a.

Budgeted sales are

2 comma 0002,000

youth bats and

2 comma 8002,800

adult bats.

b.

Finished Goods Inventory on

DecemberDecember

3131

consists of

250250

youth bats at

$ 18$18

each and

520520

adult bats at

$ 17$17

each.

c.

Desired ending Finished Goods Inventory is

350350

youth bats and

400400

adult​bats; FIFO inventory costing method is used.

d.

Direct materials cost is

$ 9$9

per youth bat and

$ 5$5

per adult bat.

e.

Desired ending Raw Materials Inventory is

$ 11 comma 000$11,000

​(indirect materials are insignificant and not considered for budgeting​ purposes).

f.

Each bat requires

0.40.4

hours of direct​ labor; direct labor costs average

$ 16$16

per hour.

g.

Variable manufacturing overhead is

$ 0.80$0.80

per bat.

h.

Fixed manufacturing overhead includes

$ 1 comma 000$1,000

per quarter in depreciation and

$ 10 comma 472$10,472

per quarter for other​ costs, such as insurance and property taxes.

i.

Fixed selling and administrative expenses include

$ 10 comma 000$10,000

per quarter for​salaries;

$ 1 comma 500$1,500

per quarter for​ rent;

$ 1 comma 300$1,300

per quarter for​ insurance; and

$ 400$400

per quarter for depreciation.

j.

Variable selling and administrative expenses include supplies at

44​%

of sales.

Requirement 4. Prepare

PuckettPuckett​'s

cost of goods sold budget for the first quarter of

20172017.

Before preparing the cost of goods sold​ budget, calculate the projected manufacturing cost per bat for

20172017.

​(Round all amounts to the nearest​ cent.)

	Youth Bats	Adult Bats
Direct materials cost per bat	$9.00	$5.00
Direct labor cost per bat	6.40	6.40
Manufacturing overhead cost per bat	3.20	3.20
Total projected manufacturing cost per bat for 2017	$18.60	$14.60

Now prepare the cost of goods sold budget.

Review the sales budget you prepared above.

LOADING...

Review the production budget you prepared above.

LOADING...

Puckett Batting Company
Cost of Goods Sold Budget
For the Quarter Ended March 31, 2017
	Youth	Adult
	Bats	Bats	Total
Beginning inventory	$4,500	$8,840	$13,340
Bats produced and sold in 1st quarter of 2017
Total budgeted cost of goods sold

The Cold Mountain Furnace Company is a retail store with locations across the eastern United States. The company’s projected income statement for its first year of operations, which ends December 31, 2018, and its projected balance sheet as of December 31, 2018, are shown below:

Sales	$ 4,000,000
Cost of Goods Sold	2,300,000
Gross Margin	1,700,000
Selling and Administrative Expenses	800,000
Net Income	$    900,000

Cash	$   660,000
Accounts receivable	150,000
Inventory	400,000
Property, plant, and equip. (net of accum. deprec.)	200,000
Total assets	$1,410,000
Accounts payable	$   110,000
Common stock	400,000
Retained earnings	900,000
Total liabilities and owner’s equity	$1,410,000

The company is currently forecasting its 2019 operational year. Anticipated Projections for 2019 follow (continues onto next page):

Budgeted Sales
First quarter	$1,050,000
Second quarter	$1,100,000
Third quarter	$1,150,000
Fourth quarter	$1,100,000

All sales are made on credit. Sales are collected in two portions, consisting of 85% in the quarter of the sale and 15% in the quarter following the sale. All of the accounts receivable as of December 31, 2018, will relate to sales in the fourth quarter of 2018.

The cost of goods sold is expected to increase to 60% of sales in 2019. Inventory is purchased in the quarter of expected sale. 80% of inventory purchases are paid for in the quarter of purchase and 20% are paid for in the quarter following purchase. Safety stock is maintained at all times.

The accounts payable balance as of December 31, 2018, will relate to inventory purchases made in the fourth quarter of 2018.

Selling and administrative costs are expected to increase to $225,000 per quarter in 2019. Of this quarterly amount, $10,000 is depreciation expense of the property, plant, and equipment.

