Module-05_Excel spreadsheet 23-hkx6orsoq40n_192trvh6qxa8v

Module 5 - Budget Problem Sales are projected to be 6,000 for January, 8,000 for February and 14,000 for March. Your Company expects to sell 12,000 cooker/smokers in April and needs 132,000 ounces of direct materials for production. 15% of sales from Country Cookin' Inc. to retailers are cash sales, while the remaining 85% are sold on account. Additional budgeted information includes: Month Projections For Next Year January February March Direct labor $ 24,000 $ 34,500 $ 51,000 $ 109,500 Manufacturing overhead: Variable $ 28,800 $ 41,400 $ 61,200 $ 131,400 $ 41,000 $ 41,000 $ 41,000 $ 123,000 $ 71,000 $ 74,000 $ 95,000 $ 240,000 Each cooker/smoker requires 0.25 of an hour of direct labor at the rate of $15.00. Country Cookin' Inc. estimated at the beginning of the year that it would produce 307,500 cooker/smokers next year. Interest expense is budgeted at zero since the company has no outstanding debt. Income tax expense is budgeted at 35% of income before taxes. 1 Prepare next year's 1st quarter sales budget for Country Cookin' Inc. Country Cookin' Inc. Sales Budget For the Quarter Ended March 31 Month January February March Unit sales 6,000 8,000 14,000 28,000 Unit selling price $130 $130 $130 $130 Total sales revenue $ 780,000 $ 1,040,000 $ 1,820,000 $ 3,640,000 Type of Sale Cash sales $ 117,000 $ 156,000 $ 273,000 $ 546,000 Credit sales 663,000 884,000 1,547,000 3,094,000 Total sales revenue $ 780,000 $ 1,040,000 $ 1,820,000 $ 3,640,000 2 Prepare next year's 1st quarter production budget for Country Cookin' Inc. Country Cookin' Inc. Production Budget For the Quarter Ended March 31 Month January February March Unit sales 6,000 8,000 14,000 28,000 Plus: Desired ending inventory 1,200 1,600 2,800 5,600 Total needed 7,200 9,600 16,800 33,600 Less: Beginning inventory 1,200 1,600 2,800 5,600 Units to produce 6,000 8,000 14,000 28,000 Country Cookin' Inc. begins the budgeting process for the following year in the 1st quarter of the current year. With the information provided below, prepare the sales, production and direct materials budgets for the 1st quarter of next year. Also determine the budgeted manufacturing cost per unit and prepare the budgeted income statement for January of next year. Country Cookin' Inc. sells the cooker/smokers they manufacture to various retailers for $130 each. Each cooker/smoker requires 11 ounces of raw material, which is purchased by Country Cookin' Inc. for $8.00 per ounce. Country Cookin' Inc. likes to maintain an ending stock of raw material equal to 10% of the production requirements for the current month. The company would also like to maintain an ending stock of finished cooker/smokers equal to 20% of next month's sales. 1st Quarter Fixed 1 Total operating expenses 2 1st Quarter 1st Quarter

3 Prepare next year's 1st quarter direct materials budget for Country Cookin'. Country Cookin' Inc. Direct Materials Budget For the Quarter Ended March 31 Month February March Units to be produced 6,000 8,000 14,000 28,000 x Ounces of direct materials needed per unit 11 11 11 33 Ounces needed for production 66,000 88,000 154,000 924,000 Plus: Desired ending inventory of direct materials Total ounces needed Less: Beginning inventory of direct materials 7,744 11,132 16,456 35,332 Ounces to purchase x Cost per ounce Total cost of direct materials purchases 4 Prepare next year's budgeted manufacturing cost per unit for Country Cookin' Inc. Country Cookin' Inc. Budgeted Manufacturing Cost per Unit January Direct materials Direct labor Manufacturing overhead: Variable Fixed 1.60 hint: you must take into account total annualized fixed costs in relation to total expected units for the year: (annual fixed costs x 12 divided by estmated smokers to be produced) Cost of manufacturing each widget 5 Prepare next year's budgeted income statement for the month ended January 31 for Country Cookin' Inc. Country Cookin' Inc. Budgeted Income Statement For the month ended January 31 Sales Revenue Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Less: Interest expense Less: Income tax expense 42,665 Net income 1st Quarter

Prepare a flexible budget for sales levels of 26,000, 28,000, and 30,000 smokers. Country Cookin' Inc. Performance Report For the Month Ended March 31 Actual Variance Flexible Variance Master 27,000 130 $3,830,000 88 2,476,000 3.75 98,000 4.50 125,600 3.12 83,000 41,000 41,000 41,000 41,000 50,923 50,923 50,923 50,923 prepared on the Module 5 Budget Problem part 1 tab