Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 8, Problem 14E
Sales and Production Budgets L08—2, L08—3
The marketing department of Jessi Corporation has submitted the following sales
The selling price of the company’s product is S 18.00 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% in the following quarter, and 50% of sales are expected to be uncollectible. The beginning balance of
The company expects to start the first quarter with 1.650 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,850 units.
Required:
1. Calculate the estimated sales for each quarter of the fiscal year and for the year as a whole. (Hints Refer to Schedule 1 for guidance.)
2. Calculate the expected cash collections for each quarter of the fiscal year and for the year as a whole. (Hint: Refer to Schedule 1 for guidance.)
3. Calculate the required production in units of finished goods for each quarter of the fiscal year and for the year as a whole. (Hint: Refer to Schedule 2 for guidance.)
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A. SALES AND PRODUCTION BUDGET (1
Rak Sarang Corporation expects to sell 5,000 units in the first year, followed by a 300-unit
increment in subsequent quarters. The company believes that by retaining an ending inventory
equivalent to 15% of the next quarter's anticipated sales volume, it can satisfy future sales
requirements. Based on a sales price of P150 per unit:
a. Prepare the Sales Budget (For the year 2022).
b. Prepare the Production Budget (For the year 2022).
Sales and Production Budgets
The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):
The selling price of the company’s product is $18.00 per unit. Management expects to collect 65%of sales in the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $70,200.
The company expects to start the first quarter with 1,650 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,850 units.
Required:
1. Calculate the estimated sales for each quarter of the fiscal year and for the year as a whole. (Hint: Refer to Schedule 1 for guidance.)
2. Calculate the expected…
Please solve all requiremetns
Chapter 8 Solutions
Introduction To Managerial Accounting
Ch. 8 - What is a budget? What is budgetary control?Ch. 8 - Prob. 2QCh. 8 - What is meant by the term responsibility...Ch. 8 - What is a master budget? Briefly describe its...Ch. 8 - Why is the sales forecast the starting point in...Ch. 8 - “As a practical matter, planning and control mean...Ch. 8 - Prob. 7QCh. 8 - What is a self-imposed budget? What are the major...Ch. 8 - How can budgeting assist a company in planning its...Ch. 8 - Prob. 10Q
Ch. 8 - The Excel worksheet form that appears below is to...Ch. 8 - The Excel worksheet form that appears below is to...Ch. 8 - Morganton Company makes one product and ¡t...Ch. 8 - Prob. 2F15Ch. 8 - Prob. 3F15Ch. 8 - Prob. 4F15Ch. 8 - Morganton Company makes one product and it...Ch. 8 - Prob. 6F15Ch. 8 - Prob. 7F15Ch. 8 - Prob. 8F15Ch. 8 - Morganton Company makes one product and ¡t...Ch. 8 - Morganton Company makes one product and ¡t...Ch. 8 - Prob. 11F15Ch. 8 - Morganton Company makes one product and ¡t...Ch. 8 - Morganton Company makes one product and ¡t...Ch. 8 - Morganton Company makes one product and ¡t...Ch. 8 - Morganton Company makes one product and ¡t...Ch. 8 - Schedule of Expected Cash Collections LOB-2 Silver...Ch. 8 - Down Under Products, Ltd., of Australia has...Ch. 8 - Direct Materials Budget LOB-4 Three grams of musk...Ch. 8 - Direct Labor Budget LOB-5 The production manager...Ch. 8 - Manufacturing Overhead Budget L.08—6 The direct...Ch. 8 - Weller Company’s budgeted unit sales for the...Ch. 8 - Cash Budget LOB—8 Garden Depot is a retailer that...Ch. 8 - Gig Harbor is the wholesale distributor of a small...Ch. 8 - The management of Mecca copy, a photocopying...Ch. 8 - Production and Direct Materials Budgets LO8—,...Ch. 8 - Cash Budget Analysis LOB—8 A cash budget, by...Ch. 8 - Prob. 12ECh. 8 - Schedules of Expected Cash Collections and...Ch. 8 - Sales and Production Budgets L08—2, L08—3 The...Ch. 8 - Direct Labor and Manufacturing Overhead Budgets...Ch. 8 - Direct Materials and Direct Labor Budgets LOB—4,...Ch. 8 - Cash Flows; Budgeted Income Statement and Balance...Ch. 8 - Cash Flows; Budgeted Income Statement and Balance...Ch. 8 - Cash Budget: Income Statement: Balance Sheet...Ch. 8 - Cash Budget; Income Statement: Balance Sheet;...Ch. 8 - Schedules of Expected Cash Collections and...Ch. 8 - Evaluating a Company’s Budget Procedures LOB—1...Ch. 8 - Prob. 23PCh. 8 - Cash Budget with Supporting Schedules L08-2,...Ch. 8 - Prob. 25PCh. 8 - Prob. 26PCh. 8 - Prob. 27PCh. 8 - Prob. 28PCh. 8 - Completing a Master Budget LOB—2, LO8—4, LO8—7,...Ch. 8 - Prob. 30PCh. 8 - Completing a Master Budget LOB-2, LOB-4, LOB-7,...