The inventory balance at the end of 2019 is expected to be $400,000.

Required:

Prepare the Cold Mountain Furnace Company’s projected Income Statement and Balance Sheet for each quarterly reporting period of 2019. In addition, prepare the company’s projected Income Statement and Statement of Cash Flows for the full year of 2019. Assume that the company is not subject to federal, state, or local income tax.

GIVE A RESPONSE T THIS:

     There are four components (variables) of aggregate demand, but in my opinion investment is the most important component in improving GDP growth. Investment is deemed as the expenditure on capital goods – for example, new machines, offices, new technology. Investment is the second of the four components of aggregate demand, it is the spending by firms on capital, not households. However, it is said that investment is also the most volatile component of AD. An increase in investment shifts AD to the right in the short run and helps improve the quality and quantity of factors of production in the long run. The factors of production are land, labour, capital, and entrepreneurship. They are the inputs needed for supply. Mainly, the factors of production consist of any resource that is used in the creation of a good or service.      There are four components (variables) of aggregate demand, but in my opinion investment is the most important component in improving GDP growth. Investment is deemed as the expenditure on capital goods – for example, new machines, offices, new technology. Investment is the second of the four components of aggregate demand, it is the spending by firms on capital, not households. However, it is said that investment is also the most volatile component of AD. An increase in investment shifts AD to the right in the short run and helps improve the quality and quantity of factors of production in the long run. The factors of production are land, labour, capital, and entrepreneurship. They are the inputs needed for supply. Mainly, the factors of production consist of any resource that is used in the creation of a good or service.

Which of the following statements in relation to GST adjustments is most correct? Select one:

1. If an entity registered for GST on a quarterly basis purchased an item for $8800 in the September 2018 quarter, the last adjustment period will be September 2023

. 2. If an entity which is registered for GST on a quarterly basis purchased an item for $2200 in the December 2018 quarter, the first adjustment period will be June 2019.

3. A decreasing adjustment under Division 129 means that extra GST is liable to be paid.

4. If you claimed a partial input tax credit to take into account some non-creditable use, then no adjustments are required to be made.

5. If an entity which is registered for GST on a quarterly basis purchased an item for $2200 in December 2018 quarter, the first adjustment period will be December 2020.

Understanding Relationships, Master Budget, Comprehensive Review

Optima Company is a high-technology organization that produces a mass-storage system. The design of Optima's system is unique and represents a breakthrough in the industry. The units Optima produces combine positive features of both compact and hard disks. The company is completing its fifth year of operations and is preparing to build its master budget for the coming year (20X1). The budget will detail each quarter's activity and the activity for the year in total. The master budget will be based on the following information:

Fourth-quarter sales for 20X0 are 55,000 units.

Unit sales by quarter (for 20X1) are projected as follows:

First quarter	65,000
Second quarter	70,000
Third quarter	75,000
Fourth quarter	90,000

The selling price is $400 per unit. All sales are credit sales. Optima collects 85% of all sales within the quarter in which they are realized; the other 15% is collected in the following quarter. There are no bad debts.There is no beginning inventory of finished goods. Optima is planning the following ending finished goods inventories for each quarter:

First quarter	13,000 units
Second quarter	15,000 units
Third quarter	20,000 units
Fourth quarter	10,000 units

Each mass-storage unit uses 5 hours of direct labor and three units of direct materials. Laborers are paid $10 per hour, and one unit of direct materials costs $80.

There are 65,700 units of direct materials in beginning inventory as of January 1, 20X1. At the end of each quarter, Optima plans to have 30% of the direct materials needed for next quarter's unit sales. Optima will end the year with the same amount of direct materials found in this year's beginning inventory.

Optima buys direct materials on account. Half of the purchases are paid for in the quarter of acquisition, and the remaining half are paid for in the following quarter. Wages and salaries are paid on the 15th and 30th of each month.

