MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Cash Payments for Direct Labor Budget

January
February
March
Quarter
Product in units
26,000
46,000
29,000
101,000
Direct labor hours per unit
0.05
0.05
0.05
0.05
Labor hours required
1,300
2,300
1,450
5,050
Direct labor cost per hour
$
10.00 $
10.00 $
10.00 $
10.00
Total direct labor cost
$
13,000 $
23,000 $ 14,500 $
50,500

Cash Payments for Manufacturing Overhead Budget

January
February
March
Production in units
26,000
46,000
29,000
Variable mfg overhead rate
$
1 $
1 $
1 $
Variable mfg overhead costs
26,000
46,000
29,000
Fixed mfg overhead costs
50,500
50,500
50,500
Total mfg overhead costs
76,500
96,500
79,500
Less Depreciation
(20,500)
(20,500)
(20,500)
Cash mfg overhead costs
56,000
76,000
59,000

Total
101,000
1
101,000
151,500
252,500
(61,500)
191,000

Selling and Administrative Expense Budget

January
February
March
Quarter
Sales in units
20,000
50,000
30,000
100,000
Variable selling & admin rate
$
0.50 $
0.50 $
0.50 $
0.50
Variable selling & admin expense
10,000
25,000
15,000
50,000
Fixed Selling & admin expense
70,000
70,000
70,000
210,000
Total selling & admin expense
80,000
95,000
85,000
260,000
Less non-cash expenses
(10,000)
(10,000)
(10,000)
(30,000)
Cash pymts for selling & admin
$
70,000 $
85,000 $ 75,000 $ 230,000

Cash balance, beginning

Chapter 9: The Master Budget

Cash Budget
January
February
$
40,000 $
30,000

March
$ 30,000

Quarter
$
40,000
Page 1 of 14

MANAGERIAL ACCOUNTING - Fourth Edition

Add cash Collections for Sales (#2)
Total Cash available
Less disbursements:
Material Purchases (#4)
Direct labor (#5)
Mfg. Overhead (#6)

Chapter 9: The Master Budget

Solutions Manual

170,000
210,000

400,000
430,000

335,000
365,000

905,000
945,000

40,000
13,000
56,000

72,300
23,000
76,000

72,700
14,500
59,000

185,000
50,500
191,000

Page 2 of 14

MANAGERIAL ACCOUNTING - Fourth Edition

Selling & Admin (#7)
Equipment Purchases
Dividends
Total disbursements
Excess (deficiency) of cash
Financing
Borrowing
Repayments
Interest
Total Financing
Cash balance ending

70,000

Solutions Manual
85,000
143,700

75,000
48,800

400,000
30,000

270,000
95,000

230,000
192,500
51,000
900,000
45,000

30,000

(50,000)
(2,000)
(52,000)
43,000

50,000
(50,000)
(2,000)
(2,000)
43,000

Budgeted Income Statement

For the quarter ending March 31,2015
Sales (Net of 5% uncollectible)
$
950,000
Less cost of goods sold
500,000
Gross Margin
450,000
Less selling & admin. Expense
260,000
Net operating income
190,000
Less interest expense
2,000
Net income
188,000

100%
52.63%
47.37%
27.37%
20.00%
0.44%
19.56%

51,000
230,000
(20,000)
50,000

50,000
30,000

Sales~ $1,000,000-50000(1,000,000x5%)=$950,000

Chapter 9: The Master Budget

Page 3 of 14

MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Cash Payments for Direct Labor Budget

January
February
March
Quarter
Product in units
26,000
46,000
29,000
101,000
Direct labor hours per unit
0.05
0.05
0.05
0.05
Labor hours required
1,300
2,300
1,450
5,050
Direct labor cost per hour
$
10.00 $
10.00 $
10.00 $
10.00
Total direct labor cost
$
13,000 $
23,000 $ 14,500 $
50,500

Chapter 9: The Master Budget

Page 4 of 14

MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Cash Payments for Manufacturing Overhead Budget

January
February
March
Production in units
26,000
46,000
29,000
Variable mfg overhead rate
$
1 $
1 $
1 $
Variable mfg overhead costs
26,000
46,000
29,000
Fixed mfg overhead costs
50,500
50,500
50,500
Total mfg overhead costs
76,500
96,500
79,500
Less Depreciation
(20,500)
(20,500)
(20,500)
Cash mfg overhead costs
56,000
76,000
59,000

Total
101,000
1
101,000
151,500
252,500
(61,500)
191,000

Selling and Administrative Expense Budget

January
February
March
Quarter
Sales in units
20,000
50,000
30,000
100,000
Variable selling & admin rate
$
0.50 $
0.50 $
0.50 $
0.50
Variable selling & admin expense
10,000
25,000
15,000
50,000
Fixed Selling & admin expense
70,000
70,000
70,000
210,000
Total selling & admin expense
80,000
95,000
85,000
260,000
Less non-cash expenses
(10,000)
(10,000)
(10,000)
(30,000)
Cash pymts for selling & admin
$
70,000 $
85,000 $ 75,000 $ 230,000

Cash balance, beginning

Add cash Collections for Sales (#2)
Total Cash available
Less disbursements:
Material Purchases (#4)
Direct labor (#5)
Mfg. Overhead (#6)
Selling & Admin (#7)
Equipment Purchases
Dividends
Total disbursements
Excess (deficiency) of cash
Chapter 9: The Master Budget

Cash Budget
January
February
$
40,000 $
30,000
170,000
400,000
210,000
430,000
40,000
13,000
56,000
70,000
51,000
230,000
(20,000)

March
$ 30,000
335,000
365,000

Quarter
$
40,000
905,000
945,000

72,300
23,000
76,000
85,000
143,700

72,700
14,500
59,000
75,000
48,800

400,000
30,000

270,000
95,000

185,000
50,500
191,000
230,000
192,500
51,000
900,000
45,000
Page 5 of 14

MANAGERIAL ACCOUNTING - Fourth Edition

Financing
Borrowing
Repayments
Interest
Total Financing
Cash balance ending

Chapter 9: The Master Budget

Solutions Manual

50,000

50,000
30,000

30,000

(50,000)
(2,000)
(52,000)
43,000

50,000
(50,000)
(2,000)
(2,000)
43,000

Page 6 of 14

MANAGERIAL ACCOUNTING - Fourth Edition

Budgeted Income Statement

For the quarter ending March 31,2015
Sales (Net of 5% uncollectible)
$
950,000
Less cost of goods sold
500,000
Gross Margin
450,000
Less selling & admin. Expense
260,000
Net operating income
190,000
Less interest expense
2,000
Net income
188,000

Solutions Manual

100%
52.63%
47.37%
27.37%
20.00%
0.44%
19.56%

Sales~ $1,000,000-50000(1,000,000x5%)=$950,000

Chapter 9: The Master Budget

Page 7 of 14

Production in units
*Materials per units (lbs)
Production needs(lbs)
Add ending inventory (lbs)
Total needs (lbs)
Less beginning inventory (lbs)
Material to be purchased (lbs)

Direct Materials Budget

January
February
26,000
46,000
5
5
130,000
230,000
23,000
14,500
153,000
244,500
(13,000)
(23,000)
140,000
221,500

March
29,000
5
145,000
11,500
156,500
(14,500)
142,000

Mar. End Inv.=April's 23000 Prod. Units*5lbs=115,000 lbs*10%=11,500

B/S Asssets Direct Materials = $

4,600

Schedule of Cash Payments

%
January
February
140,000
221,500
$
0.40 $
0.40
$
56,000 $ 88,600

Material Purchases (lbs)

