Question

REQUIREMENTS:
Prepare, in good form, a Master Budget which includes the following:
1)    Sales Budget
2)    Production Budget
3)    Direct Materials Purchases Budget
4)    Direct Labour Cost Budget
5)    Factory Overhead Cost Budget
6)    Cost of Goods Sold Budget
7)    Selling and Administrative Expenses Budget
8)    Budgeted Income Statement
9)    Schedule of Collections from Sales
10)    Schedule of Payments for Manufacturing Costs
Budgets should be for the individual three (3) months of the first quarter of 2019.
Include a quarterly total column on the right side. (except for #6 and #8).
Budgets #6 and #8 are for the first quarter only.
Use proper rounding and show two (2) decimal places of accuracy on dollar amounts.
Round up and show whole amounts on all other figures.
(Hint) Excel provides functions for rounding:
	=ROUND(your formula,2)
	=ROUNDUP(your formula,0)
BALANCE SHEET: Bottas Manufacturing, Inc. Balance Sheet December 31, 2018 ASSETS Cash $           25,711.00 Marketable securities                20,000.00 Accounts receivable             565,844.43 Inventories:    Finished goods $           86,385.60    Work in process                          0.00    Direct materials                  7,193.94                93,579.54 Total Current Assets             705,134.97 Property, plant and equipment $         844,200.00    Less: Accumulated depreciation           (318,600.00) Total Property, Plant and Equipment             525,600.00       Total Assets $     1,230,734.97 LIABILITIES AND STOCKHOLDERS EQUITY Accounts payable $              5,755.15 Income taxes payable                          0.00 Total Current Liabilities $              5,755.15 Long-term notes payable             436,000.00 Total Liabilities             441,755.15 Common stock ($5.00 Par) $         475,000.00 Paid-in capital             100,000.00 Retained earnings             213,979.82 Total Stockholders Equity             788,979.82       Total Liabilities and Stockholders Equity $     1,230,734.97       Total Liabilities and Stockholders Equity FACTS SHEET: 1. Sales 2018 Actual Units 2019 Budgeted Units Nov Dec Jan Feb Mar Apr May 7,835 7,970 7,450 7,090 8,320 9,070 10,120 The selling price per unit has remained constant from the past year and is expected to remain unchanged throughout the first quarter of 2019 at an amount of $          59.99 2. Production The Company's policy is to produce during each month, enough units to meet the current month's sales as well as a desired inventory at the end of the month which should be equal to 23% of next month's estimated sales. On December 31, 2018, the finished goods inventory consisted of 1,714 units. 3. Direct Materials Each month the Company purchases enough direct materials to meet that month's production requirements and an amount equal to 25% of the next month's estimated production requirements. Each unit of finished product requires 2.83 pounds of direct materials at a cost of $1.38 per pound. On December 31, 2018 the direct materials inventory consisted of 5,213 lbs. 4. Direct Labour Direct labour hours required per unit of finished product: 1.75 Average rate per direct labour hour: $          12.25 5. Factory Overhead The Company applies variable factory overhead at the rate of 120% of direct labour cost. The Company has the following fixed overhead expenses per month: Factory supervisor's salary $    5,400.00 Factory rent         6,000.00 Factory insurance         6,500.00 Depreciation of factory equipment            600.00 6. Cost of Goods Sold Beginning finished goods inventory units were at a cost of $          50.40 The Company has no beginning or ending work in process inventory. Beginning direct materials were at a cost of $             1.38 7. Selling and Administrative Expenses Variable selling and administrative expenses are: Freight out $             0.80 per unit Sales commissions 1% of sales Fixed selling and administrative expenses per month are: Salaries $    8,700.00 Rent         1,800.00 Advertising            150.00 Insurance            250.00 Depreciation (excluding depreciation of computer to be purchased at the end of January 2019. See Note A)      10,050.00 All selling and administrative costs, except depreciation, are paid for in cash during the month in which they are incurred. 8. Income Statement Interest revenue for the quarter ending March 31, 2019, is $        300.00 Interest expense for the quarter ending March 31, 2019, see Note B. Income tax rate is 30% of income before taxes computed at the end of the quarter ending March 31, 2019, payable in the second quarter. 9. Cash Collection Policy Total sales consist of the following: Cash sales: 5% Credit sales: 95% Credit collections are as follows: In the month following the month of sale: 75% In the second month following the month of sale: 25% The accounts receivable balance of as of December 31, 2018, represents 75% of credit sales made in December plus 25% of credit sales made in November to be collected in January. It also includes 25% of credit sales made in December to be collected in February. The Company does not have bad debts. 10. Cash Payments Policy Material purchase payments are made as follows: In the month of purchase: 80% In the following month the balance: 20% The accounts payable balance of $    5,755.15 as of December 31, 2018 represents 20% of purchases made in December to be paid in January. All labour costs are paid for during the month in which they are incurred. All factory overhead costs, except depreciation, are paid for during the month in which they are incurred. Note A.   Capital Expenditure The Company expects to buy a new computer on January 31, 2019, for use in the sales and administrative offices at a cost of $ 18,000.00 which will be paid in cash. Monthly depreciation expense will be an additional $        300.00 Note B.   Debt Repayment On March 31, 2019, the Company is scheduled to pay $ 30,000.00 of the long-term notes payable plus interest expense for the first quarter at a rate of 12% Note C.   General Information Use proper rounding and show two (2) decimal places of accuracy on dollar amounts. Round up and show whole amounts on all other numbers (Hint) Excel provides functions for rounding: =ROUND(your formula,2) =ROUNDUP(your formula,0)

Answer 1