Budget A. Betz Company's sales budget shows the following projections for the year ending Dec. 31,2021:QuarterNo, of UnitsFirst60,00080,00045,00055,000SecondThirdFourthInventory at Dec. 31 of last year was budgeted at 18,000 units. The quantity of finishedgoods inventory at the end of each quarter should equal 30% of the next quarter's budgeted salesof units.REQUIRED:1. Prepare the production budget for the first and second quarters separately. Include a totalcolumn.B. The Charito Company is planning an overhead budget cost for May and June, 2021. Pastcost studies indicates that costs have followed behavior patterns as given below:Variable rate per hourIndirect materialsPO.901.20Heat, light & powerRepairs & maintenanceLubrication4.600.50In addition, management has estimated fixed factory overhead as followspermonth:SupervisionP44,000Indirect labor36,000Heat, light and powerRepairs & maintenance14,50017,200Taxes & insurance9,000During May and June, 2021, the company plans to manufacture 150,000 units ofproduct. Products are produced a the rate of 6 units per hour. Normal plant capacity is 15,000hours per month. REQUIRED:1. Prepare the factory overhead budget for May & June, 2021. Separate the fixed from thevariable cost components.2. Determine the unused normal capacity, if any.

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A. Betz Company's sales budget shows the following projections for the year ending Dec. 31, 2021: Quarter No, of Units First 60,000 80,000 45,000 55,000 Second Third Fourth Inventory at Dec. 31 of last year was budgeted at 18,000 units. The quantity of finished goods inventory at the end of each quarter should equal 30% of the next quarter's budgeted sales of units. REQUIRED: 1. Prepare the production budget for the first and second quarters separately. Include a total column. B. The Charito Company is planning an overhead budget cost for May and June, 2021. Past cost studies indicates that costs have followed behavior patterns as given below: Variable rate per hour PO.90 Indirect materials Heat, light & power Repairs & maintenance Lubrication 1.20 4.60 0.50 In addition, management has estimated fixed factory overhead as follows per month: P44,000 36,000 14,500 17,200 9,000 Supervision Indirect labor Heat, light and power Repairs & maintenance Taxes & insurance During May and June, 2021, the company plans to manufacture 150,000 units of product. Products are produced a the rate of 6 units per hour. Normal plant capacity is 15,000 hours per month.

A. Betz Company's sales budget shows the following projections for the year ending Dec. 31, 2021: Quarter No, of Units First 60,000 80,000 45,000 55,000 Second Third Fourth Inventory at Dec. 31 of last year was budgeted at 18,000 units. The quantity of finished goods inventory at the end of each quarter should equal 30% of the next quarter's budgeted sales of units. REQUIRED: 1. Prepare the production budget for the first and second quarters separately. Include a total column. B. The Charito Company is planning an overhead budget cost for May and June, 2021. Past cost studies indicates that costs have followed behavior patterns as given below: Variable rate per hour PO.90 Indirect materials Heat, light & power Repairs & maintenance Lubrication 1.20 4.60 0.50 In addition, management has estimated fixed factory overhead as follows per month: P44,000 36,000 14,500 17,200 9,000 Supervision Indirect labor Heat, light and power Repairs & maintenance Taxes & insurance During May and June, 2021, the company plans to manufacture 150,000 units of product. Products are produced a the rate of 6 units per hour. Normal plant capacity is 15,000 hours per month.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 18E: Carmichael Corporation is in the process of preparing next years budget. The pro forma income...

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A companys sales for the coming months are as follows: About 20 percent of sales are cash sales, and the remainder are credit sales. The company finds that typically 10 percent of a months credit sales are paid in the month of sale, 70 percent are paid the next month, and 15 percent are paid in the second month after sale. Expected cash receipts in July are budgeted at what amount? a. 114,520 b. 143,150 c. 145,720 d. 156,000
CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2019 and 2020: Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: General and administrative salaries are approximately 27,000 a month. Lease payments under long-term leases are 9,000 a month. Depreciation charges are 36,000 a month. Miscellaneous expenses are 2,700 a month. Income tax payments of 63,000 are due in September and December. A progress payment of 180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be 132,000, and a minimum cash balance of 90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2019. b. Prepare monthly estimates of the required financing or excess fundsthat is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1/30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers sales are seasonal, and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the companys current and debt ratios would vary during the year if all financial requirements were met with short-term bank loans. Could changes in these ratios affect the firms ability to obtain bank credit? Explain.
Palmgren Company produces consumer products. The sales budget for four months of the year is presented below. Company policy requires that ending inventories for each month be 25 percent of next months sales. At the beginning of July, the beginning inventory of consumer products met that policy. Required: Prepare a production budget for the third quarter of the year. Show the number of units that should be produced each month as well as for the quarter in total.
Carmichael Corporation is in the process of preparing next years budget. The pro forma income statement for the current year is as follows: Required: 1. What is the break-even sales revenue (rounded to the nearest dollar) for Carmichael Corporation for the current year? 2. For the coming year, the management of Carmichael Corporation anticipates an 8 percent increase in variable costs and a 60,000 increase in fixed expenses. What is the break-even point in dollars for next year? (CMA adapted)
Cash budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent 50,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of 40,000, marketable securities of 75,000, and accounts receivable of 300,000 (60,000 from July sales and 240,000 from August sales). Sales on account for July and August were 200,000 and 240,000, respectively. Current liabilities as of September 1 include 40,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of 55,000 will be made in October. Bridgeports regular quarterly dividend of 25,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of 50,000. Instructions Prepare a monthly cash budget and supporting schedules for September, October, and November. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the follow sales: In Shalimars experience, 10 percent of sales are paid in cash. Of the sales on account, 65 percent are collected in the quarter of sale, 25 percent are collected in the quarter following the sale, and 7 percent are collected in the second quarter after the sale. The remaining 3 percent are never collected. Total sales for the third quarter of the current year are 4,900,000 and for the fourth quarter of the current year are 6,850,000. Required: 1. Calculate cash sales and credit sales expected in the last two quarters of the current year, and in each quarter of next year. 2. Construct a cash receipts budget for Shalimar Company for each quarter of the next year, showing the cash sales and the cash collections from credit sales. 3. What if the recession led Shalimars top management to assume that in the next year 10 percent of credit sales would never be collected? The expected payment percentages in the quarter of sale and the quarter after sale are assumed to be the same. How would that affect cash received in each quarter? Construct a revised cash budget using the new assumption.
The data shown were obtained from the financial records of Italian Exports, Inc., for March: Sales are expected to increase each month by 10%. Prepare a budgeted income statement.
A companys controller is adjusting next years budget to reflect the impact of an expected 3 percent inflation rate. Listed below are selected items from next years budget before the adjustment. After adjusting for the 3 percent inflation rate, what is the companys total budget for the selected items before taxes for next year? a. 858,150 b. 860,412 c. 810,971 d. 858,971
Before the year began, the following static budget was developed for the estimated sales of 50,000. Sales are higher than expected and management needs to revise its budget. Prepare a flexible budget for 100,000 and 110,000 units of sales.
The following data were obtained from the financial records of Sonicbrush, Inc., for March: Sales are expected to increase each month by 15%. Prepare a budgeted income statement.
Roman Inc. has the following totals from its operating budgets: Prepare a budgeted income statement for the year ended December 31, 2016, assuming that income from operations is taxed at a rate of 30%.
Cash budget The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: The company expects to sell about 10% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month following the sale and the remainder the following month (second month after sale). Depreciation, insurance, and property tax expense represent 12,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in February, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of June 1 include cash of 42,000, marketable securities of 25,000, and accounts receivable of 198,000 (150,000 from May sales and 48,000 from April sales). Sales on account in April and May were 120,000 and 150,000, respectively. Current liabilities as of June 1 include 13,000 of accounts payable incurred in May for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of 24,000 will be made in July. Mercury Shoes regular quarterly dividend of 15,000 is expected to be declared in July and paid in August. Management desires to maintain a minimum cash balance of 40,000. Instructions Prepare a monthly cash budget and supporting schedules for June, July, and August. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?