The Belize Mills Limited manufactures flours to the Belize market. Belize Mills Limited sold 45KG of...
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The Belize Mills Limited manufactures flours to the Belize market. Belize Mills Limited sold 45KG of Bebe Auga for $70. Belize Mills Limited is planning for the next year by developing a master budget by quarters. Belize Mills Limited's balance sheet for December 31, 2022, follows: Belize Mills Limited Balance Sheet December 31, 2022 Assets Current Assets: Cash Accounts Receivable Raw Material Inventory Fnished Goods Invneotry Total current assets Property, plant and Equipment: Equipment Less: Accumulated Depreciation Total Assets Liabilities Current liabilities: 20,000 30,000 3,000 10,800 168,000 (39,000) 63,800 129,000 192,800 Current liabilities: Accounts payable Stockholders' equity Common stock, no par Retained Earnings Total Stockholders' Equity Total liabilites and stockholders' Equity 130,000 46,800 16,000 176,800 192,800 Other data for Belize Mills Limited: a. Budgeted sales are 1,000 bags for the first quarter and expected to increase by 200 bags per quarter. Cash sales are expected to be 10% of total sales, with the remaining 90% of sales on account. b. Finished Goods Inventory on December 31, 2022, consists of 300 bags at $36 each. c. Desired ending Finished Goods Inventory is 40% of the next quarter's sales; first quarter sales for 2024 are expected to be 1,800 bags; FIFO inventory costing method is used. 1 d. Raw Materials Inventory on December 31, 2022, consists of 750 pounds of wheat used to manufacture the flour. e. Direct materials requirements are 2.5 pounds of wheat per sack. The cost of the wheat is $4 per pound. f. Desired ending Raw Materials Inventory is 40% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2023 is 750 pounds; indirect materials are insignificant and not considered for budgeting purposes. g. Each bag requires 0.30 hours of direct labor; direct labor costs average $20 per hour. h. Variable manufacturing overhead is $3 per crate. i. Fixed manufacturing overhead includes $6,000 per quarter in depreciation and $10,860 per quarter for other costs, such as utilities, insurance, and property taxes. j. Fixed selling and administrative expenses include $8,000 per quarter for salaries; $4,800 per quarter for rent; $1,950 per quarter for insurance; and $2,000 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 2% of sales. 1. Capital expenditures include $25,000 for new manufacturing equipment, to be purchased and paid in the first quarter. m. Cash receipts for sales on account are 70% in the quarter of the sale and 30% in the quarter following the sale; December 31, 2022, Accounts Receivable is received in the first quarter of 2023; uncollectible accounts are considered insignificant and not considered for budgeting purposes. n. Direct materials purchases are paid 50% in the quarter purchased and 50% in the following quarter, December 31, 2022, Accounts Payable is paid in the first quarter of 2023. o. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. I p. Income tax expense is projected at $3,500 per quarter and is paid in the quarter incurred. q. Belize Mills Limited 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 12% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. Requirement Prepare Belize Mills Limited annual financial budget for 2023, including budgeted income statement and budgeted balance sheet. (50 Points) The Belize Mills Limited manufactures flours to the Belize market. Belize Mills Limited sold 45KG of Bebe Auga for $70. Belize Mills Limited is planning for the next year by developing a master budget by quarters. Belize Mills Limited's balance sheet for December 31, 2022, follows: Belize Mills Limited Balance Sheet December 31, 2022 Assets Current Assets: Cash Accounts Receivable Raw Material Inventory Fnished Goods Invneotry Total current assets Property, plant and Equipment: Equipment Less: Accumulated Depreciation Total Assets Liabilities Current liabilities: 20,000 30,000 3,000 10,800 168,000 (39,000) 63,800 129,000 192,800 Current liabilities: Accounts payable Stockholders' equity Common stock, no par Retained Earnings Total Stockholders' Equity Total liabilites and stockholders' Equity 130,000 46,800 16,000 176,800 192,800 Other data for Belize Mills Limited: a. Budgeted sales are 1,000 bags for the first quarter and expected to increase by 200 bags per quarter. Cash sales are expected to be 10% of total sales, with the remaining 90% of sales on account. b. Finished Goods Inventory on December 31, 2022, consists of 300 bags at $36 each. c. Desired ending Finished Goods Inventory is 40% of the next quarter's sales; first quarter sales for 2024 are expected to be 1,800 bags; FIFO inventory costing method is used. 1 d. Raw Materials Inventory on December 31, 2022, consists of 750 pounds of wheat used to manufacture the flour. e. Direct materials requirements are 2.5 pounds of wheat per sack. The cost of the wheat is $4 per pound. f. Desired ending Raw Materials Inventory is 40% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2023 is 750 pounds; indirect materials are insignificant and not considered for budgeting purposes. g. Each bag requires 0.30 hours of direct labor; direct labor costs average $20 per hour. h. Variable manufacturing overhead is $3 per crate. i. Fixed manufacturing overhead includes $6,000 per quarter in depreciation and $10,860 per quarter for other costs, such as utilities, insurance, and property taxes. j. Fixed selling and administrative expenses include $8,000 per quarter for salaries; $4,800 per quarter for rent; $1,950 per quarter for insurance; and $2,000 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 2% of sales. 1. Capital expenditures include $25,000 for new manufacturing equipment, to be purchased and paid in the first quarter. m. Cash receipts for sales on account are 70% in the quarter of the sale and 30% in the quarter following the sale; December 31, 2022, Accounts Receivable is received in the first quarter of 2023; uncollectible accounts are considered insignificant and not considered for budgeting purposes. n. Direct materials purchases are paid 50% in the quarter purchased and 50% in the following quarter, December 31, 2022, Accounts Payable is paid in the first quarter of 2023. o. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. I p. Income tax expense is projected at $3,500 per quarter and is paid in the quarter incurred. q. Belize Mills Limited 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 12% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. Requirement Prepare Belize Mills Limited annual financial budget for 2023, including budgeted income statement and budgeted balance sheet. (50 Points)
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Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
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