Shredder Manufacturing has the following projected unit sales (at $18 per unit) for four months of operations: Month Unit Sales January 60,000 February 72,000 March 76,800 April 84,000 Twenty-five percent of the customers are expected to pay in the month of sale and take a 3 percent discount; 70 percent of the customers are expected to pay in the month following sale. The remaining 5 percent will never pay. It takes two pounds of raw material (costing $0.75 per pound) to produce a unit of product. In January, no raw material is in beginning inventories, but management wants to end each month with enough material for 20 percent of the next month’s production. (April’s production is assumed to be 81,600 units.) Shredder Manufacturing pays for 60 percent of its material purchases in the month of purchase and 40 percent in the following month. Each unit of product requires 0.5 hours of labor time. Labor is paid $15 per hour and is paid in the same month as worked. Overhead is estimated to be $2 per unit plus $60,000 per month (including depreciation of $28,800). Overhead costs are paid as incurred. Shredder will begin January with no Work in Process or Finished Goods Inventory. Inventory policy for these two accounts is set at zero ending WIP and 25 percent of the following month’s sales for FG. Note: Do not use negatives signs in any of the schedules below. d. Prepare a direct labor budget for January, February, and March. Jan. Feb. March Total Production Answer Answer Answer Answer DL time per unit Answer Answer Answer Answer DLHs Answer Answer Answer Answer DL rate Answer Answer Answer Answer DL cost Answer Answer Answer Answer e. Prepare an overhead budget for January, February, and March. Jan. Feb. March Total Production Answer Answer Answer Answer VOH unit rate Answer Answer Answer Answer Total VOH Answer Answer Answer Answer FOH cost Answer Answer Answer Answer Total OH Answer Answer Answer Answer f. Prepare a cash receipts schedule for sales and a cash payments schedule for material purchased. Cash Receipts Schedule Jan. Feb. March Total Jan. Answer Answer Answer Answer Feb. Answer Answer Answer Answer March Answer Answer Answer Answer Total Answer Answer Answer Answer Cash Payments Schedule Jan. Feb. March Total Jan. Answer Answer Answer Answer Feb. Answer Answer Answer Answer March Answer Answer Answer Answer Total Answer Answer Answer Answer

Shredder Manufacturing has the following projected unit sales (at $18 per unit) for four months of operations: Month Unit Sales January 60,000 February 72,000 March 76,800 April 84,000 Twenty-five percent of the customers are expected to pay in the month of sale and take a 3 percent discount; 70 percent of the customers are expected to pay in the month following sale. The remaining 5 percent will never pay. It takes two pounds of raw material (costing $0.75 per pound) to produce a unit of product. In January, no raw material is in beginning inventories, but management wants to end each month with enough material for 20 percent of the next month’s production. (April’s production is assumed to be 81,600 units.) Shredder Manufacturing pays for 60 percent of its material purchases in the month of purchase and 40 percent in the following month. Each unit of product requires 0.5 hours of labor time. Labor is paid $15 per hour and is paid in the same month as worked. Overhead is estimated to be $2 per unit plus $60,000 per month (including depreciation of $28,800). Overhead costs are paid as incurred. Shredder will begin January with no Work in Process or Finished Goods Inventory. Inventory policy for these two accounts is set at zero ending WIP and 25 percent of the following month’s sales for FG. Note: Do not use negatives signs in any of the schedules below. d. Prepare a direct labor budget for January, February, and March. Jan. Feb. March Total Production Answer Answer Answer Answer DL time per unit Answer Answer Answer Answer DLHs Answer Answer Answer Answer DL rate Answer Answer Answer Answer DL cost Answer Answer Answer Answer e. Prepare an overhead budget for January, February, and March. Jan. Feb. March Total Production Answer Answer Answer Answer VOH unit rate Answer Answer Answer Answer Total VOH Answer Answer Answer Answer FOH cost Answer Answer Answer Answer Total OH Answer Answer Answer Answer f. Prepare a cash receipts schedule for sales and a cash payments schedule for material purchased. Cash Receipts Schedule Jan. Feb. March Total Jan. Answer Answer Answer Answer Feb. Answer Answer Answer Answer March Answer Answer Answer Answer Total Answer Answer Answer Answer Cash Payments Schedule Jan. Feb. March Total Jan. Answer Answer Answer Answer Feb. Answer Answer Answer Answer March Answer Answer Answer Answer Total Answer Answer Answer Answer

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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Comprehensive budgets
Shredder Manufacturing has the following projected unit sales (at $18 per unit) for four months of operations:

Month	Unit Sales
January	60,000
February	72,000
March	76,800
April	84,000

Twenty-five percent of the customers are expected to pay in the month of sale and take a 3 percent discount; 70 percent of the customers are expected to pay in the month following sale. The remaining 5 percent will never pay.
It takes two pounds of raw material (costing $0.75 per pound) to produce a unit of product. In January, no raw material is in beginning inventories, but management wants to end each month with enough material for 20 percent of the next month’s production. (April’s production is assumed to be 81,600 units.) Shredder Manufacturing pays for 60 percent of its material purchases in the month of purchase and 40 percent in the following month.
Each unit of product requires 0.5 hours of labor time. Labor is paid $15 per hour and is paid in the same month as worked. Overhead is estimated to be $2 per unit plus $60,000 per month (including depreciation of $28,800). Overhead costs are paid as incurred.
Shredder will begin January with no Work in Process or Finished Goods Inventory. Inventory policy for these two accounts is set at zero ending WIP and 25 percent of the following month’s sales for FG.

Note: Do not use negatives signs in any of the schedules below.

d. Prepare a direct labor budget for January, February, and March.

	Jan.	Feb.	March	Total
Production	Answer	Answer	Answer	Answer
DL time per unit	Answer	Answer	Answer	Answer
DLHs	Answer	Answer	Answer	Answer
DL rate	Answer	Answer	Answer	Answer
DL cost	Answer	Answer	Answer	Answer

e. Prepare an overhead budget for January, February, and March.

	Jan.	Feb.	March	Total
Production	Answer	Answer	Answer	Answer
VOH unit rate	Answer	Answer	Answer	Answer
Total VOH	Answer	Answer	Answer	Answer
FOH cost	Answer	Answer	Answer	Answer
Total OH	Answer	Answer	Answer	Answer

f. Prepare a cash receipts schedule for sales and a cash payments schedule for material purchased.
Cash Receipts Schedule

	Jan.	Feb.	March	Total
Jan.	Answer	Answer	Answer	Answer
Feb.	Answer	Answer	Answer	Answer
March	Answer	Answer	Answer	Answer
Total	Answer	Answer	Answer	Answer

Cash Payments Schedule

	Jan.	Feb.	March	Total
Jan.	Answer	Answer	Answer	Answer
Feb.	Answer	Answer	Answer	Answer
March	Answer	Answer	Answer	Answer
Total	Answer	Answer	Answer	Answer

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