Question

Greenwork Accessories assembles a computer networking device from kits of imported components. You have been asked to develop a quarterly and annual operating budget and pro- forma income statements for 2016. You have obtained the following information: 20 points

Beginning-of-year balances

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$40,000.00
Accounts receivable (previous quarter’s sales) . . . . . . . . . . .	$15,000.00
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	300 kits
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	400 units
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$40,000.00
Borrowed funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$10,000.00
Desired end-of-year inventory balances
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	500 kits
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	200 units

Desired end-of-quarter balances

Standard cost per unit      Raw materials. . . . . . . . . . . . . . . . . . . . . . . . . .	Units 1 kit	Unit price     $40.00	Total $40.00
Direct labor hours at rate. . . . . . . . . . . . . . . . . . . . . . . . . . .	0.8 hour	$20.00	16.00
Variable overhead/labor hour . . . . . . . . . . . . . . . . . . . . . . .	0.8 hour	$10.00	8.00
Total standard variable cost . . . . . . . . . . . . . . . . . . . . . . .			$64.00

Fixed cost per quarter

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                                $40,000.00

Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                                 10,000.00

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                                $50,000.00

Selling and administrative costs

Variable cost per unit. . . . . . . . . . . . . . . . . . . . . . .. . . . . . .

Fixed costs per quarter:

$6.00

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                    $20,000.00

Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5,000.00

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                                    $25,000.00

Interest rate per quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	0.04
Portion of sales collected
Quarter of sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	0.75
Subsequent quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	0.24
Bad debts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	0.01
Portion of purchases paid
Quarter of purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	0.7
Subsequent quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	0.3
Unit selling price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$115.00

Sales Forecast

Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     First      Second       Third        Fourth

Unit sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      2,400      1,500             2,000         3,100

Additional information

All cash payments except purchases are made quarterly as incurred.

All borrowings occur at the start of the quarter.

All repayments on borrowings occur at the end of the quarter.

All interest on borrowed funds is paid at the end of each quarter.

Borrowings and repayments may be made in any amount.

Required – 20 points

A sales budget for each quarter and the year.

A production budget for each quarter and the year.

c.   A purchases budget for each quarter and the year.

d.   A manufacturing cost budget for each quarter and the year.

e.   A selling and administrative expense budget for each quarter and the year.

f.    A cash budget for each quarter and the year.

g.   A pro-forma contribution income statement for each quarter and the year.

Answer 1

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Posted Sales Budget and Expected Cash Collection Schedule. However since desired Quarter end balances not given, rest of the answer not possible without it
1. Sales Budget with expected Cash Collections:
		Q1	Q2	Q3	Q4	Full Year
Budgeted Sales in Unit		2400	1500	2000	3100	9000
Sale Price per unit		$             115	$             115	$             115	$             115	$             115
Budgeted Sales in Dollar		$     276,000	$     172,500	$     230,000	$     356,500	$ 1,035,000
		Q1	Q2	Q3	Q4	Full Year	Accounts Receivable
Beginning Accounts Receivable		$        15,000				$        15,000
Q1 Sale		$     207,000	$        66,240			$     273,240
Q2 Sale			$     129,375	$        41,400		$     170,775
Q3 Sale				$     172,500	$        55,200	$     227,700
Q4 Sale					$     267,375	$     267,375	$                   85,560
Total Cash Collection		$     222,000	$     195,615	$     213,900	$     322,575	$     954,090