In: Accounting
Dalton Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Dalton Manufacturing's operations:
Current Assets as of December 31 (prior year):
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . .$4,460
Accounts receivable, net. . . . . . . . . . . $48,000
Inventory. . . . . . . . . . . . . . . . . . . . . . . .$15,000
Property, plant, and equipment, net. . . . . . . . . . . . . $121,000
Accounts payable. . . . . . . . . . . . . . . . . . . . . . .$43,000
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$127,000
Retained earnings. . . . . . . . . . . . . . . . . . . . . . .$22,500
Requirement 1. Prepare a schedule of cash collections forJanuary, February, and March, and for the quarter in total.
Dalton Manufacturing |
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Cash Collections Budget |
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For the Quarter Ended March 31 |
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Month |
January |
February |
March |
Quarter |
|
Cash sales |
$24,030 |
$26,730 |
$24,840 |
$75,600 |
Credits sales |
53,200 |
56,070 |
62,370 |
171,640 |
Total cash collections |
$77,230 |
$82,800 |
$87,210 |
$247,240 |
Requirement 2. Prepare a production budget. (Hint: Unit sales= Sales in dollars / Selling price per unit.)
Dalton Manufacturing |
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Production Budget |
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For the Quarter Ended March 31 |
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Month |
January |
February |
March |
Quarter |
|
Unit sales |
8,900 |
9,900 |
9,200 |
28,000 |
Plus: Desired ending inventory |
990 |
920 |
950 |
950 |
Total needed |
9,890 |
10,820 |
10,150 |
28,950 |
Less: Beginning inventory |
890 |
990 |
920 |
890 |
Units to produce |
9,000 |
9,830 |
9,230 |
28,060 |
Requirement 3. Prepare a direct materials budget. (Round your answers to the nearest whole dollar.)
Dalton Manufacturing |
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Direct Materials Budget |
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For the Quarter Ended March 31 |
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Month |
January |
February |
March |
Quarter |
|
Units to be produced |
9,000 |
9,830 |
9,230 |
28,060 |
Multiply by: Quantity (pounds) of DM needed per unit |
2 |
2 |
2 |
2 |
Quantity (pounds) needed for production |
18,000 |
19,660 |
18,460 |
56,120 |
Plus: Desired ending inventory of DM |
3,932 |
3,692 |
3,764 |
3,764 |
Total quantity (pounds) needed |
21,932 |
23,352 |
22,224 |
59,884 |
Less: Beginning inventory of DM |
3,600 |
3,932 |
3,692 |
3,600 |
Quantity (pounds) to purchase |
18,332 |
19,420 |
18,532 |
56,284 |
Multiply by: Cost per pound |
$1.50 |
$1.50 |
$1.50 |
$1.50 |
Total cost of DM purchases |
$27,498 |
$29,130 |
$27,798 |
$84,426 |
Requirement 4. Prepare a cash payments budget for the direct material purchases from Requirement 3. (Use the accounts payable balance at December 31 of prior year for the prior month payment in January.) (Round your answers to the nearest whole dollar.)
Dalton Manufacturing |
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Cash Payments for Direct Materials Budget |
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For the Quarter Ended March 31 |
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Month |
January |
February |
March |
Quarter |
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20% of current month DM purchases |
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80% of last month's DM purchases |
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Total cash payments |
Addititonal Data:
Actual sales in December were $76,000. Selling price per unit is projected to remain stable at $9per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows:
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b. |
Sales are 30% cash and 70% credit. All credit sales are collected in the month following the sale. | |||||||||
c. |
Dalton Manufacturing has a policy that states that each month's ending inventory of finished goods should be 10% of the followingmonth's sales (in units). |
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d. |
Of each month's direct material purchases, 20% are paid for
in the month of purchase, while the remainder is paid for in the
month following purchase.Two pounds of direct material is needed
per unit at $ 1.50$1.50 per pound. Ending inventory of direct materials should be 20% of next month's production needs. |
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e. |
Most of the labor at the manufacturing facility is indirect,
but there is some direct labor incurred. The direct labor hours per
unit is 30.03.The direct labor rate per hour is $13 per hour. All
direct labor is paid for in the month in which the work is
performed. The direct labor total cost for each of the upcoming
three months is as follows:
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f. |
Monthly manufacturing overhead costs are $6,500 |
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g. |
Computer equipment for the administrative offices will be
purchased in the upcoming quarter. In January, Dalton
Manufacturing will purchase equipment for $5,800 (cash), while February's cash expenditure will be $11,600 andMarch's cash expenditure will be $15,800. |
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h. |
Operating expenses are budgeted to be $1.20 per unit sold plus fixed operating expenses of $1,400 per month. All operating expenses are paid in the month in which they are incurred. No depreciation is included in these figures. | |||||||||
i. |
Depreciation on the building and equipment for the general and administrative offices is budgeted to be $4,700 for the entirequarter, which includes depreciation on new acquisitions. | |||||||||
j. |
Dalton Manufacturing has a policy that the ending cash balance in each month must be at least $4,400. It has a line of credit with a local bank. The company can borrow in increments of $1,000 at the beginning of each month, up to a total outstanding loan balance of $140,000. The interest rate on these loans is 11% per month simple interest(not compounded). The company would pay down on the line of credit balance in increments of $1,000if it has excess funds at the end of the quarter. The company would also pay the accumulated interest at the end of the quarter on the funds borrowed during the quarter. |
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k. |
The company's income tax rate is projected to be 30% of operating income less interest expense. The company pays $10,800 cash at the end of February in estimated taxes. |
I only need help with requirement 4
Dalton Manufacturing | ||||
Cash Payments for Direct Materials Budget | ||||
For the Quarter Ended March 31 | ||||
Month | ||||
January | February | March | Quarter | |
20% of current month DM purchases | $5,500 | $5,826 | $5,560 | $16,885 |
80% of last month's DM purchases | $43,000 | $21,998 | $23,304 | $88,302 |
Total cash payments | $48,500 | $27,824 | $28,864 | $105,188 |