Introduction

to Management Accounting Solutions Manual

WASATCH MANUFACTURING
Master Budget
Sales Budget
December January February
Unit sales 5,067 5,340 5,940
Unit selling price $ 15 $ 15 $ 15
Total sales Revenue $ 76,000 $ 80,100 $ 89,100

Req. 1

Cash Collections Budget

January February March
Cash sales $24,030 $26,730 $24,840
Credit sales $ 53,200.00 $ 56,070.00 $ 62,370.00
Total collections $77,230 $82,800 $87,210

Req. 2

Production Budget
January February March
Unit sales 5,340 5,940 5,520
Plus: Desired ending inventory 594 552 570
Total needed 5,934 6,492 6,090
Less: Beginning inventory 534 594 552
Units to produce 5,400 5,898 5,538

Req. 3

Direct Materials Budget

January February March
Units to be produced 5,400 5,898 5,538
Multiply by: Quantity of DM needed per unit 2 2 2
Quantity of DM needed for production 10,800 11,796 11,076
Plus: Desired ending inventory of DM 2,359 2,215 2,258
Total quantity of DM needed 13,159 14,011 13,334
Less: Beginning inventory of DM 2,160 2,359 2,215
Quantity of DM to purchase 10,999 11,652 11,119
Multiply by: Cost per pound $ 1.50 $ 1.50 $ 1.50
Total cost of DM purchases $16,499 $17,478 $16,679

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April May
Unit Sales 5,700 5,160
Plus: Desired End Inventory 516
Total Needed 6,216
Less: Beginning Inventory 570
Units to produce 5,646
DM needed per unit 2
Quantity of DM needed for production 11,292

Req. 4

Cash Payments for Direct Material Purchases Budget

January February March
December purchases (From AP) $43,000
January purchases $3,300 $13,199
February purchases $3,496 $13,982
March purchases $3,336
Total disbursements $46,300 $16,695 $17,318

Req. 5

Cash Payments for Direct Labor Costs

January February March
Direct Labor $5,400 $5,898 $5,538

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Req. 6

Cash Payments for Manufacturing Overhead Budget

January February March
Rent (fixed) $6,500 $6,500 $6,500
Other MOH (fixed) $2,900 $2,900 $2,900
Variable manufacturing overhead $ 7,560 $ 8,257 $ 7,753
Total disbursements $16,960 $17,657 $17,153

Req. 7

Cash Payments for Operating Expenses Budget

January February March
Variable operating expenses $ 6,408 $ 7,128 $ 6,624
Fixed operating expenses $ 1,400 $ 1,400 $ 1,400
Total disbursements $7,808 $8,528 $8,024

Req. 8

Combined Cash Budget

January February March
Cash balance, beginning $4,460 $4,422 $5,594
Plus: cash collections (req. 1) 77,230 82,800 87,210
Total cash available 81,690 87,222 92,804
Less cash payments:
DM purchases (req. 4) 46,300 16,695 17,318
Direct labor (req. 5) 5,400 5,898 5,538
MOH costs (req 6) 16,960 17,657 17,153
Operating expenses (req 7) 7,808 8,528 8,024
Tax payment 10,000
Equipment purchases 5,800 11,600 15,800
Total cash payments 82,268 70,378 63,833
Ending cash before financing -578 16,844 28,971
Financing:
Borrowings 5,000
Repayments -5000
Interest -6250
Total financing 5,000 -11,250 0
Cash balance, ending $4,422 $5,594 $28,971

Req. 9

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Budgeted Manufacturing Cost per Unit

Direct materials cost per unit $3.00
Direct labor cost per unit $13.00
Variable MOH cost per unit $1.20
Fixed MOH per unit (given in problem) $1.40
Cost of manufacturing each unit $18.60

Req. 10

Damon Manufacturing
Budgeted Income Statement
For the Quarter Ended March 31
Sales $ 252,000
Cost of goods sold -312,480
Gross profit -60,480
Operating expenses 24,360
Depreciation expense 4,400
Operating income -89,240
Less: interest expense -6,250
Less: provision for income tax -28,647
Net income ($66,843)

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March April May

5,520 5,700 5,160
$ 15 $ 15 $ 15
$ 82,800 $ 85,500 $ 77,400

Quarter
$75,600
$171,640
$247,240

Quarter
$16,800
570
17,370
534
16,836

Quarter
16,836
2
33,672
2,258
35,930
2,160
33,770
$ 1.50
$50,656

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 Introduction to Management Accounting Solutions Manual

Quarter
$43,000
$16,499
$17,478
$3,336
$80,313

Quarter
$16,836

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 Introduction to Management Accounting Solutions Manual

Quarter
$19,500
$8,700
$ 23,570
$51,770

Quarter
$20,160
$4,200
$24,360

Quarter
$4,460
247,240
251,700

80,313
16,836
51,770
24,360
10,000
33,200
216,479
35,221

5,000
-5,000
-6,250
-6,250
$28,971

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Introduction to Management Accounting Solutions Manual

Chapter 9: The Master Budget and Responsibility Accounting 8