Fixed overhead totals $1 million each quarter. Of this total, $350,000 represents depreciation. All other fixed expenses are paid for in cash in the quarter incurred. The fixed overhead rate is computed by dividing the year's total fixed overhead by the year's budgeted production in units.

Variable overhead is budgeted at $6 per direct labor hour. All variable overhead expenses are paid for in the quarter incurred.

Fixed selling and administrative expenses total $250,000 per quarter, including $50,000 depreciation.

Variable selling and administrative expenses are budgeted at $10 per unit sold. All selling and administrative expenses are paid for in the quarter incurred.

The balance sheet as of December 31, 20X0, is as follows:

Assets
Cash			$ 250,000
Direct materials inventory			5,256,000
Accounts receivable			3,300,000
Plant and equipment, net			33,500,000
Total assets			$42,306,000

Liabilities and Stockholders’ Equity
Accounts payable			$ 7,248,000*
Capital stock			27,000,000
Retained earnings			8,058,000
Total liabilities and stockholders’ equity			$42,306,000
* For purchase of direct materials only.

Optima will pay quarterly dividends of $300,000. At the end of the fourth quarter, $2 million of equipment will be purchased.

REQUIRED

1) Direct Materials Purchases Budget (in thousands, except for per unit/hour data) If required, round answers to one decimal place.

Optima Company Direct Materials Purchases Budget For the Year Ending December 31, 20X1

	qtr 1	qtr2	qtr 3	qtr 4	total
production	78	72	80	80	310
Materials/unit	3	3	3	3	3
Production needs	234	216	240	240	930
Desired ending inventory
Total needs
Less: Beginning inventory
Purchases
Cost per unit	80	80	80	80	80
Purchase cost					74,400

2) Cost of goods sold budget (Note: Assume that there is no change in work-in-process inventories.) Enter amounts in full, not in thousands. If an amount is zero, enter "0".

Optima Company Cost of Goods Sold Budget For the Year Ending December 31, 20X1

direct materials used
direct labor ussed	15,500,000
overhead	13,300,000
Budgeted manufacturing costs
Add: Beginning finished goods inventory	0
Cost of goods available for sale
Less: Ending finished goods inventory	3,329,000
Budgeted cost of goods sold

3)Cash Budget (in thousands)

Optima Company Cash Budget For the Year Ending December 31, 20X1

	qtr 1	qtr 2	qtr 3	qtr 4	total
Beginning cash bal.	250				250
Credit sales: Currentquarter
prior quarter
cash available
Less disbursements: Direct materials: Current quarter
prior quarter
direct labor
overhead
selling and admin.
dividends
euipment
total cash needs	0	0	0
ending cash

4) Pro forma income statement (using absorption costing). Enter amounts in full, not in thousands.(Note: Ignore income taxes.)

sales	120,000,000
less: cost of goods sold
gross margin
less: selling and adm expenses	4,000,000
income before taxes

5). Pro forma balance sheet. Enter amounts in full, not in thousands. List all assets and liabilities in order of liquidity. (Note: Ignore income taxes.)

cash
accounts receivable	5,400,000
DIRECT MATERIALS INVENTORY	5,256,000
finished goods inventory
plant equipment	33,900,000
total assest
Liabilities and stockholders' equity Accounts payble
capital stock	27,000,000
retained earnings
Total liabilities and stockholders' equity

1) Which of the following would increase GDP?

a. More people walk to work rather than drive cars.

b. Consumers in rural areas switch from buying home heating oil to burning wood they collect on their own land.

c. Farm families grow more for themselves than for the market.

d. Neither the price nor the quantity of television sets changes, but the quality of sets improves.

e. The amount spent on vacuum cleaners does not change, but quality decreases so much that more is spent on their repair.

