Question

In: Accounting

Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company...

Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows:

Endless Mountain Company

Balance Sheet

December 31, 2016

Assets

Current assets:

Cash

$

46,200

Accounts receivable (net)

260,000

Raw materials inventory (4,500 yards)

11,250

Finished goods inventory (1,500 units)

32,250

Total current assets

$

349,700

Plant and equipment:

Buildings and equipment

900,000

Accumulated depreciation

(292,000

)

Plant and equipment, net

608,000

Total assets

$

957,700

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

158,000

Stockholders’ equity:

Common stock

$

419,800

Retained earnings

379,900

Total stockholders’ equity

799,700

Total liabilities and stockholders’ equity

$

957,700

The company’s chief financial officer (CFO), in consultation with various managers across the organization has developed the following set of assumptions to help create the 2017 budget:

  1. The budgeted unit sales are 12,000 units, 37,000 units, 15,000 units, and 25,000 units for quarters 1-4, respectively. Notice that the company experiences peak sales in the second and fourth quarters. The budgeted selling price for the year is $32 per unit. The budgeted unit sales for the first quarter of 2018 is 13,000 units.
  2. All sales are on credit. Uncollectible accounts are negligible and can be ignored. Seventy-five percent of all credit sales are collected in the quarter of the sale and 25% are collected in the subsequent quarter.
  3. Each quarter’s ending finished goods inventory should equal 15% of the next quarter’s unit sales.
  4. Each unit of finished goods requires 3.5 yards of raw material that costs $3.00 per yard. Each quarter’s ending raw materials inventory should equal 10% of the next quarter’s production needs. The estimated ending raw materials inventory on December 31, 2017 is 5,000 yards.
  5. Seventy percent of each quarter’s purchases are paid for in the quarter of purchase. The remaining 30% of each quarter’s purchases are paid in the following quarter.
  6. Direct laborers are paid $18 an hour and each unit of finished goods requires 0.25 direct labor-hours to complete. All direct labor costs are paid in the quarter incurred.
  7. The budgeted variable manufacturing overhead per direct labor-hour is $3.00. The quarterly fixed manufacturing overhead is $150,000 including $20,000 of depreciation on equipment. The number of direct labor-hours is used as the allocation base for the budgeted plantwide overhead rate. All overhead costs (excluding depreciation) are paid in the quarter incurred.
  8. The budgeted variable selling and administrative expense is $1.25 per unit sold. The fixed selling and administrative expenses per quarter include advertising ($25,000), executive salaries ($64,000), insurance ($12,000), property tax ($8,000), and depreciation expense ($8,000). All selling and administrative expenses (excluding depreciation) are paid in the quarter incurred.
  9. The company plans to maintain a minimum cash balance at the end of each quarter of $30,000. Assume that any borrowings take place on the first day of the quarter. To the extent possible, the company will repay principal and interest on any borrowings on the last day of the fourth quarter. The company’s lender imposes a simple interest rate of 3% per quarter on any borrowings.
  10. Dividends of $15,000 will be declared and paid in each quarter.
  11. The company uses a last-in, first-out (LIFO) inventory flow assumption. This means that the most recently purchased raw materials are the “first-out” to production and the most recently completed finished goods are the “first-out” to customers.


ALL I NEED HELP WITH IS FILLING OUT THE CHART BELOW :)

Prepare the ending finished goods inventory budget at December 31, 2017. (Round your answers to 2 decimal places.)

Endless Mountain Company
Ending Finished Goods Inventory Budget
(absorption costing basis)
For the Year Ended December 31, 2017
Item Quantity Cost Total
Production cost per unit:
Direct materials yards per yard
Direct labor hours per hour
Manufacturing overhead hours per hour
Unit product cost $0.00
Budgeted finished goods inventory:
Units from prior year's production
Unit product cost
Cost from prior year's production
Units from current year's production
Unit product cost
Cost from current year's production
Cost of ending finished goods inventory $0

Solutions

Expert Solution

Endless Mountain Company
Ending Finished Goods Inventory Budget (absorption costing)
31-Dec-17
Item Quantity Cost/unit Total
Production cost per unit:
Direct materials: 3.5 yards 3 10.5
Direct Labour 0.25 hr 18 4.5
Manufacturing overhead 1 unit 7.46 7.46
Unit product cost( Current Production) 22.46
Budgeted finished goods inventory:
Ending finished goods inventory in units 450
Unit product costs 22.46
From Current Production 10106
Ending finished goods inventory in units 1500
Unit product costs 21.5
From Opening Stock 32250
Total Ending finished goods inventory in dollars 42356
Budgeted cost of goods sold:
Beginning finished goods inventory 32250
Plus the cost of goods manufactured 20,08,838
Less: ending inventory 42356
Budgeted cost of goods sold in dollars: 19,98,732

Related Solutions

Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2022 and reports a balance sheet at December 31, 2021 as follows: Endless Mountain Company Balance Sheet December 31, 2021 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2022 and reports a balance sheet at December 31, 2021 as follows: Endless Mountain Company Balance Sheet December 31, 2021 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2019 and reports a balance sheet at December 31, 2018 as follows: Endless Mountain Company Balance Sheet December 31, 2018 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2022 and reports a balance sheet at December 31, 2021 as follows: Endless Mountain Company Balance Sheet December 31, 2021 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2022 and reports a balance sheet at December 31, 2021 as follows: Endless Mountain Company Balance Sheet December 31, 2021 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows: Endless Mountain Company Balance Sheet December 31, 2016 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016, as follows: Endless Mountain Company Balance Sheet December 31, 2016 Assets Current assets: Cash $ 46,200 Accounts receivable 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500 units)...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows: Endless Mountain Company Balance Sheet December 31, 2016 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows: Endless Mountain Company Balance Sheet December 31, 2016 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company...
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2017 and reports a balance sheet at December 31, 2016 as follows: Endless Mountain Company Balance Sheet December 31, 2016 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT