Friday’s report of first quarter growth should show economy is strong and no recession in sight

Green Landscaping Inc. is preparing its budget for the first quarter of 2017. The next step in the budgeting process is to prepare a cash receipts schedule and a cash payments schedule. To that end the following information has been collected. Clients usually pay 60% of their fee in the month that service is performed, 30% the month after, and 10% the second month after receiving service. Actual service revenue for 2016 and expected service revenues for 2017 are November 2016, $91,690; December 2016, $82,770; January 2017, $101,930; February 2017, $121,930; March 2017, $134,390. Purchases of landscaping supplies (direct materials) are paid 60% in the month of purchase and 40% the following month. Actual purchases for 2016 and expected purchases for 2017 are December 2016, $18,090; January 2017, $17,410; February 2017, $20,720; March 2017, $21,570. (a) Prepare the following schedules for each month in the first quarter of 2017 and for the quarter in total: (1) Expected collections from clients. GREEN LANDSCAPING INC. Schedule of Expected Collections From Clients January February March Quarter November $ $ $ $ December January February March Total collections $ $ $ $ (2) Expected payments for landscaping supplies. GREEN LANDSCAPING INC. Schedule of Expected Payments for Landscaping Supplies January February March Quarter December $ $ $ $ January February March Total payments $ $ $ $ (b) Determine the following balances at March 31, 2017: (1) Accounts receivable $ (2) Accounts payable $

Tempo Company's fixed budget (based on sales of 16,000 units) for the first quarter of calendar year 2017 reveals the following.

Complete the following flexible budgets for sales volumes of 14,000, 16,000, and 18,000 units. (Round cost per unit to 2 decimal places.)

After the first quarter of the current year, Darius and Jose, both proprietors, decide to combine their businesses and created a partnership. Prior to the partnership formation, their balance sheets show the following balances:

The partners agreed on the following adjustments to their books:

1. Both their Allowance for Doubtful Accounts will be increased by 4% of Account Receivable.

2. Darius inventories will be valued at P 145,000 while that of Jose will be reduced by 10%.

3. Store Equipment will be taken in the partnership books at book value.

4. The Delivery Equipment and its contra-account will be taken up as is in the partnership books.

5. The furniture will be taken at P8,000 and P5,000, respectively.

6. Darius and Jose will make an additional cash investment that will make their contributions equal to P250,000 each.

7.They also agreed that a new set of books will be used by the partnership. Instructions:

REQUIRED:

PREPARE THE BALANCE SHEET OF THE NEWLY FORMED PARTNERSHIP IMMEDIATLY AFTER FORMATION.

Preparation of Individual Budgets During the first calendar quarter of 2016, Clinton Corporation is planning to manufacture a new product and introduce it in two regions. Market research indicates that sales will be 6,000 units in the urban region at a unit price of $53 and 5,000 units in the rural region at $48 each. Because the sales manager expects the product to catch on, he has asked for production suf-ficient to generate a 4,000-unit ending inventory. The production manager has furnished the following estimates related to manufacturing costs and operating expenses:

Variable Fixed

(per unit) (total)

Manufacturing costs:

Direct material:

A (4 lb. @ $3.15/lb.) ............................................ .$12.60 —

B (2 lb. @ $4.65/lb.) ............................................. 9.30 —

Direct labor (0.5 hr. per unit) ........................................7.50 —

Manufacturing overhead:

Depreciation ................................................. .— $ 7,650

Factory supplies ............................................... 0.90 4,500

Supervisory salaries ............................................ — 28,800

Other ........................................................ 0.75 22,950

Operating expenses:

Selling:

Advertising ................................................... — 22,500

Sales salaries and commissions* ..................................1.50 15,000

Other* ...................................................... 0.90 3,000

Administrative:

Office salaries ................................................. — 2,700

Supplies ..................................................... 0.15 1,050

Other ........................................................ 0.08 1,950

*Varies per unit sold, not per unit produced.