2) An increase in the demand for peanut butter could be caused by a(n)

a. decrease in consumer income
b.		increase in the supply of peanut butter
c.		decrease in the price of bread
d.		drought in Georgia that destroyed 30 percent of the peanut crop
e		decrease in the price of bologna

3) A surplus of shoes will cause

a. decrease in the supply of shoes
b.		a decrease in the demand for shoes
c.		both a decrease in the supply of shoes and an increase in the demand for shoes
d.		a decrease in the price of shoes, through a shift of either the supply curve or the demand curve
e.		a decrease in the price of shoes

4) One explanation for the negative slope of the aggregate demand curve is that

a. as prices rise, nominal income falls and so does the demand for real goods and services

b .falling prices make people feel poorer and reduce spending

c. as prices rise, government spends less to drive the price level back down

d. businesses increase spending when inflation is high and rising

e. as prices rise, domestic goods become more expensive relative to foreign goods, which reduces exports

Bobcat Printing makes custom t---shirts and other promotional products for student

organizations and businesses. It is beginning its first year of operations and needs to

plan for its first quarter of operations. They would like to maximize their profits, and

understand that accurate budgeting can help achieve that goal. The budgets will be

prepared based on the following information:

a. Sales are budgeted at $20,000 for Month 1, $25,000 for Month 2, and $27,000 for

Month 3. All sales will be done on account. Company does not expect to have any

cash sales.

b. Sales are collected 60% in the month of the sale, and 40% in the month following

the sale.

c. Cost of Goods Sold is budgeted at 45% of Sales

d. Monthly selling, general, and administrative expenses are as follows: donations are

10% of sales; advertising is 3% of sales; miscellaneous is 1% of sales; and rent is

$5,000 per month. All SG&A expenses are paid in the month they are incurred.

e. Since all of the orders are custom made, no inventory is kept on hand at the end of the month.

f. Inventory purchases are paid in full in the month following the purchase.

g. BobcatPrinting is planning to purchase a building in Month 3 for $6,000 in cash.

h. They would like to maintain a minimum cash balance of $2,500 at the end of each month.

The company has an agreement with a local bank that allows them to borrow, with a total line of credit of $20,000. The interest rate on these loans is 1% per month (12%annual).The would as far as able, repay the loan on the last day of the month when it has enough cash to pay the full balance and maintain an adequate ending cash balance.

i. The owner makes a draw of $3,000 every month. (Note: sole proprietors and

partnerships take owner’s draws, while stockholders receive dividends). Based upon

the information provided, complete the operating budgets provided in the excel

template, and answer the questions in TRACS. When making calculations always

round up (for example: 33 × 7% = 2.31, round up to 3.00).

Check Figures:

Gross Margin $39,600

Total assets $19,300

Ending Retained Earnings $5,507

1. Which budget must be completed before other budgets can be created?

A. The Cash Budget

B. The Sales Budget

C. The SG&A Budget

D. The Pro Forma Financial Statements

2. What is the total projected sales for the first quarter of operations?

A. $20,000

B. $45,000

C. $72,000

D. $61,200

3. How much cash does Bobcat Printing expect to collect in the first quarter of operations?

A. $26,200

B. $43,200

C. $72,000

D. $61,200

4. To what can we attribute the difference between projected total sales and projected cash received in the first quarter of operations?

A. An allowance for doubtful accounts is used because with credit sales, some customers may not make payment.

B. Bobcat Printing pays it liabilities 30 days after purchase.

C. The Conservatism Concept requires us to understate total assets and understate expenses.

D. Bobcat Printing collects part of its sales one month after the original sale.

5. What are budgeted cash payments for inventory purchases in the first quarter of operations?

A. $11,250

B. $36,000

C. $20,250

D. $32,400

6. What is the total budgeted Cost of Goods Sold for the first quarter of operations?

A. $28,600

B. $12,150

C. $20,250

D. $32,400

7. To what can we attribute the difference between budgeted cost of goods sold and projected cash payments for inventory in the first quarter of operations?

A. Bobcat Printing sells its inventory in the month of purchase, and pays for its inventory one month following purchase.

