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Apr 3, 2024

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® Ruiz Company provides the following budgeted sales for the next four months. The company wants to end each month hint #0 finished goods inventory equal to 40% of next month’s budgeted unit sales. Finished goods inventory on April 1is 272 u production budget for the months of April, May, and June. 375 points ) april, nay June 2uly Budgeted sales units s 7ee e see Ruiz Co. provides the following budgeted sales for the next four months. The company ‘wants to end each month with ending finished goods inventory equal to 20% of next ] RUIZ CO. 1 month's sales. Finished goods inventory on April 1 is 128 units. ek Production Budget | Prepare a production budget for the months of April, May, and June. April May June Hint udgeted sales units 680 760 710 Budgeted sales units 640 700 670 740 [Add: Desired ending inventory - Next period budgeted sales units. 760 710 800 Ruiz Co. prnt pen Production Budget Ratio of inventory to future sales 40% 40% 40% April May Ju Desired ending inventory units 304 24| 320) Budgeted sales units 640 700 [Add: Desired ending inventory eferances Total required units 1,064] 994} 1,120] Next moniis budgeted salos 200 670 ess: Beginning inventory units. 272) 690) 836} Ratio of inventory to future sales 20% 20% Uniits to produce 792 304 284 Desired ending inventory units 140 134 Total required units 780 ~~_ 834 Less: Beginning inventory units 128 (140) Units to produce 652 Ruiz Company provides the following budgeted sales for the next four months. The company wants to end each month with ending finished goods inventory equal to 40% of next month’s budgeted unit sales. Finished goods inventory on April 1is 272 units. Prepare a production budget for the months of April, May, and June. 2171375 points awarded April May June July Budgeted sales units 680 760 710 800 Scored [ RUIZ CO. B a Production Budget 2Book April May June udgeted sales units v 680 760 710 (Add: Desired ending inventory v Hint Next period budgeted sales units 760 710 800 — Ratio of inventory to future sales 40% 40% 40% Print Desired ending inventory units | - 304 284 320 Total required units 984 1,044 1,030 ess: Beginning inventory units |v 272 304 284 References Units to produce 712, 740 746

Production Budget A manufacturer prepares a production budget, which shows the units to produce each period to meet budgeted sales and a desired inventory level. Manufacturers often set a safef production budget does not show costs; it is always expressed in units of product. EXHIBIT 22.5 Computing Units to Produce Bt Desired ending Beginning finished r:d = Budgeted sales units + finished goods Y goods inventory procucs inventory units units Required units for the period Starting in October, TSC decides that the number of units in its finished goods inventory at each month-end should equal 90% of next month’s budgeted sales. For example, inventory at the end of October should equal 90% of budgeted November sales. and so on. We can now prepare the production budget in (@ Exhibit 22.6. Page 809 EXHIBIT 22.6 Production Budget TORONTO STICKS COMPANY 4 Budget October Budgeted sales units* 1,000 800 1,400 Add: Desired ending inventory t Next period budgeted sales units™ 800 1,400 900 Ratio of inventory to future sales x_90% X 90% X 90% Desired ending inventory units 720 — 1,260 — 810 Total required units 1,720 2,060 2210 Less: Beginning inventory units 1,010 720 1,260 Units to produce 710 1,340 950 *From sales hudoet in Fxhibit 22 4: assume Tanuary hudocted sales is 900 units Zira Company reports the following production budget for the next four months. Each finished unit requires four pounds of direct materials, and the company wants to end each month with direct materials inventory equal to 30% of next month’s production needs. Beginning direct materials inventory for April was 739 pounds. Direct materials cost $5 per pound o Prepare a direct materials budget for April, May, and June. (Round your answers to the nearest whole number) pril May dume duly M Units to produce 55 e0 s o2 ) [ ZIRACO. B hod Direct Materials Budget April May June | = nits to produce 616) 670 648 units prine Materials required per unit 4 4 4lbs. Materials needed for production (lbs.) 2.464] 2660 2592 bs () PAdd: Desired ending materals inventory (bs) 804 778 754[bs b Total materials required (Ibs) 3268 3456 3346 s ess: Beginning materials inventory (Ibs) 739) 304 778 bs Materials to purchase (lbs) 2.525) 2654 2,568 s aterials cost per pound B 5[s 5[s 5[per o Cost of direct materials purchases 5 25u 5 2669 5 2673

