In: Accounting
Storm Tools has formed a new business unit to produce
battery-powered drills. The business unit was...
Storm Tools has formed a new business unit to produce
battery-powered drills. The business unit was formed by the
transfer of selected assets and obligations from the parent
company. The unit's initial balance sheet on January 1 contained
cash ($500,000), plant and equipment ($2,500,000), notes payable to
the parent ($1,000,000), and Common Stock ($2,000,000). The
business unit is expected to repay the note at $50,000 per month,
plus all accrued interest at 1/2% per month. Payments are made on
the last day of each month. The unit is scheduled to produce 25,000
drills during January, with an increase of 2,500 units per month
for the next three months. Each drill requires $40 of raw
materials. Raw materials are purchased on account, and paid in the
month following the month of purchase. The plant manager has
established a goal to end each month with raw materials on hand,
sufficient to meet 25% of the following month's planned production.
The unit expects to sell 20,000 drills in January; 25,000 in
February, 25,000 in March, and 30,000 per month thereafter. The
selling price is $100 per drill. Half of the drills will be sold
for cash through a website. The others will be sold to retailers on
account, who pay 40% in the month of purchase, and 60% in the
following month. Uncollectible accounts are not material. Each
drill requires 20 minutes of direct labor to assemble. Labor rates
are $24 per hour. Variable factory overhead is applied at $9 per
direct labor hour. The fixed factory overhead is $25,000 per month;
60% of this amount is related to depreciation of plant and
equipment. With the exception of depreciation, all overhead is
funded as incurred. Selling, general, and administrative costs are
funded in cash as incurred, and consist of fixed components
(salaries, $100,000; office, $40,000; and advertising, $75,000) and
variable components (15% of sales).
Prepare the master budget for the quarter ended March 31,
2018.
Can an expert help prepare the master budget with the template
below
STORM TOOLS |
SALES BUDGET |
QUARTER ENDED MARCH 31,
2018 |
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JANUARY |
FEBRUARY |
MARCH |
QUARTER |
Unit sales |
20,000 |
25,000 |
25,000 |
70,000 |
Unit sales price |
100 |
100 |
100 |
100 |
Budgeted sales revenue |
$ 2,000,000 |
$ 2,500,000 |
$ 2,500,000 |
$ 7,000,000
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SERGEY
CORPORATION |
PRODUCTION BUDGET |
QUARTER ENDED MARCH 31,
2018 |
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JANUARY |
FEBRUARY |
MARCH |
QUARTER |
Unit sales |
20,000 |
25,000 |
25,000 |
70,000 |
Desired ending inventory |
5,000 |
7,500 |
12,500 |
12,500 |
Total needed |
25,000 |
32,500 |
37,500 |
82,500 |
Beginning inventory |
- |
5,000 |
7,500 |
- |
Units to be produced |
25,000 |
27,500 |
30,000 |
82,500 |
QUARTER ENDED
MARCH 31, 2018 |
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JANUARY |
FEBRUARY |
MARCH |
QUARTER |
Units to be produced |
25,000 |
27,500 |
30,000 |
82,500 |
Desired ending inventory |
6,875.00 |
7,500 |
8,125 |
8,125 |
Total needed |
$
31,875 |
$ 35,000 |
$ 38,125 |
$ 90,625 |
Less: Beginning inventory |
- |
6,875 |
7,500 |
- |
Direct Materials to purchase |
31,875 |
28,125 |
30,625 |
90,625 |
Cost of materials per unit |
40 |
40 |
40 |
40 |
Cost of purchases |
$
31,915 |
$ 28,165 |
$ 30,665 |
$ 90,665 |
SERGEY
CORPORATION |
DIRECT LABOR BUDGET |
QUARTER ENDED MARCH 31,
2018 |
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JANUARY |
FEBRUARY |
MARCH |
QUARTER |
Direct labor hours |
0.33 |
0.33 |
0.33 |
0.33 |
Labor rate per hour |
$ 24.00 |
$ 24.00 |
$ 24.00 |
$ 24.00 |
Direct labor cost per unit |
$ 8.00 |
$
8.00 |
$ 8.00 |
$ 8.00 |
Units to be produced |
25,000 |
27,500 |
30,000 |
82,500 |
Direct labor cost |
$ 200,000 |
$ 220,000 |
$ 240,000 |
$ 660,000 |
SERGEY
CORPORATION |
MANUFACTURING OVERHEAD
BUDGET |
QUARTER ENDED MARCH 31,
2018 |
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JANUARY |
FEBRUARY |
MARCH |
QUARTER |
Direct Labor Hours |
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X Variable Factory Overhead Rate |
$
9.00 |
$
9.00 |
$
9.00 |
$
9.00 |
Total variable overhead |
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Fixed Costs |
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Total overhead |
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Less: Depreciation |
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Cash payments for overhead |
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Estimated overhead rate: |
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$
3.91 |
SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES BUDGET |
QUARTER ENDED MARCH 31,
2018 |
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JANUARY |
FEBRUARY |
MARCH |
QUARTER |
Estimated Sales ($) |
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X Variable SG&A rate |
15% |
15% |
15% |
15% |
Total variable selling,
general and administrative expenses |
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Fixed costs: |
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Salaries |
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Office |
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Advertising |
