In: Accounting
Operating Budget, Comprehensive Analysis
Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world. Projected sales in units for the coming five months are given below.
January | 10,000 |
February | 10,500 |
March | 13,100 |
April | 16,000 |
May | 18,500 |
The following data pertain to production policies and manufacturing specifications followed by Ponderosa:
Direct Material | Per-Unit Usage | Unit Cost |
Part #K298 | 2 | $4 |
Part #C30 | 3 | 7 |
Inventory policy dictates that sufficient materials be on hand at the beginning of the month to satisfy 30 percent of the next month’s production needs. This is exactly the amount of material on hand on January 1.
Fixed Cost Component |
Variable Cost Component |
|
Supplies | $ — | $1.00 |
Power | — | 0.20 |
Maintenance | 12,600 | 1.10 |
Supervision | 14,000 | — |
Depreciation | 45,000 | — |
Taxes | 4,300 | — |
Other | 86,000 | 1.60 |
Fixed Costs | Variable Costs | |
Salaries | $ 88,600 | — |
Commissions | — | $1.40 |
Depreciation | 25,000 | — |
Shipping | — | 3.60 |
Other | 137,000 | 1.60 |
Required:
Prepare a monthly operating budget for the first quarter with the following schedules:
2. Production budget
January | February | March | Total | |
---|---|---|---|---|
Unit sales | 10,000 | 10,500 | 13,100 | 33,600 |
Desired ending inventory | 2,100 | 3,200 | ||
Total needed | 12,100 | |||
Less: Beginning inventory | 900 | 2,100 | ||
Units produced | 11,200 |
3. Direct materials purchases budget
January | February | March | Total | |||||
---|---|---|---|---|---|---|---|---|
Part K298 | Part C30 | Part K298 | Part C30 | Part K298 | Part C30 | Part K298 | Part C30 | |
Units produced | 11200 | |||||||
Dir. mat. per unit | 2 | 3 | 2 | 3 | 2 | 3 | 2 | 3 |
Production needs | 22,400 | 33,600 | ||||||
Desired EI | ||||||||
Total needed | ||||||||
Less: BI | ||||||||
Dir. mat. to purchase | ||||||||
Cost per unit | $ | $ | $ | $ | $ | $ | $ | $ |
Total purchase cost | $ | $ | $ | $ | $ | $ | $ | $ |
4. Direct labor budget. Round your answers to two decimal places, if required.
January | February | March | Total | |
---|---|---|---|---|
Units to be produced | ||||
Direct labor time per unit (hrs.) | ||||
Total hours needed | ||||
Wages per hour | $ | $ | $ | $ |
Total direct labor cost | $ | $ | $ | $ |
January | February | March | Total | |
---|---|---|---|---|
Budgeted direct labor hours | ||||
Variable overhead rate | ||||
Budgeted var. overhead | $ | $ | $ | $ |
Budgeted fixed overhead | ||||
Total overhead cost | $ | $ | $ | $ |
6. Selling and administrative expense budget. Round your answers to the nearest cent, if required.
January | February | March | Total | |
---|---|---|---|---|
Planned sales | ||||
Variable selling & administrative expense per unit | $ | $ | $ | $ |
Total variable expense | $ | $ | $ | $ |
Fixed selling & administrative expense: | ||||
Salaries | $ | $ | $ | $ |
Depreciation | ||||
Other | ||||
Total fixed expenses | $ | $ | $ | $ |
Total selling & administrative expenses | $ | $ | $ | $ |
7. Ending finished goods inventory budget. Round intermediate calculations to the nearest cent. Round your answers to the nearest cent, if required.
Unit cost computation: | |
Direct materials: | |
Part K298 | $ |
Part C30 | |
Direct labor | |
Overhead: | |
Variable | |
Fixed | |
Total unit cost | $ |
Number of units | |
Finished goods | $ |
8. Cost of goods sold budget
Direct materials used | ||
Part K298 | $ | |
Part C30 | $ | |
Direct labor used | ||
Overhead | ||
Budgeted manufacturing costs | $ | |
Add: Beginning finished goods | ||
Goods available for sale | $ | |
Less: Ending finished goods | ||
Budgeted cost of goods sold | $ |
9. Budgeted income statement (ignore income taxes)
Sales | $ |
Less: Cost of goods sold | |
Gross margin | $ |
Less: Selling and administrative expense | |
Income before income taxes | $ |
10. Cash budget
Enter a negative balance as a negative amount, and if an amount is
zero enter "0".
January | February | March | Total | |
---|---|---|---|---|
Beginning balance | $ | $ | $ | $ |
Cash receipts | ||||
Total cash available | $ | $ | $ | $ |
Disbursements: | ||||
Purchases | $ | $ | $ | $ |
DL payroll | ||||
Overhead | ||||
Marketing & admin | ||||
Land | ||||
Total disbursements | $ | $ | $ | $ |
Ending balance | $ | $ | $ | $ |
Financing: | ||||
Borrowed/repaid | ||||
Interest paid | ||||
Ending cash balance | $ | $ | $ | $ |