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Question: Problem 20-4B Manufacturing: Preparation of a complete master budget P1 P2 P3 The management of N... Using an "EXCEL" spreadsheet, create budgets (Items 1-9). Problem 20-4B Manufacturing: Preparation of a complete master budget P1 P2 P3 The management of Nabar Manufacturing prepared the following estimated balance sheet for June, 2015: NABAR MANUFACTURING Estimated Balance Sheet June 30, 2015 Assets Liabilities and Equity $ 40,000 ...249.900 35,000 Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment, gross Accumulated depreciacion.... Equipment, net Accounts payable Income taxes payable. Short-torm notes payable Total current liabilities Long-term note payable Total liabilities Common stock Retained earnings Total stockholders equity Total labilities and equity $ 51,400 10,000 24,000 85,400 300,000 385,400 600,000 60,580 660.580 $1,045,980 565.980 720,000 240,000) 480,000 Total assecs 51.045,980 To prepare a master budget for July, August, and September of 2015, management gathers the following information: a. Sales were 20,000 units in June. Forecasted sales in units are as follows: July, 21,000; August, 19,000; September, 20,000; October, 24,000. The products selling price is $17 per unit and its total product cost is $14.35 per unit b. Company policy calls for a given months ending finished goods inventory to equal 70% of the next months expected unit sales. The June 30 finished goods inventory is 16,800 units, which does not comply with the policy. c. Company policy calls for a given months ending raw materials inventory to equal 20% of the next months materials requirements. The June 30 raw materials inventory is 4,375 units (which also fails to meet the policy). The budgeted September 30 raw materials inventory is 1,980 units. Ravw materials cost $8 per unit. Each finished unit requires 0.50 units of raw materials. d. Each finished unit requires 0.50 hours of direct labor at a rate of $16 per hour. e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is f. Monthly general and administrative expenses include $9,000 administrative salaries and 0.9% g. Sales representatives, commissions are 10% of sales and are paid in the month of the sales. The h. The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables i. All raw materials purchases are on credit, and no payables arise from any other transactions. One J. Dividends of $20,000 are to be declared and paid in August. $2.70 per direct labor hour. Depreciation of $20,000 per month is treated as fixed factory overhead. monthly interest on the long-term note payable. sales managers monthly salary is $3,500 per month. are collected in full in the month following the sale (none are collected in the month of the sale) months raw materials purchases are fully paid in the next month. k. Income taxes payable at June 30 will be paid in July. Income tax expense will be assessed at 35% in the quarter and paid in October I. Equipment purchases of $100,000 are budgeted for the last day of September. m. The minimum ending cash balance for all months is $40,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 196 at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance. Required Prepare the following budgets and other financial intormation as required. All budgets and other financial information should be prepared for the third calendar quarter, except as otherwise noted below. Round calculations to the nearest whole dolla 1. Sales budget. 2. Production budget. 3. Raw materials budget. 4. Direct labor budget. 5. Factory overhead budget. 6. Selling expense budget 7. General and administrative expense budget. 8. Cash budget. 9. Budgeted income statement for the entire quarter (not for each month separately) Show transcribed image text Problem 20-4B Manufacturing: Preparation of a complete master budget P1 P2 P3 The management of Nabar Manufacturing prepared the following estimated balance sheet for June, 2015: NABAR MANUFACTURING Estimated Balance Sheet June 30, 2015 Assets Liabilities and Equity $ 40,000 ...249.900 35,000 Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment, gross Accumulated depreciacion.... Equipment, net Accounts payable Income taxes payable. Short-torm notes payable Total current liabilities Long-term note payable Total liabilities Common stock Retained earnings Total stockholders' equity Total labilities and equity $ 51,400 10,000 24,000 85,400 300,000 385,400 600,000 60,580 660.580 $1,045,980 565.980 720,000 240,000) 480,000 Total assecs 51.045,980 To prepare a master budget for July, August, and September of 2015, management gathers the following information: a. Sales were 20,000 units in June. Forecasted sales in units are as follows: July, 21,000; August, 19,000; September, 20,000; October, 24,000. The product's selling price is $17 per unit and its total product cost is $14.35 per unit b. Company policy calls for a given month's ending finished goods inventory to equal 70% of the next month's expected unit sales. The June 30 finished goods inventory is 16,800 units, which does not comply with the policy. c. Company policy calls for a given month's ending raw materials inventory to equal 20% of the next month's materials requirements. The June 30 raw materials inventory is 4,375 units (which also fails to meet the policy). The budgeted September 30 raw materials inventory is 1,980 units. Ravw materials cost $8 per unit. Each finished unit requires 0.50 units of raw materials. d. Each finished unit requires 0.50 hours of direct labor at a rate of $16 per hour. e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is f. Monthly general and administrative expenses include $9,000 administrative salaries and 0.9% g. Sales representatives, commissions are 10% of sales and are paid in the month of the sales. The h. The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables i. All raw materials purchases are on credit, and no payables arise from any other transactions. One J. Dividends of $20,000 are to be declared and paid in August. $2.70 per direct labor hour. Depreciation of $20,000 per month is treated as fixed factory overhead. monthly interest on the long-term note payable. sales manager's monthly salary is $3,500 per month. are collected in full in the month following the sale (none are collected in the month of the sale) month's raw materials purchases are fully paid in the next month. k. Income taxes payable at June 30 will be paid in July. Income tax expense will be assessed at 35% in the quarter and paid in October I. Equipment purchases of $100,000 are budgeted for the last day of September. m. The minimum ending cash balance for all months is $40,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 196 at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance. Required Prepare the following budgets and other financial intormation as required. All budgets and other financial information should be prepared for the third calendar quarter, except as otherwise noted below. Round calculations to the nearest whole dolla

1. Sales budget.

2. Production budget.

3. Raw materials budget.

4. Direct labor budget.

5. Factory overhead budget.

6. Selling expense budget

7. General and administrative expense budget.

8. Cash budget.

9. Budgeted income statement for the entire quarter (not for each month separately)

Answer 1

1. Sales Budget:

Sales Budget is as follows:

Budgeted sales units for the Months of July, August and September are given in the question.

2. Production Budget:

Production Budget is as follows:

It is given that closing inventory should be atleast 70% of the following month's sales. Hence, July month closing inventory equals 70% of sales of August and likewise.

We can get the Budgeted Production units, as we reduce the Opening Inventory from the Inventory available for sale.

Opening Inventory for the month of July is given in the question and Opening Inventory for the month of August and September would be the Closing Inventory for the month of July and August.

Production Cost per unit is given in the question.

If we multiply the production cost with the budgeted production units, we get the budgeted production units cost.

3. Raw Materials Budget:

Raw Materials Budget is as follows:

Opening Raw Material for July and Closing Raw Material for September are given in the question.

Closing Raw Material should be atleast 20% of the next month's requirement. That is, 20% of the next month's Production Units.

Cost of Raw Material is given in the question, hence when it is multiplied with the Raw Material units to be purchased, we get the Budgeted Raw Material Cost.

4. Direct Labor Budget:

Direct Labor Budget is as follows:

Hope this is helpful!!