Question

REQUIREMENT: Create THE MASTER BUDGET (Please Include Operating Budget and Financial Budget, please do not include Budget Statement of Cash Flows) for the year ended December 31, 2016 for Fabulous Accessories Inc. ( Please show the calculations)

Estimated Sales:

Wallets: East Region Sales Volume 287,000. West Region Sales Volume 241,000. Unit Selling Price $12.

Handbags: East Region Sales Volume 156,400. West Region Sales Volume 123,600. Unit Selling Price $25.

Estimated Inventory, January 1,2016: Wallet 88,000. Handbags 48,000.

Desired Inventory , December 31, 2016: Wallets 80,000. Handbags 60,000.

Estimated direct material quantity and price for each unit:

Wallet : Leather 0.30 sq. yd.per unit. Lining: 0.10 sq. yd. per unit.

Handbag: Leather 1.25 sq. yd. per unit. Lining: .050 sq.yd. per unit.

Estimated Direct Materials Inventory, January 1, 2016: Leather 18,000 sq. yds. Lining 15,000 sq. yds.

Desired Direct Materials Inventory, December 31, 2016: Leather 20,000 sq. yds. Lining 12,000 sq. yds.

Estimated price per square yard of leather and lining during 2016: Leather $4.50. Lining $1.20

Estimated Direct Labor Quantity and Rate:

Wallet: Cutting Department: 0.10 hr. per unit. Sewing Department: 0.25 hr. per unit

Handbag: Cutting Department: 0.15 hr. per unit. Sewing Department: 0.40 hr. per unit

Hourly rate: Cutting Department $12. Sewing Department $15

Factory Overhead Budget for the year ending December 31, 2016 are as follow:

Indirect factory wages $732,800

Supervisor Salaries: $360,000

Power and light $306,000

Depreciation of plant and equipment $288,000

Indirect materials $182,800

Maintenance $140,280

Insurance and property taxes $79,200. Total factory overhead cost $2,089,080

Estimated Inventory January 1, 2016:

Direct materials: Leather $81,000(18,000 sq. yds. x $4.50)

Lining $18,000(15,000 sq. yds. x $1.20)

Total direct materials $99,000

Work in process $ 214,000. Finished goods $1,095,600

Desired Inventory December 31, 2016:

Direct materials: Leather $90,000(20,000 sq. yds. x $4.50)

Lining $14,400(12,000 sq. yds. x $1.20)

Total direct materials $104,400

Work in process $220,000. Finished goods $1,565,000

Selling and Administrative Expense Budget for the year 2016:

Selling Expenses: Sales salaries expenses $715,000

Advertising expense 360,000

Travel expense 115,000

Total selling expense $1,190,000

Administrative expense: Officers' salaries expense $360,000

Office salaries expense 258,000

Office rent expense 34,500

Office supplies expense 17,500

Miscellaneous administrative expenses 25,000

Total administrative expenses $695,000

Total selling and administrative expenses $1,885,000

Capital Expenditure Budget for the five years ending December 31, 2020:

Machinery-Cutting Department: 2016:$400,000. 2019:$280,000. 2020:$360,000

Machinery-Sewing Department: 2016:$274,000. 2017: $260,000. 2018: $560,000. 2019:$200,000

Office equipment:2017: $90,000. 2020: $60,000

Total: 2016: $674,000. 2017: $350,000. 2018: $560,000. 2019: $480,000. 2020: $420,000

Cutting Machine-to be purchased in January 2016

Cutting Machine-to be purchased in April 2016

Cash Budget:

Estimated cash receipts: receipts from sales on account: From prior month's sales on account 40% - From current month's sales on account 60%

Estimated cash payments: payments of manufacturing costs on account: From prior month's manufacturing costs 25%- From current month's manufacturing costs 75%

Budget Balance Sheet: December 31, 2015:

Current Assets: Cash $225,000. Account Receivable $480,000. Direct Materials Inventory $99,000. Work in Process Inventory $214,400. Finished Goods Inventory $1,095,600. Land $1,000,000. Building and Equipment 1,000,000. Accumulated depreciation -400,000. Total $3,714,000.

Liabilities and Stockholders' Equity: Current Liabilities: Account Payable 190,000. Income Taxes Payable 150,000

Stockholders' Equity : Common Stock, 100,000 shares outstanding $10-par $1,000,000. Retained earnings $2,374,000. Total $3,714,000

Answer 1