Olympia Company, Inc. is preparing budgets for the second quarter ending June 30, 2021. SALES BUDGET...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Olympia Company, Inc. is preparing budgets for the second quarter ending June 30, 2021. SALES BUDGET . Budgeted sales of the company's only product for the next five months are: April.. May June July August...... . 27,400 units 36,100 units 35,200 units 30,900 units 25,000 units The selling price is $11.10 per unit. SCHEDULE OF EXPECTED CASH COLLECTIONS Additional data: • All sales are on account. • The company collects 60% of these credit sales in the month of the sale; 35% are collected in the month following sale; and the remaining 5% are uncollectible. • The accounts receivable balance on March 31 was $62,000 All of this balance was collectible. PRODUCTION BUDGET Additional data: The company desires to have inventory on hand at the end of each month equal to 15% of the following month's budgeted unit sales. • On March 31, 4,300 units were on hand. DIRECT MATERIALS BUDGET Additional data: • 6 pounds of material are required per unit of product. • Management desires to have materials on hand at the end of each month equal to 10% of the following month's production needs. • The beginning materials inventory was 19,200 pounds. • The material costs $0.42 per pound. SCHEDULE OF EXPECTED CASH DISBURSEMENTS FOR MATERIAL Additional data: Fifty five percent of a month's purchases are paid for in the month of purchase; 45% is paid for in the following month. • No discounts are given for early payment. • The accounts payable balance on March 31 was $19,000. DIRECTBUDGET Additional data: Each unit produced requires 0.05 hour of direct labor. • Each hour of direct labor costs the company $15.50 • Management fully adjusts the workforce to the workload each month. MANUFACTURING OVERHEAD BUDGET Additional data: • Variable manufacturing overhead is $26 per direct labor-hour. • Fixed manufacturing overhead is $54,700 per month. This includes $25,000 in depreciation, which is not a cash outflow. ENDING FINISHED GOODS INVENTORY BUDGET Additional data: • The Company uses absorption costing in its budgeted income statement and balance sheet. • Manufacturing overhead is applied to units of product on the basis of direct labor- hours. . • The company has no work in process inventories. SELLING AND ADMINISTRATIVE EXPENSE BUDGET Additional data: . • Variable selling and administrative expenses are $0.60 per unit sold. • Fixed selling and administrative expenses are $65,000 per month and includes $16,000 in depreciation. CASH BUDGET Additional data: 1. A line of credit is available at a local bank that allows the company to borrow up to $100,000 in one-thousand-dollar increments. a. All borrowing occurs at the beginning of the month, and all repayments occur at the end of the month. 2. 3. b. The company does not have to make any payments until the end of the quarter. c. The interest rate is 10% annually. Olympia desires a cash balance of at least $40,000 at the end of each month. The cash balance at the beginning of April was $14,200. Cash dividends of $18,000 are to be paid to stockholders in April. 4. Equipment purchases of $137,000 are scheduled for May and $35,000 for June. This equipment will be installed and tested during the second quarter and will not become operational until July, when depreciation charges will commence. Requirements: (Round all figures to the nearest whole number utilizing the attached spreadsheet template.) (1) Prepare the following budgets for April, May, and June (and second quarter totals): (a) Sales Budget (b) Production Budget (c) Direct Materials Budget (d) Direct Labor Budget (e) Manufacturing Overhead Budget (f) Ending Finished Goods Inventory Budget (g) Selling and Administrative Expense Budget (h) Cash Budget (2) Prepare a budgeted income statement for the quarter ending June 30, 2021, and a budgeted balance statement as of June 30, 2021. Olympia Company, Inc. Assets Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Balance Sheet March 31,2021 Land Property, plant, and equipment: Buildings and equipment Less: Accumulated depreciation Property, plant and equipment, net Total assets Liabilities and stockholders' equity Current liabilities: Accounts payable Stockholders' equity: Common stock Retained ear ngs Total stockholders Total liabilities and stockholder's equity $ 14,200.00 62,000 8,064 26,500 1,713,460 (740.000) 300,000 1,165,224 110,764 400,000 973,460 1,484,224 19,000 1,465,224 1,484,224 Olympia Company, Inc. is preparing budgets for the second quarter ending June 30, 2021. SALES BUDGET . Budgeted sales of the company's only product for the next five months are: April.. May June July August...... . 