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Carmichael Corporation is in the process of preparing next years budget. The pro forma income statement for the current year is as follows: Required: 1. What is the break-even sales revenue (rounded to the nearest dollar) for Carmichael Corporation for the current year? 2. For the coming year, the management of Carmichael Corporation anticipates an 8 percent increase in variable costs and a 60,000 increase in fixed expenses. What is the break-even point in dollars for next year? (CMA adapted)arrow_forwardOperating Budget, Comprehensive Analysis Allison Manufacturing produces a subassembly used in the production of jet aircraft engines. The assembly is sold to engine manufacturers and aircraft maintenance facilities. Projected sales in units for the coming 5 months follow: The following data pertain to production policies and manufacturing specifications followed by Allison Manufacturing: a. Finished goods inventory on January 1 is 32,000 units, each costing 166.06. The desired ending inventory for each month is 80% of the next months sales. b. The data on materials used are as follows: Inventory policy dictates that sufficient materials be on hand at the end of the month to produce 50% of the next months production needs. This is exactly the amount of material on hand on December 31 of the prior year. c. The direct labor used per unit of output is 3 hours. The average direct labor cost per hour is 14.25. d. Overhead each month is estimated using a flexible budget formula. (Note: Activity is measured in direct labor hours.) e. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Note: Activity is measured in units sold.) f. The unit selling price of the subassembly is 205. g. All sales and purchases are for cash. The cash balance on January 1 equals 400,000. The firm requires a minimum ending balance of 50,000. If the firm develops a cash shortage by the end of the month, sufficient cash is borrowed to cover the shortage. Any cash borrowed is repaid at the end of the quarter, as is the interest due (cash borrowed at the end of the quarter is repaid at the end of the following quarter). The interest rate is 12% per annum. No money is owed at the beginning of January. Required: 1. Prepare a monthly operating budget for the first quarter with the following schedules. (Note: Assume that there is no change in work-in-process inventories.) a. Sales budget b. Production budget c. Direct materials purchases budget d. Direct labor budget e. Overhead budget f. Selling and administrative expenses budget g. Ending finished goods inventory budget h. Cost of goods sold budget i. Budgeted income statement j. Cash budget 2. CONCEPTUAL CONNECTION Form a group with two or three other students. Locate a manufacturing plant in your community that has headquarters elsewhere. Interview the controller for the plant regarding the master budgeting process. Ask when the process starts each year, what schedules and budgets are prepared at the plant level, how the controller forecasts the amounts, and how those schedules and budgets fit in with the overall corporate budget. Is the budgetary process participative? Also, find out how budgets are used for performance analysis. Write a summary of the interview.arrow_forwardCash budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent 50,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of 40,000, marketable securities of 75,000, and accounts receivable of 300,000 (60,000 from July sales and 240,000 from August sales). Sales on account for July and August were 200,000 and 240,000, respectively. Current liabilities as of September 1 include 40,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of 55,000 will be made in October. Bridgeports regular quarterly dividend of 25,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of 50,000. Instructions Prepare a monthly cash budget and supporting schedules for September, October, and November. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?arrow_forward
- Coral Seas Jewelry Company makes and sells costume jewelry. For the coming year, Coral Seas expects sales of 15.9 million and cost of goods sold of 8.75 million. Advertising is a key part of Coral Seas business strategy, and total marketing expense for the year is budgeted at 2.8 million. Total administrative expenses are expected to be 675,000. Coral Seas has no interest expense. Income taxes are paid at the rate of 40 percent of operating income. Required: 1. Construct a budgeted income statement for Coral Seas Jewelry Company for the coming year. 2. What if Coral Seas had interest payments of 500,000 during the year? What effect would that have on operating income? On income before taxes? On net income?arrow_forwardA-3arrow_forwardPlease dont give solutions image based thankuarrow_forward
- Coronado Company estimates that unit sales will be 9,200 in quarter 1, 12,880 in quarter 2, 13,800 in quarter 3, and 16,560 in quarter 4. Using a unit selling price of $70 per unit. Prepare the sales budget by quarters for the year ending December 31, 2027. $ $ 1 $ $ CORONADO COMPANY Sales Budget 2 Quarter $ 3 $ $ [ $arrow_forwardShow the solution in good accounting formarrow_forwardA company is preparing its production budget for product XY for the forthcoming year. Budgeted sales of product XY are 1,800 units. Opening inventory is 190 units and the company wants to reduce inventories at the end of the year by 10%. What is the budgeted number of units of product XY to be produced in the following year? OA. 1,392 O B. 1,781 OC. 1,488 OD. 1,600arrow_forward
- REQUIRED Use the information provided below to prepare the Pro-Forma Statement of Comprehensive Income for July and August 2021 (using separate monetary columns for each month). INFORMATION The budgeted Statement of Comprehensive Income of Ryobi Enterprises for the year ended 30 June 2021 is as follows: Sales 3 000 000 Cost of sales (2 000 000) Gross profit 1 000 000 Rent income 108 000 1 108 000 Operating expenses (720 000) Salaries 360 000 Advertising 120 000 Bad debts 60 000 Depreciation Other operating expenses Operating profit Interest expense 30 000 150 000 388 000 (38 000) Net profit 350 000arrow_forwardPlease do not give solution in image format thankuarrow_forwardNonearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY