1,100 70 70 $ 70,000 $ 73,500 $ 77,000 S Fourth Quarter 1,150 70 $ 80,500 $ Total 4,300 70 301,000 Prepare the production budget. Review the sales budget you prepared above. Tamison Toy Company Production Budget For the Year Ended December 31, 2019 Budgeted sets to be sold Plus: Desired sets in ending inventory Total sets needed Less: Sets in beginning inventory Budgeted sets to be produced First Quarter 1,000 315 1,315 350 965 Second Quarter 1,050 330 1,380 315 1,065 Third Quarter 1,100 345 1,445 330 1,115 Fourth Quarter 1,150 360 1,510 345 1,165 Total 4,300 360 4,660 350 4,310 The Tamison Toy Company manufactures toy building block sets for children. Tamison is planning for 2019 by developing a master budget by quarters. Tamison's balance sheet for December 31, 2018, follows: (Click the icon to view the balance sheet.) Other budget data for Tamison Toy Company: i (Click the icon to view the other data.) Read the requirements. Direct Materials Budget For the Year Ended December 31, 2019 First Quarter Second Quarter Budgeted sets to be produced Direct materials per set (pounds) Direct materials needed for production Plus: Desired direct materials in ending inventory Total direct materials needed Less: Direct materials in beginning inventory Budgeted purchases of direct materials Direct materials cost per pound Budgeted cost of direct materials purchases X 965 3860 1,065 4 4260 Third Quarter 1,115 4460 Fourth Quarter 1,165 4660 Total 4,310 17240 Current Assets: Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation Total Assets Current Liabilities: Accounts Payable Tamison Toy Company Balance Sheet December 31, 2018 Assets Common Stock, no par Retained Earnings Liabilities $ Stockholders' Equity S Total Stockholders' Equity Total Liabilities and Stockholders' Equity 35,000 50,000 1,400 11,900 194,000 (32,000) 100,000 148,300 $ $ 98,300 162,000 260,300 12,000 248,300 260,300 (Unless otherwise noted, assume all of the following events occurred during 2018 and that any balances given are stated as of December 31, 2018.) a. Budgeted sales are 1,000 sets for the first quarter and expected to increase by 50 sets per quarter. Cash sales are expected to be 30% of total sales, with the remaining 70% of sales on account. Sets are budgeted to sell for $70 per set. b. Finished Goods Inventory on December 31, 2018, consists of 350 sets at $34 each. c. Desired ending Finished Goods Inventory is 30% of the next quarter's sales; first quarter sales for 2020 are expected to be 1,200 sets. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2018, consists of 1,400 pounds. Direct materials requirement is 4 pounds per set. The cost is $1 per pound. e. Desired ending Raw Materials Inventory is 10% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2019, is 1,400 pounds; indirect materials are insignificant and not considered for budgeting purposes. f. Each set requires 0.40 hours of direct labor, direct labor costs average $14 per hour. g. Variable manufacturing overhead is $5.60 per set. h. Fixed manufacturing overhead includes $5,500 per quarter in depreciation and $534 per quarter for other costs, such as utilities, insurance, and property taxes. i. Fixed selling and administrative expenses include $8,500 per quarter for salaries; $3,600 per quarter for rent; $1,800 per quarter for insurance; and $1,000 per quarter for depreciation. j. Variable selling and administrative expenses include supplies at 3% of sales. k. Capital expenditures include $50,000 for new manufacturing equipment, to be purchased and paid for in the first quarter. 1. Cash receipts for sales on account are 70% in the quarter of the sale and 30% in the quarter following the sale; Accounts Receivable balance on December 31, 2018, is expected to be received in the first quarter of 2019; uncollectible accounts are considered insignificant and not considered for budgeting purposes. m. Direct materials purchases are paid 80% in the quarter purchased and 20% in the following quarter; Accounts Payable balance on December 31, 2018, is expected to be paid in the first quarter of 2019. n. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. o. Income tax expense is projected at $4,500 per quarter and is paid in the quarter incurred. p. Tamison desires to maintain a minimum cash balance of $20,000 and borrows from the local bank as needed in increments of $1,000 at the beginning of the quarter, principal repayments are made at the beginning of the quarter when excess funds are available and in increments of $1,000; interest is 8% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. Requirement 1. Prepare Tamison's operating budget and cash budget for 2019 by quarter. Required schedules and budgets include: sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, cost of goods sold budget, selling and administrative expense budget, schedule of cash receipts, schedule of cash payments, and cash budget. Manufacturing overhead costs are allocated based on direct labor hours. (Round all calculations to the nearest dollar.) Begin by preparing the sales budget. Budgeted sets to be sold Sales price per unit Total sales Tamison Toy Company Sales Budget For the Year Ended December 31, 2019 First Third Quarter Quarter $ S 1,000 70 Second Quarter 1,050 1,100 70 70 $ 70,000 $ 73,500 $ 77,000 S Fourth Quarter 1,150 70 $ 80,500 $ Total 4,300 70 301,000 Prepare the production budget. Review the sales budget you prepared above. Tamison Toy Company Production Budget For the Year Ended December 31, 2019 Budgeted sets to be sold Plus: Desired sets in ending inventory Total sets needed Less: Sets in beginning inventory Budgeted sets to be produced First Quarter 1,000 315 1,315 350 965 Second Quarter 1,050 330 1,380 315 1,065 Third Quarter 1,100 345 1,445 330 1,115 Fourth Quarter 1,150 360 1,510 345 1,165 Total 4,300 360 4,660 350 4,310 The Tamison Toy Company manufactures toy building block sets for children. Tamison is planning for 2019 by developing a master budget by quarters. Tamison's balance sheet for December 31, 2018, follows: (Click the icon to view the balance sheet.) Other budget data for Tamison Toy Company: i (Click the icon to view the other data.) Read the requirements. Direct Materials Budget For the Year Ended December 31, 2019 First Quarter Second Quarter Budgeted sets to be produced Direct materials per set (pounds) Direct materials needed for production Plus: Desired direct materials in ending inventory Total direct materials needed Less: Direct materials in beginning inventory Budgeted purchases of direct materials Direct materials cost per pound Budgeted cost of direct materials purchases X 965 3860 1,065 4 4260 Third Quarter 1,115 4460 Fourth Quarter 1,165 4660 Total 4,310 17240 Current Assets: Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation Total Assets Current Liabilities: Accounts Payable Tamison Toy Company Balance Sheet December 31, 2018 Assets Common Stock, no par Retained Earnings Liabilities $ Stockholders' Equity S Total Stockholders' Equity Total Liabilities and Stockholders' Equity 35,000 50,000 1,400 11,900 194,000 (32,000) 100,000 148,300 $ $ 98,300 162,000 260,300 12,000 248,300 260,300 (Unless otherwise noted, assume all of the following events occurred during 2018 and that any balances given are stated as of December 31, 2018.) a. Budgeted sales are 1,000 sets for the first quarter and expected to increase by 50 sets per quarter. Cash sales are expected to be 30% of total sales, with the remaining 70% of sales on account. Sets are budgeted to sell for $70 per set. b. Finished Goods Inventory on December 31, 2018, consists of 350 sets at $34 each. c. Desired ending Finished Goods Inventory is 30% of the next quarter's sales; first quarter sales for 2020 are expected to be 1,200 sets. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2018, consists of 1,400 pounds. Direct materials requirement is 4 pounds per set. The cost is $1 per pound. e. Desired ending Raw Materials Inventory is 10% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2019, is 1,400 pounds; indirect materials are insignificant and not considered for budgeting purposes. f. Each set requires 0.40 hours of direct labor, direct labor costs average $14 per hour. g. Variable manufacturing overhead is $5.60 per set. h. Fixed manufacturing overhead includes $5,500 per quarter in depreciation and $534 per quarter for other costs, such as utilities, insurance, and property taxes. i. Fixed selling and administrative expenses include $8,500 per quarter for salaries; $3,600 per quarter for rent; $1,800 per quarter for insurance; and $1,000 per quarter for depreciation. j. Variable selling and administrative expenses include supplies at 3% of sales. k. Capital expenditures include $50,000 for new manufacturing equipment, to be purchased and paid for in the first quarter. 1. Cash receipts for sales on account are 70% in the quarter of the sale and 30% in the quarter following the sale; Accounts Receivable balance on December 31, 2018, is expected to be received in the first quarter of 2019; uncollectible accounts are considered insignificant and not considered for budgeting purposes. m. Direct materials purchases are paid 80% in the quarter purchased and 20% in the following quarter; Accounts Payable balance on December 31, 2018, is expected to be paid in the first quarter of 2019. n. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. o. Income tax expense is projected at $4,500 per quarter and is paid in the quarter incurred. p. Tamison desires to maintain a minimum cash balance of $20,000 and borrows from the local bank as needed in increments of $1,000 at the beginning of the quarter, principal repayments are made at the beginning of the quarter when excess funds are available and in increments of $1,000; interest is 8% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter.
Expert Answer:
Answer rating: 100% (QA)
Question Tamison Toy Company Direct Materials Budget Tamison Toy Company Direct Materials Budget For ... View the full answer
Related Book For
Accounting Business Reporting for Decision Making
ISBN: 9780730302414
4th edition
Authors: Jacqueline Birt, Keryn Chalmers, Albie Brooks, Suzanne Byrne, Judy Oliver
Posted Date:
Students also viewed these accounting questions
-
Prepare a cost of goods sold budget for the Summit Manufacturing Company for the year ended December 31, 2011, from the following estimates. Inventories of production units: : Direct materials...
-
LearnCo LearnCo manufactures and sells one product, an abacus for classroom use, with two models, the Basic model and the Deluxe model, The company began operations on January 1, 20Y1, and is...
-
Prepare a cost of goods sold budget for Day Timer Publishers Inc. using the information in Practice Exercises 22-3B and 22-4B. Assume the estimated inventories on January 1, 2010, for finished goods...
-
At t = 0, a particle is traveling parallel to very large insulating plate at a 0.360 m distance with a speed of 980 m/s. Consider that the insulating plate has uniform surface charge density 2.34. x...
-
The tapered cantilever beam AB shown in the figure has a solid circular cross section. The diameters at the ends A and B are dA and dB = 2dA, respectively. Thus, the diameter d and moment of inertia...
-
Peter Kanakarian has decided to open a printing shop. He has secured two contracts: (1) a five- year contract to print a popular regional magazine (5,000 copies each month), and (2) a three- year...
-
Can a patient consent to a procedure and then withdraw it? Discuss your answer.
-
The following relative frequency ogive represents the lengths of a random sample of tornadoes in the United States. (a) What is the class width? (b) Approximately 92% of all tornadoes are less than...
-
Ralph contributes land with a basis and value of $ 1 2 0 , 0 0 0 in exchange for a 3 0 % share of the profits and losses in Orange LLC . Orange is a calendar year LLC . Orange generates $ 3 0 0 , 0 0...
-
1. Since Mr. Snodgrass doesnt have any historical data, (only an estimate of the number of customers hell serve each month), which specific type of qualitative method is he using? What would be the...
-
k S A block of mass m = 7.1kg is moving on an inclined plane with a speed of v=13.2m/s at the instant shown in the upward direction. There is friction between the inclined plane and the block with...
-
what is supply-side economics and give at least 3 journal articles as references.
-
As part of the initial investment Ray Blake Contributes Equipment that had Originally cost $112,000 and which Accumulated depreciation of $84,150 has been recorded. If similar equipment would cost...
-
Should The Canadian Rocky Mountain invest to expand its business in Saskatchewan?
-
Jack has not filed a Federal tax return in 10 years. In each of those years, his business earned a net income of $1,000,000. Upon an IRS audit, what tax penalties is Jack likely to incur? What type...
-
Critically examine why the outlook that unions should be opposed on efficiency grounds might be overly pessimistic.
-
2. Find the total resistance of the combination of resistors shown in the figure below, where R=0.200n, R2 = 18.0n, and R3 = 2.50n. Hint: Draw successive equivalent circuits. R ww
-
What is a lobbyist in US? How did this term emerge?
-
(a) Give an example of an expense that would be included in each of the David Jones Ltd expense category. (b) Calculate EBITDA for David Jones Ltd. (c) Explain the purpose of EBIT and EBITDA. (d)...
-
You are reviewing a balance sheet and notice that goodwill appears on the statement. Relate this information to the entity's past investing decisions. Discuss how goodwill is measured (1) at...
-
If days inventory for Forever20 retail outlet was 47 days and days creditors was 39 days, calculate what the cash cycle would be if credit sales for a year amounted to $45 000andthe average trade...
-
(a) The following trial balance was extracted from the books of M. Jackson on 30 April 2017. From it, and the note below it, prepare his statement of profit or loss for the year ending 30 April 2017,...
-
On 1 April 2013 a business purchased a machine costing 112,000. The machine can be used for a total of 20,000 hours over an estimated life of 48 months. At the end of that time the machine is...
-
On 1 January 2015 a business purchased a laser printer costing 1,800. The printer has an estimated life of four years after which it will have no residual value. It is expected that the output from...
Study smarter with the SolutionInn App