"creating" business exercises

profileduvungan
background_2.xlsx
Home>Business & Finance homework help>Management homework help> "creating" business exercises

Sales Budget

Rockstar Shrimp plans to sell its shrimp for $10.
Rockstar Shrimp Rockstar Shrimp
4th Quarter Sales Budget - Shrimp (lbs.) Sales Forecast for 2016
October November December 4th Quarter Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Annual
Budgeted Units Sold 2,500 3,000 3,500 9,000 Shrimp (lbs.) 2,250 2,750 3,250 3,500 3,000 2,000 1,500 1,500 1,750 2,500 3,000 3,500 30,500
Budgeted Sales Price x $10.00 $10.00 $10.00 $10.00
Budgeted Sales Revenue = $25,000.00 $30,000.00 $35,000.00 $90,000.00

Production Budget

The Vice President of Operations and the Inventory Manager decide to hold monthly Ending Inventory equal to 10% of the following month's sales.
Rockstar Shrimp is forecasting the same level of sales in January 2015 as in January 2014 — 2,250 bags/lbs. of shrimp.
Rockstar Shrimp
4th Quarter Production Budget - Shrimp (lbs.)
October November December 4th Quarter January February
Budgeted Unit Sales 2,500 3,000 3,500 9,000 2,250 2,750
Budgeted Ending Inventory 300 350 225 225 275
Total Units Required 2,800 3,350 3,725 9,875 2,525
Beginning Inventory 250 300 350 250 225
Budgeted Production 2,550 3,050 3,375 9,625 2,300
October's Budgeted Beginning Inventory is equal to 10% of October's Budgeted Unit Sales.
December's Budgeted Ending Inventory is 10% of January's Budgeted Unit Sales of 2,250 bags/lbs. of shrimp.

Direct Labor Budget

Rockstar Shrimp Activity Direct Labor Hours
4th Quarter Direct Labor Budget - Shrimp (lbs.) Washing 0.02
October November December 4th Quarter Cut 0.02
Budgeted Production 2,550 3,050 3,375 8,975 Separate 0.02
Standard Direct Labor Hours Per Order x 0.1 0.1 0.1 0.1 Cook 0.04
Total Direct Labor Hours Required = 255 305 337.5 897.5 Standard Direct Labor Hours 0.1
Standard Average Wage Rate x $10 $10 $10 $10
Budgeted Direct Labor Cost = $2,550.00 $3,050.00 $3,375.00 $8,975.00 Item Rate
Base Hourly Rate $10.00
Payroll Taxes 0.8
Fringe Benefits  1.00
Standard Direct Labor Rate $11.80

Cost of Goods Sold Budget

The beginning Raw Materials balance is assumed to be $19,250.
The beginning Finished Goods balance is assumed to be $45,840.
Rockstar Shrimp Product Material Description Standard Quantity Standard Price Standard Product Cost
4th Quarter Ending Inventory and Cost of Goods Sold Budget - Shrimp (lbs.) Shrimp Shrimp 1 lb. $6.00 $6.00
Raw Materials Inventory: House Sauce 0.13 $0.50 $0.07
Beginning Inventory $19,250 Lemon 0.2 $0.11 $0.02
Purchases of Direct Materials + 55,259 Bags 1 $0.10 $0.10
Direct Materials Used (Shrimp) $6.19
Budgeted Production 9,625
Standard Materials Cost per Shrimp Order x $6.19 Variable Overhead = 60% x $1 Direct Labor Cost = $0.60
= - $59,578.75 Fixed Overhead = 14.36% x $1 Direct Labor Cost = $0.14
Ending Raw Materials Inventory $14,930 Total Standard Overhead Cost = $0.74
Finished Goods Inventory:
Unit Costs
Direct Materials $6.19
Direct Labor + $1.00
Overhead + $0.74
Total Standard Unit Cost = $7.93
Ending Inventory Units x 225
Ending Finished Goods Inventory = $1,784.25
Cost of Goods Sold:
Beginning Work in Process inventory $0
Direct Materials Used $59,578.75
Direct Labor + 8,975
Manufacturing Overhead + 42,885
Total Manufacturing Cost $111,439
Less: Ending Work in Process Inventory 0
Cost of Goods Manufactured $111,439
Add: Beginning Finished Goods + 45,840
Less: Ending Finished Goods - $1,784
Cost of Goods Sold $155,495