27,400 units 36,100 units 35,200 units 30,900 units 25,000 units The selling price is $11.10 per unit. SCHEDULE OF EXPECTED CASH COLLECTIONS Additional data: • All sales are on account. • The company collects 60% of these credit sales in the month of the sale; 35% are collected in the month following sale; and the remaining 5% are uncollectible. • The accounts receivable balance on March 31 was $62,000 All of this balance was collectible. PRODUCTION BUDGET Additional data: The company desires to have inventory on hand at the end of each month equal to 15% of the following month's budgeted unit sales. • On March 31, 4,300 units were on hand. DIRECT MATERIALS BUDGET Additional data: • 6 pounds of material are required per unit of product. • Management desires to have materials on hand at the end of each month equal to 10% of the following month's production needs. • The beginning materials inventory was 19,200 pounds. • The material costs $0.42 per pound. SCHEDULE OF EXPECTED CASH DISBURSEMENTS FOR MATERIAL Additional data: Fifty five percent of a month's purchases are paid for in the month of purchase; 45% is paid for in the following month. • No discounts are given for early payment. • The accounts payable balance on March 31 was $19,000. DIRECTBUDGET Additional data: Each unit produced requires 0.05 hour of direct labor. • Each hour of direct labor costs the company $15.50 • Management fully adjusts the workforce to the workload each month. MANUFACTURING OVERHEAD BUDGET Additional data: • Variable manufacturing overhead is $26 per direct labor-hour. • Fixed manufacturing overhead is $54,700 per month. This includes $25,000 in depreciation, which is not a cash outflow. ENDING FINISHED GOODS INVENTORY BUDGET Additional data: • The Company uses absorption costing in its budgeted income statement and balance sheet. • Manufacturing overhead is applied to units of product on the basis of direct labor- hours. . • The company has no work in process inventories. SELLING AND ADMINISTRATIVE EXPENSE BUDGET Additional data: . • Variable selling and administrative expenses are $0.60 per unit sold. • Fixed selling and administrative expenses are $65,000 per month and includes $16,000 in depreciation. CASH BUDGET Additional data: 1. A line of credit is available at a local bank that allows the company to borrow up to $100,000 in one-thousand-dollar increments. a. All borrowing occurs at the beginning of the month, and all repayments occur at the end of the month. 2. 3. b. The company does not have to make any payments until the end of the quarter. c. The interest rate is 10% annually. Olympia desires a cash balance of at least $40,000 at the end of each month. The cash balance at the beginning of April was $14,200. Cash dividends of $18,000 are to be paid to stockholders in April. 4. Equipment purchases of $137,000 are scheduled for May and $35,000 for June. This equipment will be installed and tested during the second quarter and will not become operational until July, when depreciation charges will commence. Requirements: (Round all figures to the nearest whole number utilizing the attached spreadsheet template.) (1) Prepare the following budgets for April, May, and June (and second quarter totals): (a) Sales Budget (b) Production Budget (c) Direct Materials Budget (d) Direct Labor Budget (e) Manufacturing Overhead Budget (f) Ending Finished Goods Inventory Budget (g) Selling and Administrative Expense Budget (h) Cash Budget (2) Prepare a budgeted income statement for the quarter ending June 30, 2021, and a budgeted balance statement as of June 30, 2021. Olympia Company, Inc. Assets Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Balance Sheet March 31,2021 Land Property, plant, and equipment: Buildings and equipment Less: Accumulated depreciation Property, plant and equipment, net Total assets Liabilities and stockholders' equity Current liabilities: Accounts payable Stockholders' equity: Common stock Retained ear ngs Total stockholders Total liabilities and stockholder's equity $ 14,200.00 62,000 8,064 26,500 1,713,460 (740.000) 300,000 1,165,224 110,764 400,000 973,460 1,484,224 19,000 1,465,224 1,484,224
Expert Answer:
Answer rating: 100% (QA)
1 Budgets Sales Budget Multiply the units by the selling price to determine the total sales for each ... View the full answer
Related Book For
Accounting What the Numbers Mean
ISBN: 978-0073527062
9th Edition
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele,
Posted Date:
Students also viewed these marketing questions
-
Central Manufacturing, Inc. is preparing budgets for the second quarter of 2016. Central produces only one product in its factory. This product requires 4 pounds of material C, 3 pounds of material...
