| Module 4 - Course Budget Project |
| | Your Company begins the budgeting process for the following year in the 1st quarter of the current year. With the information provided below, prepare the sales, production and direct materials budgets for the 1st quarter of 2013. Also determine the budgeted manufacturing cost per unit and prepare the budgeted income statement for January 2013. |
| | Your Company sells the widgets they manufacture to various retailers for $130 each. Each widget requires 11 ounces of raw material, which is purchased by Your Company for $8.00 per ounce. To prepare for next month's production, Your Company likes to maintain an ending stock of raw material equal to 10% of the production requirements. The company would also like to maintain an ending stock of finished widgets equal to 20% of next month's sales. |
| | Sales are projected to be 6,000 for January, 8,000 for February and 14,000 for March. |
| | Your Company expects to sell 12,000 widgets in April and needs 132,000 ounces of direct materials for production. |
| | 15% of sales from Your Company to retailers are cash sales, while the remaining 85% are sold on account. |
| | Additional budgeted information includes: |
| | | Month | | | 1st
Quarter |
| | 2013 | January | February | March |
| | Direct labor | $ 22,500 | $ 30,000 | $ 52,500 | $ 105,000 |
| | Manufacturing overhead: |
| | Variable | $ 27,000 | $ 36,000 | $ 63,000 | $ 126,000 |
| | Fixed 1 | $ 41,000 | $ 41,000 | $ 41,000 | $ 123,000 |
| | Total operating expenses 2 | $ 71,000 | $ 74,000 | $ 95,000 | $ 240,000 |
| | Each widget requires 0.25 of an hour of direct labor at the rate of $15.00. |
| | Your Company estimated at the beginning of the year that it would sell 307,500 widgets during 2013. |
| | Interest expense is budgeted at zero since the company has no outstanding debt. |
| | Income tax expense is budgeted at 35% of income before taxes. |
| 1 | Prepare the 2013 sales budget for the 1st quarter for Your Company. |
| | Your Company |
| | 2013 Sales Budget |
| | For the Quarter Ended March 31 |
| | | Month | | | 1st
Quarter |
| | | January | February | March |
| | Unit sales |
| | Unit selling price |
| | Total sales revenue |
| | Type of Sale |
| | Cash sales |
| | Credit sales |
| | Total sales revenue |
| 2 | Prepare the 2013 production budget for the 1st quarter for Your Company. |
| | Your Company |
| | 2013 Production Budget |
| | For the Quarter Ended March 31 |
| | | Month | | | 1st
Quarter |
| | | January | February | March |
| | Unit sales |
| | Plus: Desired ending inventory |
| | Total needed |
| | Less: Beginning inventory |
| | Units to produce |
| 3 | Prepare the 2013 direct materials budget for the 1st quarter for Your Company. |
| | Your Company |
| | 2013 Direct Materials Budget |
| | For the Quarter Ended March 31 |
| | | Month | | | 1st
Quarter |
| | | January | February | March |
| | Units to be produced |
| | x Ounces of direct materials needed per unit |
| | Ounces needed for production |
| | Plus: Desired ending inventory of direct materials |
| | Total ounces needed |
| | Less: Beginning inventory of direct materials |
| | Ounces to purchase |
| | x Cost per ounce |
| | Total cost of direct materials purchases |
| 4 | Prepare the January 2013 budgeted manufacturing cost per unit for Your Company. |
| | Your Company |
| | Budgeted Manufacturing Cost per Unit |
| | January 2013 |
| | Direct materials |
| | Direct labor |
| | Manufacturing overhead: |
| | Variable |
| | Fixed | | hint: you must take into account total annualized fixed costs in relation to total expected units for the year |
| | Cost of manufacturing each widget |
| 5 | Prepare the 2013 budgeted income statement for the month ended January 31 for Your Company. |
| | Your Company |
| | 2013 Budgeted Income Statement |
| | For the month ended January 31 |
| | Sales Revenue |
| | Less: Cost of goods sold |
| | Gross profit |
| | Less: Operating expenses |
| | Operating income |
| | Less: Interest expense |
| | Less: Income tax expense |
| | Net income |
milkywayTime
week_4_project.xlsx