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Total fixed selling &
administrative expenses |
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Total S & A expenses |
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SERGEY
CORPORATION |
BUDGETED INCOME STATEMENT |
QUARTER ENDED MARCH 31,
2018 |
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JANUARY |
FEBRUARY |
MARCH |
QUARTER |
Sales |
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Less: Cost of Goods Sold |
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Gross Margin |
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Less: S&A Expenses |
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Interest Expense |
5,000 |
4,750 |
4,500 |
14,250 |
Net Income |
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Cost Per Unit |
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Direct Materials |
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Direct Labor |
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Factory Overhead |
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Total Cost per unit |
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SERGEY
CORPORATION |
CAPITAL EXPENSES BUDGET |
QUARTER ENDED MARCH 31,
2018 |
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JANUARY |
FEBRUARY |
MARCH |
QUARTER |
Capital Expenses |
$
- |
$
- |
$
- |
$
- |
STORM TOOLS |
CASH RECEIPTS AND
DISBURSEMENTS BUDGET |
QUARTER ENDED MARCH 31,
2018 |
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JANUARY |
FEBRUARY |
MARCH |
QUARTER |
Cash receipts: |
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Collection of credit sales: |
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January |
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February |
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March |
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Total cash receipts |
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Cash disbursements: |
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Purchases of materials: |
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January |
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February |
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March |
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Total disbursements for purchases |
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Payment of direct labor |
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Payment of overhead |
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Payment of S & A expenses |
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Capital acquisition |
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Financing: |
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Planned repayment |
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Interest on note (1/2% of unpaid
balance) |
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Total cash disbursements |
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Excess or (deficiency) |
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Plus: Beginning cash balance |
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Ending cash balance |
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Sales: |
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Cash Sales |
50% |
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Remaining 50% on credit with
collections as follows |
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Month of Sale |
40% |
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Month after sale |
60% |
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Direct Material Payments |
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Month of Sale |
0% |
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Month after sale |
100% |
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SERGEY CORPORATION |
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BUDGETED BALANCE SHEET |
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MARCH 31, 2018 |
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ASSETS |
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LIABILITIES |
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Accounts Payable |
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Cash |
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Notes Payable - Parent Company |
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Accounts Receivable |
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Inventories: |
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Stockholders' Equity |
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Direct Materials |
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Finished Goods |
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Common Stock |
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Equipment |
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Retained Earnings |
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Less: Accum Depr |
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Rounding Error |
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(Should be less than $100) |
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Total Assets |
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Total Liabilities and Stockholders' Equity |
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