B. Customers do not pay for the goods it purchases until 30 days after the date of purchase.

C. Due to the Matching Concept, cash sales require payments for inventory in the month they occur.

D. There is no difference between the cost of goods sold and cash payments.

8. What is another name for cost of goods sold?

A. Period cost

B. Capitalize cost

C. Overhead cost

D. Product cost

9. What is the total budgeted SG&A expense for the quarter?

A. $13,440

B. $25,080

C. $7,000

D. $8,780

10. What is the total projected cash payments for SG&A expense?

A. $15,000

B. $7,000

C. $25,080

D. $8,780

11. Are there A/R cash collections during the first month of the Sales Budget?

A. There should be A/R cash collections for the first month of the Sales budget.

B. None of the above are true.

C. It is the first month of operations, so there are no prior credit sales.

D. Due to the cash method, cash collections from A/R do not begin until the second month of the quarter.

12. What is the projected beginning cash balance for Month 1?

A. $0

B. $7,500

C. $300

D. $2,500

13. What is the projected ending cash balance for Month 1?

A. $2,500

B. $1,100

C. $8,000

D. None of the above.

14. Will Bobcat Printing need to borrow money in Month 1?

A. Yes

B. No

15. If you answered "Yes" that Bobcat Printing had to borrow money in the first month, how much money will it need to borrow to ensure it does not have a cash shortage?

A. Bobcat Printing does not borrow in the first month.

B. $1,800

C. $500

D. $1,300

16. If Bobcat Printing borrowed money in Month 1, what is the projected interest expense it will incur for borrowing the money?

A. $130

B. Bobcat Printing will not have interest because it does not need to borrow money in Month 1.

C. $13

D. $170

E. $14

17. Bobcat Printing will have a cash surplus in Month 2.

True

False

18. If Bobcat Printing has a projected cash surplus in Month 2, how much cash will it repay for borrowing on its line of credit?

Bobcat Printing will not have a cash surplus, therefore it will need to borrow more money in

Month 2.

B. $1,100

C. $1,300

D. $1,800

19. Bobcat Printing will have cash shortage in Month 3.

True

False

20. Bobcat Printing will need to borrow money in Month 3.

True

False

21. How much will Bobcat Printing borrow in Month 3?

A. $1,643

B. $1,300

C. Bobcat Printing will not have a projected cash shortage in Month 3, thus it will not borrow money

D. $2,500

22. What is the projected gross profit for the first quarter of operations?

A. $14,507

B. $29,300

C. $57,900

D. $39,600

23. What is the projected interest expense for the first quarter of operations?

A. $34

B. $170

C. $13

D. $19

24. What is the projected net income the first quarter of operations?

A. $7,650

B. $14,507

C. $13,200

D. $23,373

25. What is the projected beginning capital investment for the first quarter of operations?

A. $0

B. Cannot be determined

C. $3,985

D. $1,500

26. What is the projected total owner's equity for the first quarter of operations?

A. $14,507

B. $5,507

C. $2,973

D. $12,000

27. What is the projected ending cash balance for the first quarter of operations?

A. $12,846

B. $3,846

C. $2,500

D. $0

28. What is the projected accounts receivables balance for the first quarter of operations?

A. $10,800

B. $27,000

C. $12,000

D. $13,500

29. What is the projected account payable for the first quarter of operations?

A. $20,250

B. $12,150

C. $0

D. $9,100

30. What is the projected interest payable for the first quarter of operations?

A. $34

B. $19

C. $13

D. $0

31. What is the projected net cash flow from operating activities for the first quarter of operations?

A. $12,000

B. $22,800

C. $10,800

D. $15,857

32. What is the projected net cash flow for investing activities for the first quarter of operations?

A. $6,000

B. ($9,000)

C. $9,000

D. ($6,000)

33. What is the projected cash flow from financing activities for the first quarter of operations?

A. ($2,500)

B. $9,000

C. ($7,357)

D. $7,357

E. ($9,000

Milden Company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. As an aid in planning, the company has decided to start using a contribution format income statement. To have data to prepare such a statement, the company has analyzed its expenses and has developed the following cost formulas:

Cost	Cost Formula
Cost of good sold	$26 per unit sold
Advertising expense	$183,000 per quarter
Sales commissions	7% of sales
Shipping expense	?
Administrative salaries	$93,000 per quarter
Insurance expense	$10,300 per quarter
Depreciation expense	$63,000 per quarter

