LANGLEY BATTING COMPANY Balance Sheet December 31, 2018 Assets Current Assets: Cash $ 30,000 Accounts Receivable 16,700 Raw Materials Inventory 6,000 Finished Goods Inventory 21,300 Total Current Assets $ 74,000 Property, Plant, and Equipment Equipment 130,000 Less: Accumulated Depreciation (50,000) 80,000 Total Assets $ 154,000 Liabilities Current Liabilities: Accounts Payable $ 15,200 Stockholders' Equity Common Stock, no par $ 90,000 Retained Earnings 48,800 Total Stockholders' Equity 138,800 $ 154,000 Total Liabilities and Stockholders' Equity
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Preparing an operating budget—sa1es, production, direct materials direct labor,
The Langley Batting Company manufactures Wood baseball bats. Langley’s two primary products are a youth bat, designed for children and young teens, and an adult but, designed for high school and college-aged players. Langler sells the bats to sporting goods stores, and all sales are on account. The youth bat sells for $40 the adult bat sells for $65 Langley’s highest sales volume is in the first three months of the year as retailers prepare for the spring baseball season. Langley’s
Other data for Langley Batting Company for the first quarter of 2019:
- Budgeted sales are 1, 200 youth bats and 2 600 adult bats.
- Finished Goods Inventory on December 31, 2018, consists of 300 youth bats at $14 each and 950 adult bats at $18 each.
- Desired ending Finished Goods Inventory is 350 youth bats and 300 adult bats; FIFO inventory costing method is used.
- Direct materials requirements are 48 ounces of Wood per youth bat and 56 ounces of Wood per adult bat. The cost of Wood is $0.25 per ounce.
- Raw Materials Inventory of December 31, 2018, consists of 24,000 ounces of wood at $0.25 per ounce.
- Desired ending Raw Materials Inventory is 24,000 ounces (indirect materials are insignificant and not considered for budgeting purposes).
- Each bat requires 0.7 hours of direct labor; direct labor costs average $18 per hour.
- Variable manufacturing overhead is $0.30 per bat.
- Fixed manufacturing overhead includes $1,300 per quarter in
depreciation and $520,140 per quarter for other costs, such as insurance and property taxes. - Fixed selling and administrative expenses include $9,000 per quarter for salaries; $2,500 per quarter for rent; $1,000 per quarter for insurance; and $200 per quarter for depreciation.
- Variable selling and administrative expenses include supplies at 2% of sales.
Requirements
- Prepare Langley’s sales budget for the first quarter of 2019.
- Prepare Langley’s production budget for the first quarter of 2019.
- Prepare Langley’s direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of 2019. Round the predetermined overhead allocation rate to two decimal places. The overhead allocation base is direct labor hours.
- Prepare Langley’s cost of goods sold budget for the first quarter of 2019.
- Prepare Langley’s selling and administrative expense budget for the first quarter of 2019.
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