Question

This problem consists of four independent mini-problems.

Omit headings other than those already given. A. Kriter Kitchen Tools produces and sells insulated ice buckets. The sales budget for 2016 is as follows: 1st quarter — 8,000 units 3rd quarter — 13,000 units 2nd quarter — 11,000 units 4th quarter — 10,000 units Kriter desires an ending inventory equal to 10% of the next quarter's sales. The January 1, 2016 inventory is 800 units. Unit sales during the 1st quarter of 2017 are estimated at 9,000 units. Instructions: Compute required production for 2016, showing quarterly data. Description Quarter 1 Quarter 2 Quarter 3 Quarter 4 —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— ——————————————————————————————————————————

B. Shanigan’s Manufacturers is preparing its direct labor budget for the second quarter of 2017 from the following budgeted production figures: April—8,000 units; May—7,000 units; and June—9,000 units. Each unit requires 3.25 hour of direct labor. The hourly wage rates are expected to be $15 in April, and $15.50 in May and June. Instructions: Prepare a direct labor budget for the quarter, showing monthly data. Description April May June Quarter —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— ——————————————————————————————————————————

C. JetGreen Cleaners makes 80% of its sales on credit. Experience shows that 25% of the credit customers pay in the month of sale, 55% within the following month, the rest during the next month. Total sales for May, June, July, and August are estimated at $180,000; $220,000; $280,000; and $200,000, respectively. Instructions: Determine budgeted cash receipts for July and August. Description July August —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— —————————————————————————————————————————— ——————————————————————————————————————————

D. Southside Sports is preparing its annual cash budget, showing quarterly data, for 2017. A $14,000 cash balance is desired at the end of each quarter. Borrowings and repayments are in $1,000 increments at 6% annual interest. The company borrows at the beginning of a quarter based on the estimated deficiency. Interest is paid only when principal is repaid at the end of a quarter with excess cash. The maximum amount of principal was repaid in the second and fourth quarters. The cash balance on December 31, 2016 is $17,000. Total receipts and disbursements, other than borrowings and principal or interest payments, are estimated at: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Disbursements: $110,000 $135,000 $124,000 $140,000 Receipts: 102,000 142,000 120,000 155,000 Instructions: Prepare a schedule of estimated borrowings and repayments of principal and interest for the four quarters of 2017. Description Quarter 1 Quarter 2 Quarter 3 Quarter 4 ——————————————————————————————————————————

Answer 1

PRODUCTION BUDGET
			Q-1	Q-2	Q-3	Q-4	YEAR
Budgeted Sales Units			8,000	11,000	13,000	10,000	42,000
Add: Desired Ending Finished inventory			1,100	1,300	1,000	900	900
Total Needs			9,100	12,300	14,000	10,900	42,900
Less: Beginning Finished Inventory			800	1,100	1,300	1,000	800
Required Production in units			8,300	11,200	12,700	9,900	42,100
LABOUR COST BUDGETS
			April	May	June	Quarter
Units to be produced			8,000	7,000	9,000	24,000
Labour required per unit			3.25	3.25	3.25	3.25
Labour hours			26000	22750	29250	78000
Labuor Rate per hour			15.00	15.50	15.50
Budgeted Labour cost in $			390,000	352,625	453,375	1,196,000
EXPECTED CASH COLLECTIONS
			July	Aug	Total
Cash sales			56,000	40000	96000
May sales			28,800		28800
June sales			96800	35200	132000
July sales			56000	123,200	179,200
Aug sales				40000	40000
Total Cash Collections			237,600	238,400	476,000
Cash Budget
			Q-1	Q-2	Q-3	Q-4
Cash balance in Beginning			17000	14000	15850	14000
Add: cash receipts			102000	142000	120000	155000
Total cash available			119000	156000	135850	169000
Less: expected disbursals			110000	135000	124000	140000
Excess/ Shortage of cash			9000	21000	11850	29000
Financing:
Borrowing			5000		2150
Repayment				-5000		-2150
Interest				-150		-64.5
Total Financing:			5000	0	2150	0
Ending cash balance			14000	15850	14000	26785.5