Management has concluded that shipping expense is a mixed cost, containing both variable and fixed cost elements. Units sold and the related shipping expense over the last eight quarters follow:

Quarter	Units Sold	Shipping Expense
Year 1:
First	29,000	$	173,000
Second	31,000	$	188,000
Third	36,000	$	230,000
Fourth	32,000	$	193,000
Year 2:
First	30,000	$	183,000
Second	33,000	$	198,000
Third	47,000	$	245,000
Fourth	44,000	$	221,000

Milden Company’s president would like a cost formula derived for shipping expense so that a budgeted contribution format income statement can be prepared for the next quarter.

2. In the first quarter of Year 3, the company plans to sell 35,000 units at a selling price of $56 per unit. Prepare a contribution format income statement for the quarter. (Do not round your intermediate calculations.)

Milden Company
Budgeted Contribution Format Income Statement
For the First Quarter, Year 3
Sales		$1,960,000
Variable expenses:
Cost of goods sold	$910,000
Sales commissions
Shipping expense
Total variable expenses		910,000
Contribution margin		1,050,000
Fixed expenses:
Total fixed expenses		0
Net operating income		$1,050,000

1. The following is the sales forecast of Mazon Corporation which makes and sells a product called a Minitab for the upcoming fiscal year:

	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
Budgeted unit sales	23,000	15,000	10,000	25,000

Past experience has shown that the ending inventory for each quarter is equal to 10% of the next quarter’s sales in units. The company expect to start the first quarter with 4,000 units. The desired ending finished goods inventory at the end of 4^th Quarter is 3,000 units.

One Minitab requires 3.5 kilograms of the raw material Jurislon. The company wants to maintain monthly ending inventories of Jurislon equal to 20% of the following month's production needs. The beginning inventory of Jurislon on hand is 6,900 kilograms and the desire ending Jurislon for the 4^th Quarter is 4,500 kilograms. The cost of Jurislon is $2.00 per kilogram.

Required: [13 Marks]

1. Prepare a production budget for the year showing number of units to be produced each quarter and for the year in total.   
2. Prepare direct materials budget by quarter and for the year in total. At the bottom of your budget, show the dollar amount of purchases for each quarter and for the year in total.

A- ABC company has two divisions--Women and Men. The divisions have the following revenues and expenses:

	Women			Men
Sales	$	500,000		$	550,000
Variable costs		200,000			275,000
Traceable fixed costs		150,000			180,000
Allocated common corporate costs		135,000			170,000
Net income (loss)	$	15,000		$	(75,000)

The management of ABC is considering the elimination of the Men Division. If the Men Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by this decision.

Required:

Should the Company drop Men division? Explain. Support you answer with the necessary calculations.                                                                                                                    (7.5 marks)

B- XYZ Company manufactures and sell wooden product. It wants to prepare cash budget for the second quarter of the year. The company’s sales budget for the second quarter given below:

	April	May	June	Total
Budgeted Credit Sales	$470,000	$670,000	$230,000	$1,370,000

  - Credit sales are collected as follows:

25% in the same month of sale, 65% in the month following sale, and 10% in the second month following sale

- February sales totaled $400,000, and March sales totaled $430,000.

Required:

1. Prepare the cash collection schedule for the second quarter.

2. What is the accounts receivable balance on June 30th?                                              

C- ABC Corporation has estimated the following information for first quarter of 2020 for one of its products:

	January	February	March
Units to be produced	128,000	140,000	152,000
Desired ending inventory of finished goods	30,000	36,000	38,000

The ending inventory at December 2019 was 28,000 units.

Required:

Prepare the Production Budget and the Sales Budget for the first quarter of 2020, assuming selling price per unit is $20.

D- The following information has been take from a manufacturing company for the year 2019:

Sales revenues 36,000 – opening inventory of materials 10,000 – closing inventory of materials 8,000 – opening inventory of finished goods 6,000 – closing inventory of finished goods 4,000 – cost of goods produced 26,000

Required: Calculate cost of goods sold and gross profit for the year ended December 31, 2019.