MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

WASATCH MANUFACTURING
Master Budget
For the Quarter Ended March 31

Unit sales
Unit selling price
Total sales Revenue

Sales Budget
December
January
8,444
8,900
$
9.00 $
9.00
$ 76,000 $
80,100

February
9,900
$
9.00
$
89,100

March
9,200
$
9.00
$ 82,800

April
9,500
$
9.00
$ 85,500

March
20,700
66,825
87,525

1st Quarter
$ 63,000
$ 183,900
$ 246,900

March
9,200
1,425
10,625
1,380
9,245

1st Quarter
28,000
1,425
29,425
1,335
28,090

May
8,600
$
9.00
$ 77,400

Wasatch Manufacturing
Cash Collections Budget
For the Quarter Ended March 31

Cash collections (25%)

Credit collections (75%)
Total collections

$
$
$

January
20,025
57,000
77,025

Month
February
$
22,275
$
60,075
$
82,350

$
$
$

Wasatch Manufacturing
Production Budget
For the Quarter Ended March 31

Unit sales
Plus: Desired ending inventory
Total needed
Less: Beginning inventory
Units to produce

January
8,900
1,485
10,385
1,335
9,050

Month
February
9,900
1,380
11,280
1,485
9,795

Wasatch Manufacturing

Chapter 9: The Master Budget

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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Direct Materials Budget

For the Quarter Ended March 31

Units to be produced
Multiply by: Quantity of DM needed per unit (lbs.)
Quantity of DM needed for production (lbs.)
Plus: Desired ending inventory of DM (lbs.)
Total quantity of DM needed (lbs.)
Less: Beginning inventory of DM (lbs.)
Quantity of DM to purchase (lbs.)
Multiply by: Cost per pound
Total cost of DM purchases

Unit sales
Desired End Inventory (15%)
Total Needed
Beginning Inventory
Units to produce
DM needed per unit
DM needed for production
10% of DM

January
9,050
2
18,100
1,959
20,059
1,810
18,249
$
1.50
$
27,374
April
9,500
1,290
10,790
1,380
9,410
2
18,820
1,882

Month
February
9,795
2
19,590
1,849
21,439
1,959
19,480
$
1.50
$
29,220

Chapter 9: The Master Budget

$22,000
$8,212

$30,212

1st Quarter
28,090
2
56,180
1,882
58,062
1,810
56,252
$
1.50
$ 84,378

March

1st Quarter

May
8,600

Wasatch Manufacturing
Cash Payments for Direct Material Purchases Budget
For the Quarter Ended March 31
Month
January
February
December purchases (from A/P balance sheet)
January purchases
February purchases
March purchases
Total cash payments

March
9,245
2
18,490
1,882
20,372
1,849
18,523
$
1.50
$ 27,785

$19,161
$8,766
$27,927

$20,454
$8,335
$28,789

$22,000
$27,374
$29,220
$8,335
$86,929

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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Wasatch Manufacturing
Cash Payments for Direct Labor Budget
For the Quarter Ended March 31
Month
January
February
Units to be produced
(from production budget)
Multiply by: Direct labor hours per unit
Total direct labor hours required
Multiply by: Direct labor rate per hour
Total direct labor costs

8,900
0.03
267
$13
$3,471

9,900
0.03
297
$13
$3,861

March
9,200
0.03
276
$13
$3,588

1st Quarter
28,000
0.03
840
$13
$10,920

Wasatch Manufacturing

Chapter 9: The Master Budget

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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Cash Payments for Manufacturing Overhead Budget

For the Quarter Ended March 31
Month
January
February

March

1st Quarter

Units to be produced
(from production budget)
Variable MOH Costs:
Total Variable Operating Expenses ($1.40 per unit)

12,460

13,860

12,880

39,200

Fixed MOH Costs:

Factory Rent
Other Fixed MOH
Total Fixed MOH

$
$
$

6,500
2,100
8,600

$
$
$

6,500
2,100
8,600

$
$
$

6,500
2,100
8,600

$
$
$

19,500
6,300
25,800

Total cash payments for manufacturing overhead

21,060

22,460

21,480

65,000

8,900

9,900

9,200

Wasatch Manufacturing
Cash Payments for Operating Expenses Budget
For the Quarter Ended March 31
Month
January
February

March

28,000

1st Quarter

Units to be produced
(from sales budget)
Variable Operating Expenses:
Variable Operating Expenses ($1.20 per unit)

10,680

11,880

11,040

33,600

Fixed Operating Expenses:

Fixed Operating Expenses
Total Cash Payments for Operating Expenses

$
$

1,400
12,080

$
$

1,400
13,280

$
$

1,400
12,440

$
$

4,200
37,800

8,900

9,900

9,200

28,000

Combined Cash Budget

Cash Balance, Beginning

Chapter 9: The Master Budget

January
$
6,000

Month
February
$
5,202

March
$
5,224

1st Quarter
$
6,000
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MANAGERIAL ACCOUNTING - Fourth Edition

Plus: Cash Collections
Total Cash Available
Less Cash Payments:
DM Purchases
Direct Labor
Manufacturing Overhead costs
Operating Expenses
Tax Payment
Equipment Purchases
Total Cash Payments
Ending Cash before Financing
Financing:
Borrowings
Repayments
Interest Payments
Total Financing
Cash Balance, Ending

Chapter 9: The Master Budget

Solutions Manual
$
$

77,025
83,025

$
$

82,350
87,552

$
$

87,525
92,749

$ 246,900
$ 252,900

$
$
$
$

30,212
3,471
21,060
12,080

28,789
3,588
21,480
12,440

15,000
81,823
1,202

27,927
3,861
22,460
13,280
10,800
6,000
84,328
3,224

$
$
$
$

$
$
$

$
$
$
$
$
$
$
$

$
$
$

4,000
70,297
22,451

$ 86,929
$ 10,920
$ 65,000
$ 37,800
$ 10,800
$ 25,000
$ 236,449
$ 16,451

4,000

-6000
-150
-6150
16,301

$
$
$
$
$

4000
5,202 $

2000

2000
5,224 $

6,000
(6,000)
(150)
(150)
16,301

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MANAGERIAL ACCOUNTING - Fourth Edition

Solutions Manual

Budgeted Manufacturing Cost per Unit

Direct materials cost per unit: 2lbs x $1.50
Direct labor cost per unit: (0.03 labor hours per unit at $13 per labor hour)
Variable manufacturing costs per unit: $1.20
Fixed manufacturing overhead per unit 2lbs x $0.60 per unit
Cost of manufacturing each unit

$
$
$
$
$

3.00
0.39
1.20
0.60
5.19

Budgeted Income Statement

Sales Revenue
Less: Cost of Goods Sold
Gross Profit
Less: Operating Expenses
Less: Depreciation Expense
Operating Income
Less: Interest Expense
Less: Income Tax Expense @ 28%
Net Income

Chapter 9: The Master Budget

$ 252,000
(145,320)
$ 106,680
$ (37,800)
$
(5,200)
$ 63,680
$ (10,800)
$ (14,806)
$ 38,074

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