Question
In: Accounting
Para Corp is preparing its Master Budget for 20XX. To complete this problem you need to...
Para Corp is preparing its Master Budget for 20XX. To complete this problem you need to prepare a selection of Para’s individual budgets. Specifically, the Production Budget, the Direct Materials Budget and Schedule of Cash Payments, the Direct Labor Budget and the Ending Finished Goods Budget.
REQUIRED
1. PREPARE A PRODUCTION BUDGET
Prepare the Production Budget for the first three months of Para’s
fiscal year (January, February, and March), along with the totals
for the quarter using the format shown in the text book.
Relevant Information for preparing the Production Budget
includes:
Sales projections for the 3 months:
January – 75,000 units
February - 100,000 units
March – 90,000 units
April – 36,943 units
Finished goods inventory on January 1, 20XX = 7,500 units
Desired ending inventory for each month = 25% of the next month’s
budgeted unit sales.
2. PREPARE A DIRECT MATERIALS BUDGET
(TO INSURE CONSISTENCY IN GRADING – USE THE REQUIRED PRODUCTION GIVEN HERE, NOT THE AMOUNTS YOU COMPUTED FOR QUESTION 1.)
Prepare the Direct Materials Budget for the first three months
of Para’s fiscal year (January, February, and March), along with
the totals for the quarter, using the format shown in the text
book. Relevant Information for preparing the Direct Materials
Budget includes:
Required Production for the 3 months:
January – 95,000 units
February - 120,000 units
March – 110,000 units
April – 36,943
Number of gallons needed per unit = 3
Raw materials inventory on January 1, 20XX = 30,000 gallons
Desired ending inventory for each month = 10% of the next month’s
budgeted production
Raw materials cost per gallon = $2.00
3. PREPARE A SCHEDULE OF CASH PAYMENTS FOR RAW
MATERIALS
(TO INSURE CONSISTENCY IN GRADING – USE THE COST OF GALLON PURCHASED GIVEN HERE, NOT THE AMOUNTS YOU COMPUTED IN PART 2.)
Prepare the Schedule of Cash Payments for the first three months
of Para’s fiscal year (January, February, and March), along with
the totals for the quarter, using the format shown in the textbook.
Relevant information for the Schedule of Cash Payments
includes:
January cost of gallons purchased - $350,000
February cost of gallons purchased - $400,000 units
March cost of gallons purchased – $450,000
Para pays for 40% of its purchases in the month of purchase, 50% in
the month after purchase and 10% in the second month after
purchase.
Beginning Accounts Payable = $40,000
4. PREPARE A DIRECT LABOR BUDGET
Prepare the Direct Labor Budget for the first three months of
Para’s fiscal year (January, February, and March), along with the
totals for the quarter, using the format shown in the text book.
Relevant information for the Direct Labor Budget includes:
Use the required production amounts given for the Direct Materials
Budget in Question #2.
Each unit requires .5 hours of direct labor at a rate of $20 per
hour.
5. PREPARE AN ENDING FINISHED GOODS BUDGET
Prepare the Ending Finished Goods Budget using the format shown in
the text book. Be sure to compute an amount for ending finished
goods inventory.
Use the per unit amounts and costs given for Question 2 (Direct
Materials Budget) and Question 4 (Direct Labor Budget)
Assume Manufacturing Overhead is based on direct labor hours at a
cost of $10 per hour.
Assume ending finished goods inventory = 50,000 units.
Solutions
Expert Solution
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| Answer 1- Production Budget | Jan | Feb | March | Jan-Mar | April | Note |
| Budgeted sales (Units) | 75,000.00 | 100,000.00 | 90,000.00 | 265,000.00 | 36,943.00 | A |
| Add: Closing | 25,000.00 | 22,500.00 | 9,236.00 | 9,236.00 | F=25% of A of next month. | |
| Less: Opening | 7,500.00 | 25,000.00 | 22,500.00 | 7,500.00 | G=25% of A of same month. For January its given in the problem. | |
| Production Budget | 92,500.00 | 97,500.00 | 76,736.00 | 266,736.00 | H | |
| Answer 2- Direct Material Budget | Jan | Feb | March | Jan-Mar | April | |
| Production Budget | 95,000.00 | 120,000.00 | 110,000.00 | 325,000.00 | 36,943.00 | B |
| Material required per unit | 3.00 | 3.00 | 3.00 | 3.00 | C | |
| Material Usage Budget | 285,000.00 | 360,000.00 | 330,000.00 | 975,000.00 | 110,829.00 | D=B*C |
| Add: Closing | 36,000.00 | 33,000.00 | 11,083.00 | 11,083.00 | E=10% of D of next month. | |
| Less: Opening | 30,000.00 | 36,000.00 | 33,000.00 | 30,000.00 | I=10% of D of same month. For January its given in the problem. | |
