Question

The facts for this problem are presented on the Facts tab of this workbook.
Instructions - Your solutions should be clearly labeled on the Solutions tab of this workbook.

For the first quarter of 2017, do the following.

(a) Prepare a sales budget. This is similar to Illustration 21-3 on page 1088 of your textbook.

(b) Prepare a production budget. This is similar to Illustration 21-5 on page 1089 of your textbook.

(c) Prepare a direct materials budget. (Round to nearest dollar) This is similar to Illustration 21-7 on page 1091 of your textbook.

(d) Prepare a direct labor budget. (For calculations, round to the nearest hour.) This is similar to Illustration 21-9 on page 1094 of your textbook.

(e) Prepare a manufacturing overhead budget. (Round intermediate amounts to the nearest dollar.) This is similar to Illustration 21-10 on page 1094 of your textbook.

(f) Prepare a selling and administrative budget. This is similar to Illustration 21-11 on page 1095 of your textbook.

(g) Prepare a budgeted income statement. (Round intermediate calculations to the nearest dollar.) This is similar to Illustration 21-13 on page 1096 of your textbook.

(h) Prepare a cash budget. This is similar to Illustration 21-17 on page 1100 of your textbook.

(You will need to prepare schedules for expected collections from customers and expected payments to vendors first. See Illustrations 21-15 and 21-16 on page 1099 of your textbook for guidance.) Rules: * Use Excel's functionality to your benefit. Points are lost for lack of formula. * Use proper formats for schedules, following the referenced textbook examples. * Use dollar-signs and underscores where appropriate. * Double-check your work! Verify your formula and logic! Grading Guidelines: Effective Use of Excel 40% Facts, Logic 20% Completeness 30% Spelling, Punctuation, Value Format 10% Serious Business, Inc. The company is preparing its budget for the coming year, 2017. The first step is to plan for the first quarter of that coming year. The following information has been gathered from their managers. Sales Information Period Units November                   113,000 Actual Grading guidelines are on the instructions tab. December                   101,000 Actual January                   111,000 Planned February                   112,000 Planned March                   114,000 Planned April                   124,000 Planned May                   136,000 Planned Unit selling price $                   12.00 Finished Goods Inventory Planning The company likes to keep 10% of the next month’s unit sales in finished goods ending inventory. Accounts Receivable & Collections Sales on Account 100% Collections Activity Month of Sale 85% Month after Sale 15% Balance at 12/31/16 $         185,000.00 Materials Inventory Costs & Planning Direct Materials Amount Used per Unit Cost Metal                               2 lb $        1.00 lb The company likes to keep 5% of the material needed for the next month's production in raw materials ending inventory. Accounts Payable & Disbursements Purchases on Account 100% Payment Activity Month of Purchase 50% Month after Purchase 50% Balance at 12/31/16 $              120,000 Direct Labor & Costs Time per Unit Production                               9 minutes Pay Rate/Hour $                     7.00 Manufacturing Overhead Costs Variable costs per direct labor hour Indirect materials $                     0.30 Indirect labor                         0.45 Utilities                         0.45 Maintenance                         0.25 Fixed costs per month Salaries $                 42,000 Depreciation                     16,800 Property taxes                       2,675 Insurance                       1,200 Janitorial                       1,300 Selling and Administrative Costs Variable costs per unit sold $                     1.45 Fixed costs per month Advertising $                 15,000 Insurance                     14,000 Salaries                     72,000 Depreciation                     25,000 Other fixed costs                       3,000 Income Taxes Accrued on Monthly Net Income 35% rounded to nearest dollar Amounts Accrued Q4 2016 paid January 2017 $              200,000 Cash and Financing Matters Cash Balance, 12/31/2016 $                 90,000 2017 Minimum Balance Required                   715,000 Monthly Dividends $                     2.25 per share Outstanding Shares                       5,000 Line of Credit Limit None Borrowing Increment Required $                   1,000 Interest Rate 9% Draws First of Month Repayments Last of Month Interest accumulates to the loan balance and is paid in full with each repayment. Additional Item Fixed Asset Purchase $              445,000 Month February

Answer 1

November	December	January	February	March	April	May
113000	101000	111000	112000	114000	124000	136000
(a) Sales Budget
	January	February	March	Quarter
Budgeted Unit Sales	111000	112000	114000	337000
Selling Price per unit	$                12	$                    12	$                  12	$                  12
Total sales	$ 1,332,000	$      1,344,000	$    1,368,000	$    4,044,000
	= 111000 * 12
(b) Production Budget
	January	February	March	Quarter	October
Budgeted unit sales	111000	112000	114000	337000	124000
Add: Desired ending inventory (10% of next month)	11200	11400	33700	33700
Total Needs	122200	123400	147700	370700
Less: Beginning Inventory	11100	11200	11400	11100
Required Production of Units	111100	112200	136300	359600
© Direct Material budget
	January	February	March	Quarter
Budgeted production	111100	112200	136300	359600
Raw material required per unit Metal	2	2	2	2
Budgeted required of rw material for production	222200	224400	272600	719200
Add: Desired ending inventory (5% of next month)	11220	13630	35960	35960
Total Needs	122320	125830	172260	395560
Less: Beginning Inventory	5555	11220	13630	5555
Required Purchase of Raw Material	116765	114610	158630	390005
Unit Price	$                  1	$                       1	$                     1	$                     1
Purchase of Raw Material	$     116,765	$          114,610	$        158,630	$        390,005
	= 116765 * 1
(d) Direct Labour Budget
	January	February	March	Quarter
Budgeted production	111100	112200	136300	87300
Direct labour required per unit	0.15	0.15	0.15	0.15
Budgeted required of labour hours	16665	16830	20445	13095
Direct labour rate per hour	$                  7	$                       7	$                     7	$                     7
Direct Labour Cost	$     116,655	$          117,810	$        143,115	$          91,665
	= 16665 * 7