ACCOUNTING PRINCIPLES 122 5/16 >C<
17th Edition
ISBN: 9781323461471
Author: Horngren
Publisher: PEARSON C
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Chapter 22, Problem P22.42APGA
Completing a comprehensive budgeting-manufacturing company
The Grady Tire Company manufactures racing tires for bicycle. Grady sells tires for $60 each. Grady is planning for the next year by developing a
Other data for Grady Tire Company:
- Budgeted sales are 700 tires for the first quarter and expected to increase by 50 tires per quarter. Cash sales are expected to be 30% of total sales, with the remaining 70% of sales on accounts.
- Finished Goods Inventory on December 31 consists of 100 tires at $26 each.
- Desired ending Finished Goods Inventory is 20% of the next quarter’s sales; first quarter sales for 2018 are expected to be 900 tires. FIFO inventory costing, method, is used.
- Direct materials cost is $9 per tire.
- Desired ending Raw Materials Inventory is 20% of the next quarter’s direct materials needed for production, desired ending Inventory for December 31 is $900, indirect materials are insignificant and not considered for budgeting purpose.
- Each tire requires 0.4 hours of direct labor costs average $10 per hour.
- Variable manufacturing overhead is $4 per tire.
- Fixed manufacturing overhead includes $3,000 per quarter in
depreciation and $1,770 per quarter for other costs, such as utilities, insurance, and property taxes. - Fixed selling and administrative expense include $7,500 per quarter for salaries: $3,000 per quarter for rent; $1,650 per quarter for insurance, and $2,000 per quarter for depreciation.
- Variable selling and administrative expense include supplies at 2% of sales.
- Capital expenditures include $50,000 for new manufacturing equipment, to be purchased and paid in the first quarter.
- Cash receipts for sales on account are 30% in the quarter of the sale and 70% in the quarter following the sale; December 31, 2016.
Accounts Receivable is received in the first quarter of 2017; uncollectible accounts are considered insignificant and not considered for budgeting purposes. - Direct materials purchases are paid 70% in the quarter purchased and 305 in the following quarter: December 31, 2016, Accounts Payable is paid in the first quarter of 2017.
- Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred.
- Income tax expense is projected at $4,000 per quarter and is paid is the quarter incurred.
- Grady desires to maintain a minimum cash balance of $50,000 and borrows from the local bank as needed in increments of $1,000 at the beginning of the quarter, principal repayments are made at the beginning of the quarter when excess funds are available and in increments of $1,000, interest is 8% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter.
Requirements
- Prepare Grady’s operating budget and
cash budget for 2017 by quarters. Required schedules and budgets include: sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, cost of goods sold budget, selling and administrative expense budget, schedule of cash receipts, schedule of cash payments, and cash budget, schedule of cash receipts, schedule of cash payments, and cash budget.Manufacturing overhead costs are allocated based on direct labor hours. Round all calculations to the nearest dollar. - Prepare Grady’s annual financial budget for 2017, including
budgeted income statement , budgeted balance sheet, and budgeted statement ofcash flows.
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Completing a comprehensive budgeting problem—manufacturing company
The Gerard Tire Company, manufactures racing tires for bicycles. Gerard sells tires for $90 each. Gerard is planning for the next year by developing a master budget by quarters. Gerard’s balance sheet for December 31, 2018, follows:
Other data for Gerard Tire Company:
Budgeted sales are 1,500 tires for the first quarter and expected to increase by 200 tires per quarter. Cash sales are expected to be 10% of total sales, with the remaining 90% of sales on account.
Finished Goods Inventory on December 31, 2018, consists of 300 tires at $33 each.
Desired ending Finished Goods Inventory is 30% of the next quarter’s sales; first quarter sales for 2020 are expected to be 2,300 tires. FIFO inventory costing method is used.
Raw Materials Inventory on December 31, 2018, consists of 600 pounds of rubber compound used to manufacture the tires.
Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of…
MULTI COLORED PICTURE ATTACHED IS THE PART I NEED HELP WITH
SECOND IS PART OF THE INFORMATION GIVEN WITH THE QUESTION
The Grady Tire Company manufactures racing tires for bicycles. Grady sells tires for $70 each. Grady is planning for the next year by developing a master budget by quarters. Grady's balance sheet for Decembe 31,2018, follows:
a. Budgeted sales are 1,800 tires for the first quarter and expected to increase by 50 tires per quarter. Cash sales are expected to be 20% of total sales, with the remaining 80% of sales on account.
b. Finished Goods Inventory on December 31, 2018 consists of 100 tires at $36 each.
c. Desired ending Finished Goods Inventory is 50% of the next quarter's sales; first quarter sales for 2020 are expected be 2,000 tires. FIFO inventory costing method is used.
d. Raw Materials Inventory on December 31, 2018, consists of 200 pounds of rubber compound used to manufacture the tires.
e. Direct materials requirements are 2 pounds of a rubber compound…
I
Rooney Company, which expects to start operations on January 1, year 2, will sell digital cameras in shopping malls.
