a. The sales forecast is 2,000; 1,700; 1,600; and 1,500 units for January, February, March, and April, respectively. The unit sales price is $16. All sales are on credit and collections are 40% in the month of sale and 60% the following month. Accounts receivable is for credit sales only. b. At the end of each month Dean's Devices wants a finished goods inventory equal to 70% of the next month's sales and a direct materials inventory of 120% of that month's production requirement. c. A unit of finished product requires 3 pounds of direct material at $2 a pound, and 30 minutes of direct labor at $7 an hour. Direct materials purchases are paid 25% in the month of purchase and 75% in the following month. Accounts payable is for credit purchases only. All other costs are paid in the month incurred. d. Dean's Devices applies manufacturing overhead to units of product based on direct labour hours. The variable manufacturing overhead rate is $3 per direct labour hour. Fixed manufacturing overhead consists of: salaries $3,000 per month, depreciation $1,500 per month, and other fixed costs $1,110 per month. e. Selling costs are sales commissions ($0.30 per unit sold) and shipping ($0.14 per unit sold). Administrative costs each month are: salaries $800; rent $500; and depreciation $400. f. Dean's Devices plans to buy equipment costing $10,000 in January. This will be paid in cash. g. Dean's Devices management requires a minimum cash balance on hand of $10,000. The company can obtain short-term financing at a rate of 8% per year. Borrowings are received at the beginning of the month and repayments are made at the end of the month (both in $1,000 increments). Any interest incurred is paid at the end of the month following the advance. Prepare the master budget for the first quarter of 2023 for each month and the quarter in total.
a. The sales forecast is 2,000; 1,700; 1,600; and 1,500 units for January, February, March, and April, respectively. The unit sales price is $16. All sales are on credit and collections are 40% in the month of sale and 60% the following month. Accounts receivable is for credit sales only. b. At the end of each month Dean's Devices wants a finished goods inventory equal to 70% of the next month's sales and a direct materials inventory of 120% of that month's production requirement. c. A unit of finished product requires 3 pounds of direct material at $2 a pound, and 30 minutes of direct labor at $7 an hour. Direct materials purchases are paid 25% in the month of purchase and 75% in the following month. Accounts payable is for credit purchases only. All other costs are paid in the month incurred. d. Dean's Devices applies manufacturing overhead to units of product based on direct labour hours. The variable manufacturing overhead rate is $3 per direct labour hour. Fixed manufacturing overhead consists of: salaries $3,000 per month, depreciation $1,500 per month, and other fixed costs $1,110 per month. e. Selling costs are sales commissions ($0.30 per unit sold) and shipping ($0.14 per unit sold). Administrative costs each month are: salaries $800; rent $500; and depreciation $400. f. Dean's Devices plans to buy equipment costing $10,000 in January. This will be paid in cash. g. Dean's Devices management requires a minimum cash balance on hand of $10,000. The company can obtain short-term financing at a rate of 8% per year. Borrowings are received at the beginning of the month and repayments are made at the end of the month (both in $1,000 increments). Any interest incurred is paid at the end of the month following the advance. Prepare the master budget for the first quarter of 2023 for each month and the quarter in total.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please do not give solution in image format ? And Fast answering please and explain proper steps by Step.
Transcribed Image Text:Dean's Devices Corporation has the following balance sheet at December 31, 2022:
Liabilities
Accounts payable
Assets
Cash.......
Accounts receivable
Inventories:
$10,200
17,200
Direct materials (4,400 units)........ 8,800
Finished goods (1,400 units)
20,160
Equipment
Stockholder's Equity
.$ 5,400
Common stock
Retained earnings
50,000
.10,500
60,460
Less: Accumulated depreciation ... (30,000)
Total liabilities and
Total assets
.$76,360
Stockholders' equity
$76,360
The company is preparing its budget for the first quarter of 2023 and has collected the data below:
Transcribed Image Text:a. The sales forecast is 2,000; 1,700; 1,600; and 1,500 units for January, February, March, and
April, respectively. The unit sales price is $16. All sales are on credit and collections are 40%
in the month of sale and 60% the following month. Accounts receivable is for credit sales only.
b. At the end of each month Dean's Devices wants a finished goods inventory equal to 70% of
the next month's sales and a direct materials inventory of 120% of that month's production
requirement.
c. A unit of finished product requires 3 pounds of direct material at $2 a pound, and 30 minutes of
direct labor at $7 an hour. Direct materials purchases are paid 25% in the month of purchase
and 75% the following month. Accounts payable for credit purchases only. All other costs
are paid in the month incurred.
d. Dean's Devices applies manufacturing overhead to units of product based on direct labour
hours. The variable manufacturing overhead rate is $3 per direct labour hour. Fixed
manufacturing overhead consists of: salaries $3,000 per month, depreciation $1,500 per
month, and other fixed costs $1,110 per month.
e. Selling costs are sales commissions ($0.30 per unit sold) and shipping ($0.14 per unit sold).
Administrative costs each month are: salaries $800; rent $500; and depreciation $400.
f. Dean's Devices plans to buy equipment costing $10,000 in January. This will be paid in cash.
g. Dean's Devices management requires a minimum cash balance on hand of $10,000. The
company can obtain short-term financing at a rate of 8% per year. Borrowings are received at
the beginning of the month and repayments are made at the end of the month (both in $1,000
increments). Any interest incurred is paid at the end of the month following the advance.
Prepare the master budget for the first quarter of 2023 for each month and the quarter in total.
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VIEWStep 2: Determination of Master budget. 1 Sales budget
VIEWStep 3: Determination of Master budget. 2 Production budget
VIEWStep 4: Determination of master budget 3. Material usage budget
VIEWStep 5: Determination of master budget 4. Material purchase budget
VIEWStep 6: Determination of master budget 5. Direct labor budget
VIEWStep 7: Determination of master budget .6 Production overhead budget
VIEWStep 8: Determination of master budget .7 Selling and administrative budget
VIEWStep 9: Determination of master budget .8 Cash budget
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