Required

a. Assuming that the desired ending inventories of materials A and B are 4,000 and 6,000 pounds, respectively, and that work-in-process inventories are immaterial, prepare budgets for the cal-endar quarter in which the new product will be introduced for each of the following operating factors:

1. Total sales

2. Production

3. Material purchases cost

4. Direct labor costs

5. Manufacturing overhead costs

6. Selling and administrative expenses

b. Using data generated in requirement (a), prepare a budgeted income statement for the calendar

quarter. Assume an overall effective income tax rate of 30%.

Operating Budget

Create an operating budget for the first quarter of a new business.

Projected Sales are:

Month #1: $65,000

Month #2: $97,500

Month #3: $130,000

Month #4: $110,500

These sales are based on selling one product with a selling price of $6.50

Create a Production Budget based on Units (not dollars).

Desired Finished Goods Ending Inventory each month is 10% of the next month’s projected sales. (Use the Finished Goods Ending Inventory amount for the previous year for the Beginning Finished Goods Inventory to start this year).

Create a Direct Materials Purchase Budget

Each unit produced requires 10# of direct materials at a cost of $0.08 per pound.

Desired Ending Direct Materials Inventory is 10% of the next month’s material requirements.

Create a Direct Labor Budget

Direct Labor Costs are $15/hour

Each unit requires 5 minutes of labor

Create an Overhead Budget

Variable Overhead Expenses are:

Supplies ($.02 per unit)

Inspection ($.10 per unit)

Maintenance and Repair ($.03 per unit)

Utilities ($.01 per unit)

Fixed Overhead Expenses are $1100 monthly.

Create a Selling and Administrative Budget

Variable Selling & Administrative Expenses are:

Sales Commissions ($.03 per unit)

Delivery ($.01 per unit)

Office Support ($.02 per unit)

Fixed Selling & Administrative Expenses are $2500 monthly.

Combine all Budgets to Create a Budgeted Income Statement

Complete a Budgeted Income Statement for months 1 through 3, and a Budgeted Income Statement that reflects the total first quarter.

**********TEMPLATE FOR ASSIGNMENT IS BELOW, COPIED FROM EXCEL***********************

Tempo Company's fixed budget (based on sales of 12,000 units) for the first quarter reveals the following.

(1) Compute the total variable cost per unit.
(2) Compute the total fixed costs.
(3) Compute the income from operations for sales volume of 10,000 units.
(4) Compute the income from operations for sales volume of 14,000 units.

Tempo Company's fixed budget (based on sales of 12,000 units) for the first quarter of calendar year 2017 reveals the following.

Complete the following flexible budgets for sales volumes of 10,000, 12,000, and 14,000 units. (Round cost per unit to 2 decimal places.)

Tempo Company's fixed budget (based on sales of 14,000 units) for the first quarter reveals the following.

(1) Compute the total variable cost per unit.

Compute the total variable cost per unit.

(2) Compute the total fixed costs.

Compute the total fixed costs.

(3) Compute the income from operations for sales volume of 12,000 units.

(4) Compute the income from operations for sales volume of 16,000 units.

Tempo Company's fixed budget (based on sales of 14,000 units) for the first quarter reveals the following. Fixed Budget Sales (14,000 units × $207 per unit) $ 2,898,000 Cost of goods sold Direct materials $ 322,000 Direct labor 602,000 Production supplies 364,000 Plant manager salary 122,000 1,410,000 Gross profit 1,488,000 Selling expenses Sales commissions 98,000 Packaging 196,000 Advertising 100,000 394,000 Administrative expenses Administrative salaries 172,000 Depreciation—office equip. 142,000 Insurance 112,000 Office rent 122,000 548,000 Income from operations $ 546,000

(1) Compute the total variable cost per unit.

(2) Compute the total fixed costs.

(3) Compute the income from operations for sales volume of 12,000 units.

(4) Compute the income from operations for sales volume of 16,000 units.