Rooney has budgeted sales as indicated in the following table. The company expects a 15 percent increase in sales per
month for February and March. The ratio of cash sales to sales on account will remain stable from January through
March
Required
a. Complete the sales budget by filling in the missing amounts.
b. Determine the amount of sales revenue Rooney will report on its first quarter pro forma income statement.
Complete this question by entering your answers in the tabs below.
Required Required
B
Complete the sales budget by filling in the missing amounts. (Do not round intermediate
calculations. Round final answers to two decimal places.)
March
Sales
Cash sales
Sales on account
Total budgeted sales
January February
$45,000
115,000
160,000
Chapter 22 Solutions
ACCOUNTING PRINCIPLES 122 5/16 >C<
Ch. 22 - Prob. 1QCCh. 22 - A company prepares a five-year budget. This budget...Ch. 22 - Which of the following is the cornerstone of the...Ch. 22 - Suppose Iron City manufactures cast iron skillets....Ch. 22 - Suppose Iron City manufactures cast iron skillets....Ch. 22 - Suppose Iron City manufactures cast iron skillets....Ch. 22 - Suppose Iron City manufactures cast iron skillets....Ch. 22 - The budgeted income statement is part of which...Ch. 22 - Prob. 9QCCh. 22 - Suppose Mallcentral sells 1,000 hardcover books...
Ch. 22 - Suppose Mallcentral sells 1,000 hardcover books...Ch. 22 - The budgeted balance sheet is part of which...Ch. 22 - Information technology has made it easier for...Ch. 22 - Prob. 1RQCh. 22 - Prob. 2RQCh. 22 - How is benchmarking beneficial?Ch. 22 - What is budgetary slack? Why might managers try to...Ch. 22 - Explain the difference between strategic and...Ch. 22 - Explain the difference between static and flexible...Ch. 22 - What is a master budget?Ch. 22 - In a manufacturing company, what are the three...Ch. 22 - Why is the sales budget considered the cornerstone...Ch. 22 - Prob. 10RQCh. 22 - What is the formula used to determine the amount...Ch. 22 - What are the two types of manufacturing overhead?...Ch. 22 - How is the predetermined overhead allocation rate...Ch. 22 - What is the capital expenditures budget?Ch. 22 - What are the three sections of the cash budget?Ch. 22 - Prob. 16RQCh. 22 - How does the master budget for a merchandising...Ch. 22 - Prob. 18ARQCh. 22 - Prob. 19ARQCh. 22 - Prob. 20ARQCh. 22 - Budgeting benefits Learning Objective 1 List the...Ch. 22 - S22-2 Budgeting types
Learning Objective...Ch. 22 - Prob. S22.3SECh. 22 - Preparing an operating budget—production budget...Ch. 22 - Prob. S22.5SECh. 22 - Prob. S22.6SECh. 22 - Prob. S22.7SECh. 22 - Prob. S22.8SECh. 22 - Prob. S22.9SECh. 22 - Prob. S22.10SECh. 22 - Prob. S22.11SECh. 22 - Prob. S22.12SECh. 22 - Prob. S22.13SECh. 22 - Prob. S22.14SECh. 22 - Prob. S22.15SECh. 22 - Prob. S22.16SECh. 22 - Prob. S22.17SECh. 22 - Prob. S22.18SECh. 22 - Prob. S22.19SECh. 22 - Prob. S22.20SECh. 22 - Prob. E22.21ECh. 22 - Prob. E22.22ECh. 22 - Prob. E22.23ECh. 22 - E22-24 Preparing an operating budget-sales and...Ch. 22 - Prob. E22.25ECh. 22 - Preparing an operating budget-direct materials,...Ch. 22 - Prob. E22.27ECh. 22 - Prob. E22.28ECh. 22 - Prob. E22.29ECh. 22 - Preparing the financial budget-cash budget Harley...Ch. 22 - Prob. E22.31ECh. 22 - Prob. E22.32ECh. 22 - Prob. E22.33ECh. 22 - Prob. E22.34ECh. 22 - Prob. E22.35ECh. 22 - Prob. E22.36ECh. 22 - Prob. E22.37ECh. 22 - Prob. E22.38ECh. 22 - Prob. P22.39APGACh. 22 - Prob. P22.40APGACh. 22 - Prob. P22.41APGACh. 22 - Completing a comprehensive budgeting-manufacturing...Ch. 22 - Prob. P22.43APGACh. 22 - Prob. P22.44APGACh. 22 - Prob. P22.45APGACh. 22 - Prob. P22.46APGACh. 22 - Completing a comprehensive budgeting problem...Ch. 22 - Preparing an operating budget- sales, production,...Ch. 22 - Prob. P22.49BPGBCh. 22 - Prob. P22.50BPGBCh. 22 - Completing a comprehensive budgeting...Ch. 22 - Prob. P22.52BPGBCh. 22 - Prob. P22.53BPGBCh. 22 - Prob. P22.54BPGBCh. 22 - Prob. P22.55BPGBCh. 22 - Prob. P22.56BPGBCh. 22 - Prob. P22.57CPCh. 22 - Prob. 22.1DCCh. 22 - Prob. 22.1EICh. 22 - Prob. 22.1FC
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