Direct Materials Budget

Rockstar Shrimp is keeping Budgeted Ending Direct Materials Inventory balance of 20 % of the following month's production requirements.
October's Ending Inventory is 20% of November's production needs.
October's Beginning Inventory is 20% of October's production needs.
Rockstar Shrimp Rockstar Shrimp
4th Quarter Materials Purchases Budget - Shrimp (lbs.) 4th Quarter Materials Purchases Budget - Lemons
October November December 4th Quarter January October November December 4th Quarter January
Budgeted Production 2,550 3,050 3,375 9,625 2,250 Budgeted Production 2,550 3,050 3,375 9,625 2,250
Standard Materials Per Unit (lb.) 1 1 1 1 1 Standard Materials Per Unit 0.20 0.20 0.20 0.20 0.20
Production Needs 2,550 3,050 3,375 9,625 2,250 Production Needs 510 610 675 1,925 450
Budgeted Ending Inventory 610 675 460 1,745 Budgeted Ending Inventory 122 135 460 717
Total Materials Required 3,160 3,725 3,835 10,720 Total Materials Required 632 745 1,135 2,642
Beginning Inventory 510 610 675 510 Beginning Inventory 102 122 135 102
Budgeted Materials Purchases 2,650 3,115 3,160 8,925 Budgeted Materials Purchases 530 623 1,000 2,153
Standard Price $6 $6 $6 $6 Standard Price $0.11 $0.11 $0.11 $0.11
Budgeted Purchases Cost $15,900 $18,690 $18,960 $53,550 Budgeted Purchases Cost $58 $69 $110 $237
Rockstar Shrimp Rockstar Shrimp
4th Quarter Materials Purchases Budget 4th Quarter Materials Purchases Budget - House Sauce
October November December 4th Quarter October November December 4th Quarter January
Shrimp (lbs.) $15,900 $18,690 $18,960 $53,550 Budgeted Production 2,550 3,050 3,375 9,625 2,250
Bags $265.00 $311.50 $316.00 $892.50 Standard Materials Per Unit 0.13 0.13 0.13 0.13 0.13
House Sauce $172 $202 $205 $580 Production Needs 332 397 439 1,167 292.50
Lemons $58 $69 $110 $237 Budgeted Ending Inventory 79 88 60 227
Total for Bag of Shrimp $16,396 $19,273 $19,591 $55,259 Total Materials Required 411 484 499 1,394
Beginning Inventory 66 79 88 66
Item Quantity Item (Lemons) Price Budgeted Materials Purchases 344.50 404.95 410.80 1,160.25
Shrimp (lbs.) 1 List Price $0.25 Standard Price $0.50 $0.50 $0.50 $0.50
Bags 1 Quantity Discount -$0.15 Budgeted Purchases Cost $172 $202 $205 $580
Sauce 0.13 Freight $0.01
Lemons 0.2 Standard Price Per Bag $0.11 Rockstar Shrimp
Standard Quantity Per Bag 2.33 4th Quarter Materials Purchases Budget - Bags
Item (House Sauce) Price October November December 4th Quarter January
Item (Shrimp - lbs.) Price List Price $0.70 Budgeted Production 2,550 3,050 3,375 9,625 2,250
List Price $8 Quantity Discount -$0.30 Standard Materials Per Unit 1 1 1 1 1
Quantity Discount -$3.00 Freight $0.10 Production Needs 2,550 3,050 3,375 9,625 2250
Freight $1.00 Standard Price Per Bag $0.50 Budgeted Ending Inventory 610 675 460 1,745
Standard Price Per Bag $6.00 Total Materials Required 3,160 3,725 3,835 10,720
Item (Bags) Price Beginning Inventory 510 610 675 510
List Price $0.10 Budgeted Materials Purchases 2,650 3,115 3,160 8,925
Quantity Discount -$0.01 Standard Price $0.10 $0.10 $0.10 $0.10
Freight $0.01 Budgeted Purchases Cost 265.00 311.50 316.00 892.50
Standard Price Per Bag $0.10

