Accounts Management

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BudgetExSection1.xlsx
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Master Budget

Step 1 Sale Budget
Expected sales volume: 3,000 units in the first quarter with 500-unit increases in each succeeding quarter.
Sales price: $60 per unit
Q1 Q2 Q3 Q4
Unit 3000 3500 4000 4500
Selling Price $ 60 $ 60 $ 60 $ 60
Total Revenue $ 180,000 $ 210,000 $ 240,000 $ 270,000
Step 2. Production Budget To meet future sales needs with an ending inventory of 20% of next quarter’s budgeted sales volume.
Budgeted Sale Units
+ Desired Ending 20% Next period
- Beginning Inventory
= Required Production Units
2019 2020 2021
Q4 Q1 Q2 Q3 Q4 Q1
Budgeted Sale 3000 3500 4000 4500 5000
Desired Ending 700 800 900 1000
Total Required Units 3700 4300 4900 5500
Beginning Inventory 600 700 800 900
Required production Unit 3100 3600 4100 4600
Step 3 Direct Material Budget Maintains an ending inventory of raw materials equal to 10% of the next quarter’s production requirements.
Direct Material Production Each Rightride requires 2 pounds and each pound costs at $4
+ Desired Ending DM 1,020 pounds for the fourth quarter of 2017
- Beginning DM Inventory
= Required DM purchase
2016 Curret budget 2017 2018
Direct Materials Budget Q1 Q2 Q3 Q4 Q1
Required production Unit 3100 3600 4100 4600
DM per unit 2 2 2 2
Total Pounds for Production 6200 7200 8200 9200
Desired Ending DM 720 820 920 1020 10%
Beginning DM 620 720 820 920
Required DM purchase 6300 7300 8300 9300
Cost per unit $ 4.00 $ 4.00 $ 4.00 $ 4.00
Total Cost of Purchase $ 25,200 $ 29,200 $ 33,200 $ 37,200
Step 4 Direct Labour Two hours of direct labor are required to produce each unit of finished goods
Hourly wage rate is $10
Q1 Q2 Q3 Q4
Required Production Unit 3100 3600 4100 4600
Direct Labour per Unit 2 2 2 2
Total Required DL 6200 7200 8200 9200 30800
DL Cost per Hour $ 10.00 $ 10.00 $ 10.00 $ 10.00
Total Direct Labor Cost $ 62,000 $ 72,000 $ 82,000 $ 92,000
Step 5 MOH Q1 Q2 Q3 Q4
Variable MOH
Indirect Material $ 6,200 $ 7,200 $ 8,200 $ 9,200 $ 1.00 Per Direct Labour
Indirect Labor $ 8,680 $ 10,080 $ 11,480 $ 12,880 $ 1.40 Per Direct Labour
Utilities $ 2,480 $ 2,880 $ 3,280 $ 3,680 $ 0.40 Per Direct Labour
Maintenance $ 1,240 $ 1,440 $ 1,640 $ 1,840 $ 0.20 Per Direct Labour
Total $ 18,600 $ 21,600 $ 24,600 $ 27,600
Fixed MOH
Supervisory Salaries $ 20,000 $ 20,000 $ 20,000 $ 20,000
Depreciation $ 3,800 $ 3,800 $ 3,800 $ 3,800
Property Taxes and Insurance $ 9,000 $ 9,000 $ 9,000 $ 9,000
Maintenance $ 5,700 $ 5,700 $ 5,700 $ 5,700
Total Fixed Costs $ 38,500 $ 38,500 $ 38,500 $ 38,500
Total MOH $ 57,100 $ 60,100 $ 63,100 $ 66,100 $ 246,400
Total Direct Labor Hour 30800
MOH per Direct Labor Hour $ 8 MOH/DL
Step 6 Operating Expense
Q1 Q2 Q3 Q4
Sales in Units 3000 3500 4000 4500
Variable Expenese
Sales Commissions $ 9,000 $ 10,500 $ 12,000 $ 13,500 $ 3.00 Per Unit
Freight $ 3,000 $ 3,500 $ 4,000 $ 4,500 $ 1.00 Per Unit
Total Variable $ 12,000 $ 14,000 $ 16,000 $ 18,000
Fixed Expenses
Adverising $ 5,000 $ 5,000 $ 5,000 $ 5,000
Salary Sales $ 15,000 $ 15,000 $ 15,000 $ 15,000
Salary Office $ 7,500 $ 7,500 $ 7,500 $ 7,500
Depreciation $ 1,000 $ 1,000 $ 1,000 $ 1,000
Property Taxes and Insurance $ 1,500 $ 1,500 $ 1,500 $ 1,500
Total Fixed $ 30,000 $ 30,000 $ 30,000 $ 30,000
Total S&GA $ 42,000 $ 44,000 $ 46,000 $ 48,000

