Name Schedule 1- Sales Budget 오2 Q1 Q3 Q4 Total Units Unit price Total Sales Schedule 2 - Production Budget 오2 오4 Q1 Q3 Total Sales in UNITS Plus: Desired finished goods ending inventory Total needs Less: Beginning finished goods inventory Finished goods production needs Schedule 3: Direct Materials Purchases Budget Q1 Q2 Q3 Q4 Total Production units x Materials per unit Production needs for direct materials Plus: Desired ending inventory of direct materials Total needs Less: Beginning direct materials inventory Purchases of direct materials x Cost per unit Direct materials purchases cost Schedule 4: Direct labor Budget Q1 Q2 Q3 Q4 Total Production units xLabor Hours per unit Labor hours needed x Cost per labor hour Total direct labor cost Schedule 5: Overhead Budget Q1 Q2 Q3 Q4 Total Budgeted hours x Variable rate per hour Budgeted variable overhead Budgeted fixed overhead Total Overhead
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.
Optima Company is a high-technology organization that produces a mass-storage system. The design of Optima’s system is unique and represents a breakthrough in the
industry. The units Optima produces combine positive features of both compact and
hard disks. The company is completing its fifth year of operations and is preparing to
build its
activity and the activity for the year in total. The master budget will be based on the
following information:
a. Fourth-quarter sales for 2018 are 55,000 units.
b. Unit sales by quarter (for 2018) are projected as follows:
First quarter 65,000
Second quarter 70,000
Third quarter 75,000
Fourth quarter 90,000
The selling price is $400 per unit. All sales are credit sales. Optima collects 85 percent of all sales within the quarter in which they are realized; the other 15 percent is
collected in the following quarter. There are no
c. There is no beginning inventory of finished goods. Optima is planning the following ending finished goods inventories for each quarter:
First quarter 13,000 units
Second quarter 15,000 units
Third quarter 20,000 units
Fourth quarter 10,000 units
d. Each mass-storage unit uses five hours of direct labor and three units of direct materials. Laborers are paid $10 per hour, and one unit of direct materials costs $80.
e. There are 65,700 units of direct materials in beginning inventory as of January 1,
2010. At the end of each quarter, Optima plans to have 30 percent of the direct
materials needed for next quarter’s unit sales. Optima will end the year with the
same level of direct materials found in this year’s beginning inventory.
f. Optima buys direct materials on account. Half of the purchases are paid for in the
quarter of acquisition, and the remaining half are paid for in the following quarter.
Wages and salaries are paid on the 15th and 30th of each month.
g. Fixed
The fixed overhead rate is computed by dividing the year’s total fixed overhead by
the year’s expected actual units produced.
h. Variable overhead is budgeted at $6 per direct labor hour. All variable overhead
expenses are paid for in the quarter incurred.
i. Fixed selling and administrative expenses total $250,000 per quarter, including
$50,000 depreciation.
j. Variable selling and administrative expenses are budgeted at $10 per unit sold. All
selling and administrative expenses are paid for in the quarter incurred.
k. The
Assets
Cash $ 250,000
Direct materials inventory 5,256,000
Plant and equipment 33,500,000
Total assets $42,306,000
Liabilities and
Accounts payable $ 7,248,000*
Capital stock 27,000,000
Total liabilities and stockholders’ equity $42,306,000
*For purchase of direct materials only.
l. Optima will pay quarterly dividends of $300,000. At the end of the fourth quarter,
$2 million of equipment will be purchased.
*PLEASE COMPLETE THE FOLLOWING PER THE TEMPLATE PROVIDED (:
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