-
Consider a monopolist firm in a market with demand curve P= 1797-3Q. Suppose the firm has marginal cost curve MC = 4Q. What is the firm's total revenue at the profit maximizing quantity? Give your...
-
The monthly cash budgets for the second quarter of 2010 follow ($000 omitted) for Morrison Mfg. Co. A minimum cash balance of $30,000 is required to start each month, and a $100,000 line of credit...
-
Some rocks or bricks contain small air pockets in them and have a spongy structure. Assuming the air spaces form columns of an average diameter of 0.006 mm, determine how high water can rise in such...
-
In Problem 22, if P(s1) = 0.25, P(s2) = 0.50, and P(s3) = 0.25, find a recommended decision for each of the three decision makers.
-
(S)-1-Bromo-1,2-diphenylethane reacts with a strong base to produce cis-stilbene and trans-stilbene: a) This reaction is stereo-selective, and the major product is trans-stilbene. Explain why the...
-
A \(0.36-\mathrm{kg}\) cart and a \(0.12-\mathrm{kg}\) cart are held together with a compressed spring between them. When they are released, the \(0.36-\mathrm{kg}\) cart moves at \(1.1 \mathrm{~m} /...
-
Rick Kleckner Corporation recorded a finance lease at $300,000 on January 1, 2012. The interest rate is 12%. Kleckner Corporation made the first lease payment of $53,920 on January 1, 2012. The lease...
-
GM has the total assets of $264,037 million, total liabilities of $191,753 million, the earnings before interests and taxes of $10,314 million, interest expenses of $987 million, and depreciation of...
-
Wayland Custom Woodworking is a firm that manufactures custom cabinets and woodwork for business and residential customers. Students will have the opportunity to establish payroll records and to...
-
The table below shows the average sales (as number sold per day) at grocery store of Product A based on its prices and the prices of a competitor's Product B, where the two competing products and...
-
A PhD driving a cab would be considered __________.
-
The five-year plan had been the main economic plan of _____. a) the United States b) Sweden c) Nazi Germany d) the Soviet Union
-
An automobile manufacturer will accept a shipment of tires only if an inspection of 5 percent of the tires, randomly chosen from the shipment, does not contain any defective tires. The manufacturer...
-
The net thermal efficiency of an internal combustion engine is given by, where HV is the heating value of the fuel and sfc is the specific fuel consumption of the engine. Consider an engine operating...
-
A steam power plant has an average monthly net power delivery of 740 MW over the course of a year. This power delivery is accomplished by burning coal in the boiler. The coal has a heating value of...
-
The plaintiff's burden of proof in a tort case is by a preponderance of the evidence. This means that when both sides have presented their evidence, the greater weight of the believable evidence must...
-
Suppose the concentration of glucose inside a cell is 0.1 mm and the cell is suspended in a glucose solution of 0.01 mm. a. What would be the free energy change involved in transporting 10-o mole of...
-
Osage Inc. has actual sales for June and July and forecast sales for August, September, October, and November as follows: Actual: June . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....
-
MBI, Inc., had sales of $141.6 million for fiscal 2010. The companys gross profit ratio for that year was 31.6%. Required: a. Calculate the gross profit and cost of goods sold for MBI, Inc., for...
-
Circle-Square, Ltd., is in the process of liquidating and going out of business. The firms balance sheet shows $22,800 in cash, accounts receivable of $114,200, inventory totaling $61,400, plant and...
-
The purchasing officer for The Majestic Emporium has prepared a purchases budget for the financial year ending 31 March 2020, based on the following data. The cost of sales is 65% of sales, and the...
-
Greyt Dog Beds Ltd manufactures dog beds specifically designed for greyhounds and whippets. The company purchases all the required materials from external suppliers and designs and assembles the...
-
Ketton Ltd is in the process of preparing direct labour and factory overhead budgets for the year ending 30 June 2020. Relevant data are set out below. Required (a) Prepare the direct labour budget...
Study smarter with the SolutionInn App