Overhead Budget

Rockstar Shrimp C&C SPORTS
4th Quarter Overhead Budget - Shrimp (lbs.) Budgeted Annual Manufacturing Overhead Costs
October November December 4th Quarter Fixed Costs Variable Costs
Direct Labor Cost $2,550.00 $3,050.00 $3,375.00 $8,975.00 Indirect labor $25,000
Variable Overhead Rate Per DLH dollar x $0.60 $0.60 $0.60 $0.60 Depreciation 18000
Variable Overhead Cost (DL cost x $0.6) = $1,530 $1,830 $2,025 $5,385 Indirect materials 60000 $0.50 per direct labor dollar
Fixed Overhead Cost + $12,500 $12,500 $12,500 $37,500 Rent 24000
Total Budgeted Manufacturing Overhead = $14,030 $14,330 $14,525 $42,885 Utilities 17500 $0.10 per direct labor dollar
Less: Noncash Items Insurance 10800
Depreciation - 1,500 1,500 1,500 4,500 Other 5000
Total Cash Costs = $12,530 $12,830 $13,025 $38,385 Total $160,300 $0.60 per direct labor dollar
Monthly Fixed Overhead Cost equals Annual Fixed Overhead Cost divided by 12.
Monthly Depreciation equals Annual Depriciation divided by 12.
Annual Overhead Costs equals $150,000.
Annual Depreciation is $18,000.

Selling & Admin. Expense Budget

Three of Rockstar Shrimp's Selling expenses are variable.
First, salespeople earn a 5% commission on all sales.
Second, Bad Debt Expense is estimated to be 5% of sales, but it applies only to the shrimp.
Finally, Packing Expenses are estimated to be $0.50 per unit.
The remaining Selling and Administrative expenses are fixed annual amounts:
Office Equipment Depreciation: $18,000
Advertising: $36,000
Administrative Salaries: $115,200
Utilities: $17,500
Since these expenses are incurred evenly throughout the year, we can calculate the monthly budgeted amounts by dividing the fixed annual amount by 12.
Rockstar Shrimp
4th Quarter Selling & Administrative Budget - Shrimp
October November December 4th Quarter
Budgeted Sales Revenue $25,000 $30,000 $35,000 $90,000
Comission Percentage x 0.05 0.05 0.05 0.05
Sales Commissions = $1,250 $1,500 $1,750 $4,500
Bad Debt Expense (Bdg. Sales x 5%) 1,250 1,250 1,250 3,750
Budgeted Sales (Units) 2,500 3,000 3,500 9,000
Packinging Cost Per Unit x $0.50 $0.50 $0.50 $0.50
Shipping = $1,250.00 $1,500.00 $1,750.00 $4,500.00
Office Equipment Depreciation 1,500 1,500 1,500 4,500
Advertising 3,000 3,000 3,000 9,000
Administrative Salaries 9,600 9,600 9,600 28,800
Utilities 1,485 1,485 1,485 4,456
Total Budgeted Expenses $20,585 $21,335 $22,085 $64,006
Less: Noncash Items
Bad Debt Expense - 1,250 1,250 1,250 3,750
Office Equipment Depreciation - 1,500 1,500 1,500 4,500
Total Cash Cost = $17,835 $18,585 $19,335 $55,756