Cost per lb
Total Cost of purchases

December purchases
January purchases

12,000
28,000

$
$

56,000
56,000

50% $
50%

$
$

88,600
88,600

50%
50%

$ 56,800
Total cash pymts for materials

50%

28,000

44,300

72,300

February purchases

March purchases
$

40,000

B/S Liabs~A/P

Quarter
101,000
5
505,000
11,500
516,500
(13,000)
503,500

March
Quarter
142,000
503,500
$
0.40 $
0.40
$
56,800 $ 201,400

12,000

$
$

28,000
28,000
44,300
44,300

44,300

$
$

$
$

28,400
72,700

$ 28,400
$ 185,000

185,000

Cash Payments for Direct Labor Budget

January
February
March
Product in units
26,000
46,000
29,000
Direct labor hours per unit
0.05
0.05
0.05
Labor hours required
1,300
2,300
1,450
Direct labor cost per hour
$
10.00 $
10.00 $
10.00
Total direct labor cost
$
13,000 $
23,000 $ 14,500

Cash Payments for Manufacturing Overhead Budget

January
February
March
Production in units
26,000
46,000
29,000
Variable mfg overhead rate
$
1 $
1 $
1
Variable mfg overhead costs
26,000
46,000
29,000
Fixed mfg overhead costs
50,500
50,500
50,500
Total mfg overhead costs
76,500
96,500
79,500
Less Depreciation
(20,500)
(20,500)
(20,500)
Cash mfg overhead costs
56,000
76,000
59,000

Quarter
101,000
0.05
5,050
$
10.00
$
50,500

dget

Total
101,000
1
101,000
151,500
252,500
(61,500)
191,000

Selling and Administrative Expense Budget

January
February
March
Sales in units
20,000
50,000
30,000
Variable selling & admin rate
$
0.50 $
0.50 $
0.50
Variable selling & admin expense
10,000
25,000
15,000
Fixed Selling & admin expense
70,000
70,000
70,000
Total selling & admin expense
80,000
95,000
85,000
Less non-cash expenses
(10,000)
(10,000)
(10,000)
Cash pymts for selling & admin
$
70,000 $
85,000 $ 75,000

Cash balance, beginning

Add cash Collections for Sales (#2)
Total Cash available
Less disbursements:
Material Purchases (#4)
Direct labor (#5)
Mfg. Overhead (#6)
Selling & Admin (#7)
Equipment Purchases
Dividends
Total disbursements
Excess (deficiency) of cash
Financing
Borrowing
Repayments
Interest
Total Financing
Cash balance ending

Cash Budget
January
February
$
40,000 $
30,000
170,000
400,000
210,000
430,000
40,000
13,000
56,000
70,000
51,000
230,000
(20,000)

March
$ 30,000
335,000
365,000

72,300
23,000
76,000
85,000
143,700

72,700
14,500
59,000
75,000
48,800

400,000
30,000

270,000
95,000

30,000

(50,000)
(2,000)
(52,000)
43,000

50,000

50,000
30,000

Quarter
100,000
$
0.50
50,000
210,000
260,000
(30,000)
$ 230,000

Quarter
$
40,000
905,000
945,000
185,000
50,500
191,000
230,000
192,500
51,000
900,000
45,000
50,000
(50,000)
(2,000)
(2,000)
43,000

Budgeted Income Statement

For the quarter ending March 31,2015
Sales (Net of 5% uncollectible)
$
950,000
Less cost of goods sold
500,000
Gross Margin
450,000
Less selling & admin. Expense
260,000
Net operating income
190,000
Less interest expense
2,000
Net income
188,000
Sales~ $1,000,000-50000(1,000,000x5%)=$950,000

Balance Sheet Data:

Cash:
Accounts Receivables
Raw Materials Inventory
Finished Goods Inventory
Liabilities
Accounts Payable

$
$
$
$

43,000
75,000
25,000
28,400

100%
52.63%
47.37%
27.37%
20.00%
0.44%
19.56%