Budgeted IS

Cost of Goods Sold
Cost per unit
DM 2 pounds $ 4.00 $ 8.00
DL 2 hours $ 10.00 $ 20.00
MOH 2 hours $ 8.00 $ 16.00 MOH allocated by DL
Total Cost per Unit $ 44.00
Q1 Q2 Q3 Q4
Revenue 180000 210000 240000 270000 $ 900,000.00
COGS 132000 154000 176000 198000 $ 660,000.00
Gross Profit 48000 56000 64000 72000 $ 240,000.00
S&GA 42000 44000 46000 48000 $ 180,000.00
Operating Profit 6000 12000 18000 24000 $ 60,000.00
Interest expense 100
Income before Income taxes 6000 12000 17900 24000
Income tax expense 3000 3000 3000 3000
Net Income 3000 9000 14900 21000

Cash Budget

Beginning Cash Balance Contains three sections:
Add: Cash Receipts (from Sales, Other Incomes, Assets disposals) ►Cash Receipts
Total Avaiable Cash ►Cash Disbursements
Less: Cash Disbursement (COGs, Opex) ►Financing
Excess (Deficiency) of Available Cash over Cash Disbursement
Financing (borrowing or repayment)
Ending Cash Balance
$38,000 Given from last year $38,000
Cash Receipt
60% are collected in the quarter
40% are collected in the following quarter
60,000 at December 31, 2016 be collected in full in the first quarter of 2017
Short-term investments are expected to be sold for $2,000 cash in the first quarter
15,000 Given by Management Cash Disbursment
Sales 50% are paid in the quarter purchased and 50% are paid in the following quarter
Schedule of Collection 2019 Q1 Q2 Q3 Q4 Q1 Accounts payable of $10,600 at December 31, 2016, are expected to be paid in full in the first quarter of 2017
Account Receivable 60000 60000 100% is paid in the quarter incurred. Direct Labour
First Quarter 180000 108000 72000 MOH and SGA are paid in the quarter except depreciation
Second Quarter 210000 126000 84000 Capital Expenditure
Third Quarter 240000 144000 96000 purchase a truck in the second quarter for $10,000 cash
Fourth Quarter 270000 162000 108000 AR Hayes makes equal quarterly payments of its estimated $12,000 annual income taxes
Total Collections 900000 168000 198000 228000 258000 Loans are repaid in the earliest quarter in which there is sufficient cash (that is, when the cash on hand exceeds the $15,000 minimum required balance
Purchase
Schedule of Payments Q1 Q2 Q3 Q4 Q1
Account Payable 10600 10600
First Quarter 25200 12600 12600
Second Quarter 29200 14600 14600
Third Quarter 33200 16600 16600
Fourth Quarter 37200 18600 18600 AP
Total Payment 124800 23200 27200 31200 35200
Q1 Q2 Q3 Q4
Beginning Cash Balace 38000 25500 15000 19400
Add: Cash Receipts
Collections from Customers 168000 198000 228000 258000
Sale of Investment Given 2000
Total Receipts 170000 198000 228000 258000
Total Avaiable Cash 208000 223500 243000 277400
Less: Cash Disbursement
Direct Materials 23200 27200 31200 35200
Direct Labour 62000 72000 82000 92000
MOH 53300 56300 59300 62300 not including depreication Total MOH - Depreciation "= Total MOH + Depreciation"
S&GA 41000 43000 45000 47000 not including depreication Total S&GA - Depreciation
Purchase of Truck Given 10000
Income Tax Expense Given 3000 3000 3000 3000 12,000/4
Total Disbursements 182500 211500 220500 239500
Excess (Deficiency) of Available Cash over Cash Disbursement 25500 12000 22500 37900 15,000 minium requirement
Financing (borrowing or repayment)
Borrowing 3000 15000 - 12000
Repayment 3100 paid back the loan plus interest expense
Ending Cash Balance 25500 15000 19400 37900 Cash BS
Interest Expense
(P*r%/12)*3
3000 borrowing as loan
Interest 10%
101.25 Interest expense for 3 months