Question

The Diesel Dynamo Company is a high-tech diesel subsystem production business that produces technology accessories for trucks and other transport. The design of Diesel Dynamo products are unique and represent a breakthrough in the industry. The units Diesel Dynamo produces claim to provide for greater dependability, quality and longevity. The company is completing its third year of operations and is preparing to create a master budget for next year, 2017. The budget will detail each quarter’s activities and the activity for the year in total.

Through connections at the Rotary Club, the CEO was able obtain a template for use in creating a master budget and has provided it to you along with financial information from the corporate controller. Your job is to create the initial documents for the master budget:

sales budget

production budget

direct materials purchases budget

direct labor budget

overhead budget

selling and administrative expense budget

cash budget include a schedule of cash collections and payments

finished goods inventory calculation

At that point you will present your results at the budget committee meeting before continuing to complete all of the documents needed.

		Diesel Dynamo Company
			Budget Project
			Fall 2017
INPUT SECTION
SALES
		4th	1st	2nd	3rd	4th
		Quarter	Quarter	Quarter	Quarter	Quarter
		2017	2018	2018	2018	2018
	Budgeted Sales in units	43,000	37,900	34,500	31,000	43,000
	Budgeted Selling Price	$530	per production unit (Finished Good)
RECEIVABLES
	Receivables Collection Schedule	91.50%	quarter of sale
		5.50%	quarter following sale
		3.00%	uncollectible
		100.00%
	Policy		Entire projected uncollectible receivables are written off each quarter
INVENTORY COSTS
	Direct Labor	4.5	hours
		$19.50	per direct labor hour
	Raw Materials	3	direct material units per finished good production unit
		$85.00	per raw material unit
	Variable Overhead	$9.50	per Direct Labor Hour
	Fixed Overhead
	Depreciation	$304,000	per quarter
	Other Fixed Overhead	$950,000	per quarter
	Fixed Overhead Application Rate	CALCULATE FROM PRODUCTION BUDGET
INVENTORY ACCOUNTS
		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

Answer 1

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with the given information Purchase Budget/Selling admin budget and Cash budget is not feasible. Answered Rest all.
1. Sales Budget with expected Cash Collections:
		Q1	Q2	Q3	Q4	Full Year
Budgeted Sales in Unit		37900	34500	31000	43000	146400
Sale Price per unit		$             530	$             530	$             530	$             530	$             530
Budgeted Sales in Dollar		$20,087,000	$18,285,000	$16,430,000	$22,790,000	$77,592,000
		Q1	Q2	Q3	Q4	Full Year	Accounts Receivable
						$                -
Q1 Sale		$18,379,605	$ 1,104,785			$19,484,390
Q2 Sale			$16,730,775	$ 1,005,675		$17,736,450
Q3 Sale				$15,033,450	$     903,650	$15,937,100
Q4 Sale					$20,852,850	$20,852,850	$             1,253,450
Total Cash Collection		$18,379,605	$17,835,560	$16,039,125	$21,756,500	$74,010,790
2. Production Budget
		Q1	Q2	Q3	Q4	Full Year
Budgeted Sales in Unit		37900	34500	31000	43000	146400
Add: Desired Inventory		15000	19000	20000	15000	15000
Total Needs		52900	53500	51000	58000	161400
Less: Beginning Inventory		0	-15000	-19000	-20000	0
Budgeted Production units		52900	38500	32000	38000	161400
3. Material Purchase Budget and Expected Cash Payment
		Q1	Q2	Q3	Q4	Full Year	$                           -
Budgeted Production units		52,900	38,500	32,000	38,000	161,400	-
Materials per unit in lbs		3	3	3	3	3	3
Production needs in lbs		158,700	115,500	96,000	114,000	484,200	-
Add: Desired Inventory	Not given					-
Total Needs		158700	115500	96000	114000	484200
Less: Beginning Inventory	Not given	-28436	0	0		-28436
Material to be Purchased		130264	115500	96000	114000	455764
Cost per Pound		$          85.00	$          85.00	$          85.00	$          85.00	$          85.00
Total cost of Purchase		$11,072,440	$ 9,817,500	$ 8,160,000	$ 9,690,000	$38,739,940
4. Direct Labor Budget
		Q1	Q2	Q3	Q4	Full Year
Budgeted Production units		52,900	38,500	32,000	38,000	161,400
Hours per unit		4.50	4.50	4.50	4.50	4.50
Labor Hours Required		238,050	173,250	144,000	171,000	726,300
Hourly Rate		$            19.5	$            19.5	$            19.5	$            19.5	$            19.5
Budgeted Labor Cost		$ 4,641,975	$ 3,378,375	$ 2,808,000	$ 3,334,500	$14,162,850
5. Manufacturing Overhead Budget:
		Q1	Q2	Q3	Q4	Full Year
Production in Units		52,900	38,500	32,000	38,000	161,400
Variable MOH per unit		$              9.5	$              9.5	$              9.5	$              9.5	$              9.5
Variable MOH Cost		$     502,550	$     365,750	$     304,000	$     361,000	$ 1,533,300
Depreciation		$     304,000	$     304,000	$     304,000	$     304,000	$ 1,216,000
Other Fixed Overhead		$     950,000	$     950,000	$     950,000	$     950,000	$ 3,800,000
Total MOH Cost		$ 1,756,550	$ 1,619,750	$ 1,558,000	$ 1,615,000	$ 6,549,300
Less: Non Cash Cost-Dep		$    -304,000	$    -304,000	$    -304,000	$    -304,000	$ -1,216,000
Cash Paid for MOH		$ 1,452,550	$ 1,315,750	$ 1,254,000	$ 1,311,000	$ 5,333,300