Master Budget Comprehensive and Supporting Budget

Question: To demonstrate the master budget and all of the supporting budgets, use the data set provide to complete a comprehensive budget problem? Answer: Solution: 1 Cash Collection Budget Particulars January February March Quarter Cash Sales $ 24,000.00 $ 27,600.00 $ 29,700.00 $ 81,300.00 Credit Sales $ 49,000.00 $ 56,000.00 $ 64,400.00 $ 1,69,400.00 Total Cash Collections $ 73,000.00 $ 83,600.00 $ 94,100.00 $ 2,50,700.00 Production Budget Particulars January February March Quarter Unit Sales 8000 9200 9900 27100 Add: Desired Ending Inventory 2300 2475 2425 7200 Total Needed 10300 11675 12325 34300 Less: Beginning Inventory 2000 2300 2475 6775 Units to Produce 8300 9375 9850 27525 Direct Material Budget Particulars January February March Quarter Units to be Produced 8300 9375 9850 27525 x Pounds of DM needed per Unit 2 2 2 2 Quantity(pnds) needed for production 16600 18750 19700 55050 Add: Desired ending inventory of needed 1875 1970 1880 5725 Total quantity(pounds) needed 18475 20720 21580 60775 Less: Beginning inventory of DM 1660 1875 1970 5505 Quantity(pounds) to Purchase 16815 18845 19610 55270 x Cost per Pound $ 2.00 $ 2.00 $ 2.00 $ 2.00 Total cost of DM Purchase $ 33,630.00 $ 37,690.00 $ 39,220.00 $ 1,10,540.00 Cash Payment for Direct Material Budget Particulars January Febuary March Quarter December Purchases (from Account Payables) $ 42,400.00 $ 42,400.00 January Purchases $ 6,726.00 $ 26,904.00 $ 33,630.00 February Purchases $ 7,538.00 $ 7,538.00 $ 15,076.00 March Purchases $ 7,844.00 $ 7,844.00 Total Cash Payments for DM Puchases $ 49,126.00 $ 34,442.00 $ 15,382.00 $ 98,950.00 Cash Paymeny for Conversion Cost budget Particulars January Febuary March Quarter Per Unit Variable Conversion Cost $ 9,960.00 $ 11,250.00 $ 11,820.00 $ 33,030.00 $ 1.20 Rent (fixed) $ 5,000.00 $ 5,000.00 $ 5,000.00 $ 15,000.00 $ 0.54 Other fixed MOH $ 3,000.00 $ 3,000.00 $ 3,000.00 $ 9,000.00 $ 0.33 Total Payment for Conversion Cost $ 17,960.00 $ 19,250.00 $ 19,820.00 $ 57,030.00 $ 2.07 Cash Payments for Operating Expences Budget Particulars January Febuary March Quarter Variable Operating Expenses $ 8,000.00 $ 9,200.00 $ 9,900.00 $ 27,100.00 Fixed Operating Expenses $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 3,000.00 Total Payment for Operating Expenses $ 9,000.00 $ 10,200.00 $ 10,900.00 $ 30,100.00 Combined Cash Budget Particulars January Febuary March Quarter Cash Balance ( Beginning) $ 4,500.00 $ 4,000.00 $ 4,000.00 $ 12,500.00 Add: Cash Collections $ 73,000.00 $ 83,600.00 $ 94,100.00 $ 2,50,700.00 Total Cash Available $ 77,500.00 $ 87,600.00 $ 98,100.00 $ 2,63,200.00 Less: Cash Payments Direct Material Purchases $ 49,126.00 $ 34,442.00 $ 15,382.00 $ 98,950.00 Conversion Cost $ 17,960.00 $ 19,250.00 $ 19,820.00 $ 57,030.00 Operating Expenses $ 9,000.00 $ 10,200.00 $ 10,900.00 $ 30,100.00 Equipment Expenses $ 5,000.00 $ 12,000.00 $ 16,000.00 $ 33,000.00 Tax Payments $ 10,000.00 $ 10,000.00 Total Cash Payments $ 81,086.00 $ 85,892.00 $ 62,102.00 $ 2,29,080.00 Ending Cash Balance before Financing $ (3,586.00) $ 1,708.00 $ 35,998.00 $ 34,120.00 Financing: Borrowings $ 7,586.00 $ 5,708.00 $ 13,294.00 Repayments $ 13,294.00 $ 13,294.00 Interest Payments $ 341.74 $ 341.74 Ending Cash Balance $ 4,000.00 $ 4,000.00 $ 22,362.26 $ 7,190.26 Budgeted Manufacturing Cost per Unit Direct Material C.P.U. $ 4.00 Conversion C.P.U. $ 2.07 Fixed Manufacturing C.P.U. $ 0.80 Budgeted cost of Manufacturing per Unit $ 6.87 Budgeted Income Statement Sales $ 2,71,000.00 Cost of Goods Sold $ 1,86,229.43 Gross Profit $ 84,770.57 Operating Expenses $ 30,100.00 Depreciation $ 4,800.00 Operating Income $ 49,870.57 Less: Interest Expense $ 341.74 Less: Provision for Income Tax $ 10,000.00 Net Income $ 89,399.40 Working Working Cash Collection Budget January February March April May Quarter Cash Sales 24000 27600 29700 29100 25500 135900 Credit Sales 49000 56000 64400 69300 67900 306600 Total Cash Collections 73000 83600 94100 98400 93400 442500 Production Budget January February March April May Quarter Unit Sales 8000 9200 9900 9700 8500 45300 Add: Desired Ending Inventory 2300 2475 2425 2125 7200 Total Needed 10300 11675 12325 11825 8500 52500 Less: Beginning Inventory 2000 2300 2475 2425 2125 6775 Units to Produce 8300 9375 9850 9400 45725 Direct Material Budget January February March April May Quarter Units to be Produced 8300 9375 9850 9400 x Pounds of DM needed per Unit 2 2 2 2 Quantity(pnds) needed for production 16600 18750 19700 18800 Add: Desired ending inventory of needed 937.5 985 Total quantity(pounds) needed Less: Beginning inventory of DM Quantity(pounds) to Purchase x Cost per Pound Total cost of DM Purchase Solution:2 Budgeted Income Statement Particulars May June Sales $ 55,000.00 $ 51,500.00 Cost of Goods Sold $ 17,050.00 $ 24,700.00 Gross Profit $ 37,950.00 $ 26,800.00 Operating Expenses: Salary $ 4,000.00 $ 4,000.00 Depreciation $ 600.00 $ 600.00 Commission $ 5,500.00 $ 5,150.00 Operating Income $ 27,850.00 $ 17,050.00 Non Operating Expenses: Rent $ 3,000.00 $ 3,000.00 Insurance $ 200.00 $ 200.00 Profit before tax $ 24,650.00 $ 13,850.00 Less: Tax $ 5,570.00 $ 3,410.00 Net Profit $ 19,080.00 $ 10,440.00 Working Working April May June July Opening Inventory 14000 24450 25500 Purchases 27500 25750 Closing Inventory 25500 24450 25500 COGS 17050 24700