budget question

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Garden Manufacturing Data for 2020/2021 a. Unit selling price $ 63.00 The 2020 unit prices will not change for the first two quarters of 2021 Estimated sales in units) are as follows: Actual 2020 Estimated 2021 November 9,800 January 10,700 December 10,700 February 10,200 March 13,000 3 April 9,800 1 May 12,400 5 b. The company produced enough units each month to meet the month's sales plus a desired inventory level that is based on the following months estimated sales. 7 Desired finished goods inventory level 204 3 Finished goods inventory at the end of 2020 Units 2,140 e Price per unit $ 33.00 3 c. The company purchases enough raw materials each month for the current month's production requirement and a percentage(below) of what will be needed in the following month's production Desired raw materials inventory 20% 3 Each unit requires RM Unit cost: 5.00 kgs 0.60 $ Raw Materials inventory at the end of 2020 Units 3 10,600 kgs 10,600 kgs Raw Materials inventory at the end of 2020 Units 3 Raw materials purchase policies Amount paid in current month 5 Amount paid in following month 404 60% $ d. Direct labour hours required for one unit of production Direct labour hours required 1.25 hour(s) Direct labour cost per hour 1600 e. Variable manufacturing overhead is allocated on the basis of direct labour cost, Predetermined Overhead Rate 50% 7 f. The company has the following cash/credit sales policy Proportion of cash sales 10% Proportion of credit sales collected in following month 45% Proportion of credit sales collected 2 months later 55% 9 g. Fixed overhead costs (per month) Factory supervisor salary $ 75,400 Factory insurance 1,350 Factory rent $ 7,550 Depreciation of factory equipment $ 1,150 5 5 h. Total monthly fixed selling and administrative expenses Advertising $ 1,200 3 Depreciation 1,150 Insurance 1,150 Salaries 1.250 Other $ 1,150 $ $ $ $ Bi. Variable selling and administrative expenses Shipping costs $ 3.90 per unit 5 Commissions 84 of sales 5 1. The company will acquire the following assets at the end of January Furniture and equipment for the sales office $ 515,000 Monthly depreciation expense $ 10,300 *The acquisition of this furniture and equipment was contracted a year earlier and was in a contractual obligation to proceed with the purchase. 2 3 1 k. The balance sheet as at December 31, 2020 $ 75,000 $ 912,303 $ 76,980 $ 6,360 $ 70,620 $ 965,000 $ 96,500 5 Assets - Cash B Accounts receivable Inventory: Raw materials Finished goods Plant and equipment e Less: Accumulated Depreciation Total Assets 4 Liabilities and Equity Accounts payable 76% long-term notes payable Common shares Retained earnings Total liabilities and shareholders' equity $ 868,500 $ 1,932,783 $ 25,000 $ 880,000 $ 710,000 $ 317.783 $ 1,932,783 L 3 Interest rate on debt (monthly, simple interest 1 Minimum cash balance 0.50% $30,000 7 Additional information 3 All cash payments except purchases of raw materials are made monthly as incurred. * All borrowings occur at the beginning of each month and all repayments occur at the end of the month. Borrowings and repayments may occur in any amount 0 - All interest on borrowed funds is paid at the end of each month at a rate of 0.5% per month. 1 - A minimum cash balance of $30,000 is required at the end of each month. 2 * All accounts payable is from the purchase of raw materials, all other payments are made in cash. 3 4 5 16 January February March April January February March April 1 a. Sales Budget 3 Sales in units 5 Unit sales price 5 Sales in Dollars 7 3 b. Production Budget 0 1 Sales in units 2 Add: Desired ending finished goods 3 Finished goods requirements 4 Less: Beginning finished goods 5 Production requirements 6 7 C. 8 Raw materials purchases budget 9 o Units of production required 1 Units of raw materials required per unit 2 Total units of raw materials required -3 Add: Desired ending inventory 4 Total requirements -5 Less: Beginning inventory 6 Raw materials to purchase 7 Cost per unit of raw materials 8 Raw materials purchase cost 9 January February March April Direct labour and Overhead budget January February March Units of production required Direct labour hours required per unit Total direct labour hours required Direct labour cost per unit Total direct labour cost Manufacturing overhead: Variable Fixed Total manufacturing overhead Total cost of direct labour and manufacturing overhead e. Selling and administrative budget January February March Sales in units Variable: Shipping per unit Total shipping Sales commissions (W of sales) Total sales commissions Fixed Total January February March 56 f. 57 Cash budget 58 59 Cash balance, beginning 60 Cash receipts 61 Cash sales 62 From previous month sales 63 From 2nd previous month sales 64 Total 65 Operating cash payments: 66 Raw materials purchases 67 Current month 68 Previous month 69 Direct labour 70 Variable overhead 71 Fixed overhead 72 Variable selling and admin 73 Fixed selling and admin 74 Purchase of equipment 75 Total 76 Net Cash inflows(outflows) 77 Interest on notes payable 78 Excess(deficiency) of cash available 79 Borrowing 80 Repayment 81 Interest on bank loan 82 Ending balance 83 84 January February March Calculation of Unit Variable Cost 1 Garden Manufacturing 2 Budgeted Contribution Format Income Statement 3 For January, February and March 2021 4 5 6 Sales revenue 7 Less variable expenses: B Variable cost of good sold 9 Selling and administrative L0 Total variable expenses 1 Contribution margin 2 Less fixed expenses 3 Manufacturing overhead 4 Selling and administrative 5 Total fixed expenses 6 Operating income (loss) -7 Less interest expense L8 Net income (loss) 9 20 21 Garden Manufacturing 22 Budgeted Balance Sheet 3 31st March 2021 4 25 Assets 26 Cash 27 Account receivable 28 Inventory 29 Raw materials 30 Finished goods 1 Property plant and equipment (net) 82 Total assets 33 Liabilities and Shareholders' Equity Accounts payable Bank loan 6% long-term notes payable Common shares Retained earnings Total liabilities and shareholders' equity Retained earnings at March 31: Balance, January 1 Add net income(loss) Garden Manufacturing Budgeted Absoprtion Costing Income Statement For January, February and March 2021 January February March Calculation of Unit Variable Cost DM DL VOH Sales revenue Less: Cost of goods sold Gross Margin Less selling and administrative expenses Operating income (loss) Less interest expense Net income (loss) FMOH per unit calculation FMOH Cost Units Produced Variable to absorption costing reconciliation Beginning finished goods Ending finished goods Change x Unit FMOH Absorption net income Variable costing net income January February March 1 Do not hard code any of these numbers. 2 3 Requirement 1. 4 5 Part A Sales in dollars 6 7 Part B Production Requirements B 9 Part C Total raw materials purchase cost 1 Part D Total direct labour cost 2 Total variable manufacturing overhead Total fixed manufacturing overhead 5 Part E Total variable selling and admin 6 Total fixed selling and admin 8 Part F Beginning cash balance 9 Total cash receipts (inflows) Total cash payments (outflows) Excess(deficiency of cash available 2 Interest on notes Borrowing 4 Repayment 5 Interest on bank loan Ending cash balance ONDONO January February March 8 Requirement 2. 9 Income Statement Total sales revenue 1 Total variable costs 2 Total fixed costs 3 Operating income(loss) 4 Interest expense 5 Net income(loss) 6 7 Balance Sheet B Cash 9 Accounts receivable D Raw materials inventory 1 Finished goods inventory 2 Property plant and equipment (net) 3 Accounts payable 4 Bank load 5 6% long term notes payable 6 Common share 7 Retained earnings 8 January February March Requirement 3. Income Statement Total sales revenue Cost of goods sold Selling and admin expenses Operating income(loss) Interest expense Net income(los) Units produced Fixed Manufacturing Overhead Per Unit