Sales Budget:
April: 65,000 units x $10 = $650,000
May: 100,000 units x $10 = $1,000,000
June: 50,000 units x $10 = $500,000
Total Sales: $2,150,000
Production Budget:
Ending Inventory (May): 10,000 units
Total Needs: 240,000 units
Units to Produce: 240,000 units - 10,000 units = 230,000 units
Direct Materials Budget:
Direct Materials Cost per unit: $4
Total Materials Cost: 230,000 units x $4 = $920,000
Direct Labor Budget:
Direct Labor Cost per unit: $2
Total Labor Cost: 230,000 units x $2 = $460,000
Manufacturing Overhead Budget:
Variable Overhead per unit: $1
Fixed Overhead: $50,000 per month
Total Overhead: (230,000 units x $1) + $50,000 = $280,000
Selling and Administrative Expense Budget:
Selling Expenses: $0.50 per unit
Administrative Expenses: $100,000 per month
Total Expenses: (230,000 units x $0.50) + $100,000 = $215,000
Budgeted Income Statement:
Total Sales: $2,150,000
Total Expenses: $1,575,000
Net Income: $575,000
Cash Budget:
Beginning Cash Balance: $100,000
Collections: $2,150,000
Total Cash Available: $2,250,000
Disbursements:
Direct Materials: $920,000
Direct Labor: $460,000
Manufacturing Overhead: $280,000
Selling and Administrative Expenses: $215,000
Total Disbursements: $1,875,000
Ending Cash Balance: $2,250,000 - $1,875,000 = $375,000
Overall, the company is projected to have a net income of $575,000 and an ending cash balance of $375,000 for the next three months. The budgeting process has allowed for a more accurate prediction of sales and expenses, which should help prevent cash shortages and provide a better financial outlook for the company.
Kankee Unlimited a nation wide distributer of law_ cost limitation disgner necklaces ,has an exclusive franchise on the distribution of the nechlaces and sales have grown so rapidly over the past few years that it has become necessary to add new memebers to the management team. To date, the company budgeting practices have been inferoir, and at times the company has expersensied a cash shortage . You have been given responsibilities for all plannig and budgeting . Your first assignment is to prepare a master budget for the next three month , starting april one , you are eager to make a favorable imprssion on the prisedent and have assembled the information below .
The nechlaces are sold to retailers for $10 each . Recent and fo cast sales in units are as follows .
January,(actual)----20,000 june,----50,000
February,(actual)----26,000 july----30,000
march(actual)---40,000 august ---28,000
April ---65,000 september ----25,000
May ---- 100,000
1 answer
1 answer