Diesel Information Continued (direct labor budget/overhead budget/selling and administrative expense budget/cash budget include a schedule of...

Diesel Information Continued (direct labor budget/overhead budget/selling and administrative expense budget/cash budget include a schedule of cash collections and payments/finished goods inventory calculator)

	4th	1st	2nd	3rd	4th
Ending Finished Goods Inventory	Quarter	Quarter	Quarter	Quarter	Quarter
in units	0	15,000	19,000	20,000	15,000

Raw Materials Inventory
Beginning Inventory 1/1/2018	28,436	units
Planned Ending Inventory	26,000	units
Policy	25%	of next quarters' needs for production is in ending Raw Materials Inventory

Work In Process Inventory
Beginning Inventory 1/1/2018	$ 2,850
Planned Ending Inventory	$ 2,850

Payment for Raw Materials
Payment Policy	85%	quarter of purchase
	15%	quarter following purchase

Wages and Salaries Payment
Payment Policy	2	times monthly on the 15th and 30th
		Fully paid each month

Variable Selling & Administrative Exp.	3.50%	of selling price

Fixed Selling & Administrative Exp
Depreciation	$55,000	per quarter
Other Selling & Administrative Exp	$180,000	per quarter


Equipment Purchases	$5,450,000	end of 4th quarter


Dividends to be Declared	$400,000	per quarter

Minimum Cash Balance	$250,000	Required at end of every quarter

Interest Rate for Investing (short-term)	4.00%	Annually
Interest Policy	All	of the ending cash balance for the quarter earns interest for the entire quarter
	All	of the ending cash balance for the quarter remains in Cash at the beginning of the next quarter

Interest Rate for borrowing	12%	Annually
Interest Policy	$10,000	increments are used in borrowing and repayment, maintaining the minimum cash balance
		Borrowing occurs at the beginning of the quarter.
		Repayments occur at the end of the quarter.


Actual Units Produced
First Quarter	43,000	units	(use for Flexible Budget Tab only)

Flexible Budget - Analyze at 2 Production Levels
Production level 1	45,000	units
Production level 2	40,000	units

	Diesel Dynamo Company
	Balance Sheet
	12/31/2017
ASSETS
Cash	$ 6,150,000
Inventory	$ 3,748,000
Accounts Receivable (net)	$ 5,050,000
Plant and Equipment	$ 29,400,000
	$ 44,348,000

LIABILITIES AND EQUITY
Accounts Payable	$ 8,100,000
Common Stock	$ 26,234,500
Retained Earnings	$ 10,013,500
	$ 44,348,000

Expert Solution

ekkarill92 answered 3 years ago

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