**Budget Planning Data Overview****Budgeted Unit Sales:**- **Year 2 Quarter 1:** 40,000 units- **Year 2 Quarter 2:** 60,000 units- **Year 2 Quarter 3:** 100,000 units- **Year 2 Quarter 4:** 50,000 units- **Year 3 Quarter 1:** 70,000 units- **Year 3 Quarter 2:** 80,000 units**Financial Assumptions:**- **Selling Price per Unit:** $12- **Accounts Receivable (Beginning Balance):** $65,000**Sales Collection:**- 75% collected in the quarter sales are made- 25% collected in the following quarter**Inventory and Raw Materials:**- **Finished Goods Inventory (Desired Ending):** 30% of next quarter's sales- **Finished Goods Inventory (Beginning):** 12,000 units- **Raw Materials Required per Unit:** 5 pounds- **Desired Ending Inventory of Raw Materials:** 10% of next quarter's production needs- **Beginning Raw Materials Inventory:** 23,000 pounds- **Raw Material Cost:** $0.80 per pound**Payment Terms for Raw Materials:**- 60% paid in purchase quarter- 40% paid in the following quarter**Accounts Payable for Raw Materials (Beginning Balance):** $81,500**Labor and Overhead Costs:**- **Direct Labor Cost per Hour:** $15- **Direct Labor Hour per Unit:** 0.2 hours- **Variable Manufacturing Overhead (MOH) Rate:** $2 per hour- **Total Fixed MOH:** $60,000- **Variable Selling & Administrative (S&A) Expense Rate:** $1.80 per unit**Financial Requirements:**- **Minimum Cash Balance:** $50,000- **Annual Interest Rate:** 12%This budget overview reflects the crucial financial metrics and assumptions necessary for planning and forecasting in a manufacturing business, including sales projections, inventory management, cost calculations, and payment terms. **Construct the Cash Budget**| | Year 2 Quarter | | | | Year ||----------------------------------|-----------------------------|---|---|---|------|| | 1 | 2 | 3 | 4 | || **Cash balance, beginning** | 22,500 | | | | || **Add receipts:** | | | | | || Collections from customers | ? | ? | ? | ? | ? || **Total cash available** | ? | ? | ? | ? | ? || **Less disbursements:** | | | | | || Disbursements for DM purchase | ? | ? | ? | ? | ? || Disbursements for direct labor | ? | ? | ? | ? | ? || Disbursements for MOH | ? | ? | ? | ? | ? || Disbursements for S&A expenses | ? | ? | ? | ? | ? || **Total disbursements** | ? | ? | ? | ? | ? || **Excess (deficiency) of cash available over disbursements** | ? | ? | ? | ? | ? || **Financing:** | | | | | || Borrowing (at the beginning of quarters) | ? | ? | ? | ? | ? || Repayments (at the end of the year) | ? | | | | ? || Interest | ? | | | | ? || **Total financing** | ? | ? | ? | ? | ? || **Cash balance, ending** | ? | ? | ? | ? | ? |**Explanation:**This table is a format for constructing a cash budget over a one-year period divided into four quarters. The cash budget accounts for both incoming and outgoing cash flows during each quarter.- **Cash balance, beginning:** Starting amount of cash at the beginning of

Data Year 2 Quarter 2 60,000 Year 3 Quarter 1 70,000 1 3 4 2 80,000 Budgeted unit sales 40,000 100,000 50,000 • Selling price per unit • Accounts receivable, beginning balance • Sales collected in the quarter sales are made • Sales collected in the quarter after sales are made • Desired ending finished goods inventory is • Finished goods inventory, beginning • Raw materials required to produce one unit • Desired ending inventory of raw materials is • Raw materials inventory, beginning • Raw material costs • Raw materials purchases are paid $12 per unit $65,000| 75% 25% 30% of the budgeted unit sales of the next quarter 12,000 units 5 pounds 10% of the next quarter's production needs 23,000 pounds $0.80 per pound 60% in the quarter the purchases are made 40% in the quarter following purchase $81,500 and • Accounts payable for raw materials, beginning balance •Direct labor cost per hour •Direct labor hour per unit $15 per hour 0.2 hour per unit •Variable MOH rate •Total fixed MOH $2 per hour $60,000 •Variable S&A expense rate $1.80 per unit •Minimum cash balance •Annual Interest rate $50,000 12%

Data Year 2 Quarter 2 60,000 Year 3 Quarter 1 70,000 1 3 4 2 80,000 Budgeted unit sales 40,000 100,000 50,000 • Selling price per unit • Accounts receivable, beginning balance • Sales collected in the quarter sales are made • Sales collected in the quarter after sales are made • Desired ending finished goods inventory is • Finished goods inventory, beginning • Raw materials required to produce one unit • Desired ending inventory of raw materials is • Raw materials inventory, beginning • Raw material costs • Raw materials purchases are paid $12 per unit $65,000| 75% 25% 30% of the budgeted unit sales of the next quarter 12,000 units 5 pounds 10% of the next quarter's production needs 23,000 pounds $0.80 per pound 60% in the quarter the purchases are made 40% in the quarter following purchase $81,500 and • Accounts payable for raw materials, beginning balance •Direct labor cost per hour •Direct labor hour per unit $15 per hour 0.2 hour per unit •Variable MOH rate •Total fixed MOH $2 per hour $60,000 •Variable S&A expense rate $1.80 per unit •Minimum cash balance •Annual Interest rate $50,000 12%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question 1 QVC Company produces kitchen cabinets at its factory. The following relates to the production of the kitchen cabinets for the period ending December 2020. Production (units) Sales (units) Fixed production cost Fixed Selling overhead Budgeted Actual 75,000 80,000 72,500 77,500 $750,000 $781,250 $562,500 $562,500 The fixed production overhead was absorbed at a pre- determined rate per unit produced. Each kitchen cabinet was sold for $450. Required: At the beginning of January 2020, there was opening stock of 4,375 units valued at $262,500; this includes fixed production overhead of $43,750. c) Prepare the reconciliation statement as at December 31, 2020.
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Question 5.1 Stark and Company would like to evaluate one of the product lines that they sell to the defense department. Every month the Stark and Company produce an identical number of units, although the sales in units differ from month to month. Selling price Units in beginning inventory $105 110 Units produced 6,400 Units sold 6,100 Units in ending inventory Variable costs per unit: 410 Direct materials $62 Direct labour $48 Variable manufacturing overhead Variable selling and administrative Fixed costs: $3 $7 Fixed manufacturing overhead Fixed selling and administrative $64,000 $35,600 Submission Instructions: 1. Under variable costing, identify the unit product cost for the month. 2. What is the unit product cost for the month under absorption costing? 3. Prepare an income statement for the month using the contribution format and the variable costing method. 4. Prepare an income statement for the month using the absorption costing method.
Q49 Arrow, Incorporated, manufactures two products that it sells to the same market. Excerpted below are its budgeted and actual operating results for the year just completed: Budget Actual Unit sales Product X 21,500 40,000 Product Y 89,000 79,000 Unit contribution margin Product X $ 6.00 $ 3.90 Product Y $ 13.00 $ 14.00 Unit selling price Product X $ 13.00 $ 14.00 Product Y $ 30.00 $ 29.00 Industry volume was estimated to be 1,865,000 units at the time the budget was prepared. Actual industry volume for the period was 2,400,000 units. Arrow measures variances using contribution margin. The weighted-average budgeted contribution margin per unit is: Multiple Choice $10.43. $11.64. $12.23. $9.12. $9.17.
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