| Material Purchase Budget (gallon) | 291,000.00 | 357,000.00 | 308,083.00 | 956,083.00 | J | |
| Cost per gallon | 2.00 | 2.00 | 2.00 | K | ||
| Material Purchase Budget ($) | 582,000.00 | 714,000.00 | 616,166.00 | 1,912,166.00 | L=J*K | |
| Answer 3- Material Payment Budget | Jan | Feb | March | Jan-Mar | ||
| Material Purchase Budget | 350,000.00 | 400,000.00 | 450,000.00 | 1,200,000.00 | ||
| Beginning accounts Payable | 40,000.00 | - | - | 40,000.00 | ||
| Current month (40%) | 140,000.00 | 160,000.00 | 180,000.00 | 480,000.00 | ||
| Last month (50%) | - | 175,000.00 | 200,000.00 | 375,000.00 | ||
| Last second month (10%) | - | - | 35,000.00 | 35,000.00 | ||
| Expected cash disbursements for materials | 180,000.00 | 335,000.00 | 415,000.00 | 930,000.00 | ||
| Answer 4- Direct Labor Budget | Jan | Feb | March | Jan-Mar | Note | |
| Production Budget | 95,000.00 | 120,000.00 | 110,000.00 | 325,000.00 | See B | |
| Labor Hour required per unit | 0.50 | 0.50 | 0.50 | M | ||
| Labor Hour required | 47,500.00 | 60,000.00 | 55,000.00 | 162,500.00 | N=B*M | |
| Cost per Hour | 20.00 | 20.00 | 20.00 | O | ||
| Direct Labor Budget | 950,000.00 | 1,200,000.00 | 1,100,000.00 | 3,250,000.00 | P=N*O |
| Workings for Answer 5 | ||
| Direct Material cost unit | Amount $ | Note |
| Material required per unit | 3.00 | See C |
| Cost per gallon | 2.00 | See K |
| Direct Material cost unit | 6.00 | Q=C*K |
| Direct labor cost per unit | Amount $ | |
| Labor Hour required per unit | 0.50 | See M |
| Cost per Hour | 20.00 | See O |
| Direct labor cost per unit | 10.00 | R=M*O |
| Manufacturing overhead cost per unit | Amount $ | |
| Labor Hour required per unit | 0.50 | See M |
| Cost per Hour | 10.00 | S |
 ekkarill92 answered 1 year agoRelated SolutionsPara Corp is preparing its Master Budget for 20XX. To complete this problem you need to...Para Corp is preparing its Master Budget for 20XX. To complete
this problem you need to prepare a selection of Para’s individual
budgets. Specifically, the Production Budget, the Direct Materials
Budget and Schedule of Cash Payments, the Direct Labor Budget and
the Ending Finished Goods Budget.
REQUIRED
1. PREPARE A PRODUCTION BUDGET
(2 POINTS)
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this problem you need to prepare a selection of Para’s individual
budgets. Specifically, the Production Budget, the Direct Materials
Budget and Schedule of Cash Payments, the Direct Labor Budget and
the Ending Finished Goods Budget.
REQUIRED
1. PREPARE
A PRODUCTION BUDGET (2 POINTS)
Prepare the Production Budget for the
first three months of Para’s fiscal year (January, February, and
March), along with the totals for the quarter using the...
Para Corp is preparing its Master Budget for 20XX. To complete this problem you need to...Para Corp is preparing its Master Budget for 20XX. To complete
this problem you need to prepare a selection of Para’s individual
budgets. Specifically, the Production Budget, the Direct Materials
Budget and Schedule of Cash Payments, the Direct Labor Budget and
the Ending Finished Goods Budget.
1.
PREPARE A PRODUCTION BUDGET (2 POINTS)
Prepare the Production Budget for the
first three months of Para’s fiscal year (January, February, and
March), along with the totals for the quarter using the format...
Para Corp is preparing its Master Budget for 20XX. To complete this problem you need to...Para Corp is preparing its Master Budget for 20XX. To complete
this problem you need to prepare a selection of Para’s individual
budgets. Specifically, the Production Budget, the Direct Materials
Budget and Schedule of Cash Payments, the Direct Labor Budget and
the Ending Finished Goods Budget.
REQUIRED
1. PREPARE
A PRODUCTION BUDGET (2 POINTS)
Prepare the Production Budget for the
first three months of Para’s fiscal year (January, February, and
March), along with the totals for the quarter using the...
Para Corp is preparing its Master Budget for 20XX. To complete this problem you need to...Para Corp is preparing its Master Budget for 20XX. To complete
this problem you need to prepare a selection of Para’s individual
budgets. Specifically, the Production Budget, the Direct Materials
Budget and Schedule of Cash Payments, the Direct Labor Budget and
the Ending Finished Goods Budget.
REQUIRED
1.
PREPARE A PRODUCTION BUDGET (2 POINTS)
Prepare the Production Budget for the
first three months of Para’s fiscal year (January, February, and
March), along with the totals for the quarter using the...
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