Direct Materials Budget The direct materials budget shows the budgeted costs for direct materials that must be purchased to meet the budgeted production. Whereas the production budget shows unirs to produce, the direct materials budget translates the units to produce into budgeted cosrs. Layout of the direct material budget follows. [ o Mot recued Desiedendng Besinning purcnase | = [ posae X e |- R rece il — s E] Page 810 () Exhibit 22.7 shows the direct materials budget for TSC, which has 5 steps to prepare it. 4 Enter units to produce from the production budget. 2 Enter materials required per unit. For TSC, this is 0.5 pound of wood required per unit. We then compute materials needed for production: for October, we take the 710 units to produce and multiply it by 0.5 pound to get 355 lbs, 5 Add desired ending materials inventory. For TSC, its policy (starting in October) is to have ending materials equal to 50% of next period’s materials needed. This is 335 Ibs. for October (50% of 670). 4 Subtract beginning materials inventory. For TSC. this is 175 Ibs. for October from purchase, which s 512 Ibs. (690 - 175). s Enter materials cost. Materials cost is $20 per pound. We then compute cost of direct materials purchases as $10.240 for October (520 % 512 pounds). Exhibit 22.3. We then compute materials to EXHIBIT 22.7 Direct Materials Budget ‘TORONTO STICKS COMPANY Unitsto produce* Materials required per uni (pounds) x_05 x_05 x 05 Motelneede ot podcton pound T T NGt Desired Sl et ivnicny (o0 =T ST “Total materials required (pounds) 690 9075 7225 Less: Beginning materials inventory (pounds) 178 335 2315 Materials to purchase (pounds) 572 5725 850 Materials cost per pound $ 20 $ 20 $ 20 Cost o direct material purchases $10.240 $11450 $9.700

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Kayak Company budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. 375 Cash Recelpts Cash payments points January 5 522,000 5 468,500 February 410500 357,300 parch 469,000 528,000 ] Kayak requires a minimum cash balance of $30,000 at each month-end. The company can borrow money ata monthly interest rate of eBook 1%, paid on the last day of each month. The interest is computed based on the beginning balance of the loan for the month. Any preliminary cash balance above $30,000 is used to repay loans at month-end. The company has a cash balance of $30,000 and a ® Ioan balance of $60,000 at January 1. e Prepare monthly cash budgets for January, February, and March. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.) = o B KAYAK COMPANY B Cash Budget References January February March Beginning cash balance s 30000f 5 30000f 5 75726 fAdd: Cash receipts 522,000 410500 469.000 Total cash available 552,000 440,500 544726 ess: Cash payments for Interest on loan 600 74 0 468,300 357,300 528,000 Total cash payments 469.400 357,374 528,000 Preliminary cash balance 82,600 83,126 16.726) Loan activity ‘Additional loan (loan repayment) (52,600)| (53.126) 0 Ending cash balance s 30000f 5 30000f 5 16726 B ~ Loanbalance B Loan balance - Beginning of month s 60000 § 7.400[ 5 0 Additional loan (loan repayment) (52,600) (53.126) 0 Loan balance, end of month s 7400] 5 (@726 5 0

3 295375 points awarded January 5 522,000 5 468,500 February 410,500 357,300 March 469,000 525,000 Kayak requires a minimum cash balance of $30,000 at each month-end. The company can borrow money ata monthly interest rate of 1%, paid on the last day of each month. The interest is computed based on the beginning balance of the loan for the month. Any preliminary cash balance above $30,000 is used to repay loans at month-end. The company has a cash balance of $30,000 and a Ioan balance of $60,000 at January 1. Scored Prepare monthly cash budgets for January, February, and March. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.) ® [ KAYAK COMPANY B Hint Cash Budget _ January February March = Beginning cash balance s 30000 s 30000f s 75726 FAdd: Cash receipts [~ 522,000 410,500 469,000 Total cash available 552000, 440500, 544726 References ess: Cash payments for ~ ‘Allitems excluding interest ~ @esso0)] (357300 (528000) nterest on loan ~ 600) (74) Total cash payments (@69.400) (357374)g _ (528000) Preliminary cash balance 82,600 83,126] 16,726 Loan activity ‘Additional loan (loan repayment) |~ (52,600) (7.400) 13,274 Ending cash balance 5 30000[ 5 75726] 5 30,000 B " Loan balance D Loan balance - Beginning of monih s eooo0fs 74005 0 ‘Additional loan (loan repayment) (52600) (7.400) 13.274 Loan balance, end of month Fs 7.200] § of s 13204 4 Jasper Company has 63% of its sales on credit and 37% for cash. All credit sales are collected in full in the first month following the sale. The company budgets sales of $530,000 for April, $540,000 for May, and $565,000 for June. Total sales for March are $309,300. 375 points Prepare a schedule of budgeted cash receipts for April, May, and June. @ Answer is complete and correct. April May June Cash sales 3% |5 196100@ s 199800@ S 209050 @ Sales on account 63% 333900@ | 340200@Q| 355950 @ Total sales S 530000 |5 540000 |5 565000 B JASPER COMPANY [ Schedule of Cash Receipts April May June Cash receipts from: Cash sales s 196100 [s 199800 |5 209,050 Collection of accounts receivable 194859 @ | 333900@| 340200 @ Total cash receipts s 390959 |5 533700 |5 549250

6 375 points Zisk Company purchases direct materials on credit. Budgeted purchases are April, $96,000; May, $126,000; and June, $136,000. Cash payments for purchases are: 70% in the month of purchase and 30% in the first month after purchase. Purchases for March are $86.000. Prepare a schedule of cash payments for direct materials for April, May, and June. @ Answer is complete and correct. Apil May June Current period purchases 70% |5 67200@ 5 88200@ 5 95200 @ Ending accounts payable 30% 28,800 @ 37,800 @ 40,800 @ Total purchases s 96000 |5 126000 [s 136000 B Zisk Co. B Schedule of Cash Payments for Direct Materials April May June Cash payments for Current period purchases s 67200 |5 88200 [5 95200 Prior period purchases 25,800 @ 28,800 @ 37,800 @ Total cash payments s 93000 [s 117000 [s 133000 Karim Corporation requires a minimum $9,400 cash balance. Loans taken to meet this requirement cost 1% interest per month (paid at the end of each month). Any preliminary cash balance above $9.400 is used to repay loans at month-end. The cash balance on July 1 s $9,800, and the company has no outstanding loans. Budgeted cash receipts (other than for loans received) and budgeted cash payments (other than for loan or interest payments) follow. July August September Cash receipts $ 25,400 § 33,400 $ 41,400 Cash payments 30,100 31,400 33,400 Prepare a cash budget for July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar,) © Answer is complete but not entirely correct. KARIM CORP. e Cash Budget N b July August September | Beginning cash balance S 9800 s 9400@|s 9400Q Add: Cash receipts Q 25400 @ 33400 @ 114000 | Total cash available 35,200 42,800 50,800 Less: Cash payments for Q | Interest on loan o Q9 130 2Q Q 30,100 @ 31400 @ | 33,400 @ Total cash payments 30,100 31.443 33424 Prefiminary cash balance 5 510@s 1357@s 17376@ Loan activity Additional loan (loan repayment) Q 4300 @ (1957)@ | 2343Q Ending cash balance 5 940@fs 940@fs 1503@ Loan balance Loan balance - Beginning of month s 0 s 430 s 2343 Additional loan (loan repayment) 4300Q (197 | 2343 Loan balance - End of month 5 430 |5 2300@ 9

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2 375 points, Foyert Corporation requires a minimum $6,800 cash balance. Loans taken to meet this requirement cost 1% interest per month (paid at the end of each month). Any preliminary cash balance above $6,800 is used to repay loans at month-end. The cash balance on October 1is $6,800, and the company has an outstanding loan of $2,800. Budgeted cash receipts (other than for loans received) and budgeted cash payments (other than for loan or interest payments) follow. October November December Cash receipts $ 22,800 516,800 $ 20,800 Cash payments. 25,200 15,500 15,200 Prepare a cash budget for October, November, and December. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.) © Answer is complete but not entirely correct. FOYERT CORP. ' Cash Budget | October | November | December | Beginning cash balance s 680 [s 6800@)s 6800@ | Add: Cash receipts Q 22,800 @ 16,800 @ 20,800 @ Total cash available 29,600 23600 27,600 Less: Cash payments for Q Interest on loan Q 280 2@ 3@ Al items excluding interest Q 25,200 @ 15,800 @ 152200 @ Total cash payments 25,228 15,852 15243 Preliminary cash balance s 4312@ 8 7748@[s 12357 @ Loan activity Additional loan (loan repayment) Q 2428Q (948) @ 4280 @ Ending cash balance ] 6300@ s 6,300 @ [s 8077 @ Loan balance Loan balance - Beginning of month s 2800 [s 5228 s 4280 Additional loan (loan repayment) 2428 (948) 4280 Loan balance - End of month 5 528Q@[s 42800 8,560 Cash Accounts receivable Merchandise inventory Equipment Accunulated depreciation-Equipment Accounts payable Loan payable Common stock Retained earnings (beginning year balance) Sales Cost of goods sold Loan interest expense Depreciation expense Salaries expense Totals Debit $ 51,200 121,200 65,200 126,200 361,200 9,200 11,200 123,200 Lamonte Company reports the following budgeted December 31 adjusted trial balance. Credit $ 26,200 35,200 23,200 203,000 59,800 521,200 complete and correct. @ Answe: LAMONTE CoO. Budgeted Income Statement For Year Ended December 31 Sales [ s 521200 @ Cost of goods sold o 361.200 @ Gross profit 160,000 @ Selling, general and administrative expenses Salaries expense Q) 123200Q Depreciation expense o 11,200 @ Loan interest expense o 9200Q 143,600 Netincome o 516400 Prepare the budgeted income statement for the current year ended December 31. Ignore income taxes.

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