Comprehensive Master Budget Problem

Part 1 - Basic Information

Direct Materials per cotton shirt Inventory Information
Cotton $ 2.50
Dyeng Chemical $ 0.2
Stiching threads & Embroidery $ 0.4
Finished goods (units)
Director Labour Finished goods (cost)
Hour Assembly 0.04
Packing 0.005 Revenue assumption
Cost per hour Assembly $ 16.4 Selling price
Packing $ 10.0 Volume of textile sales
Cost per cotton towel Assembly $ 0.7
Packing $ 0.1
 Beginning Closing
Cotton $ 48,500 $ 49,100
Dyeng Chemical $ 700 $ 500
Stiching threads & Embroidery $ 800 $ 600
- 150,000 Cotton towels
$ 3.99

$ 6
150,000
Comprehensive Master Budget Problem

Revenue Budget
Selling Price Unit Sold Total Revenue
Sales $ 6 150,000 $ 900,000

Production Budget (Units)

Sales 150,000
Ending Inventory 150,000
Total 300,000
Less Beginning Inventory -
Production 300,000

Direct Materials Usage and Purchases Budget

Materials used Units Price Cost
Cotton 300,000 $ 3 $ 750,000
Dyeng Chemic 300,000 $ 0 $ 60,000
Stiching thre 300,000 $ 0 $ 120,000
Total Materials Used $ 930,000
Add Target Ending inventory
Cotton $ 49,100
Dyeng Chemical $ 500
Stiching threads & Embr $ 600
Total Target Ending Inventory $ 50,200 $ 50,200
Less Beginning Inventory
Cotton $ 48,500
Dyeng Chemical $ 700
Stiching threads & Embr $ 800
Total Beginning Inventory $ 50,000 $ 50,000
TOTAL PURCHASES $ 930,200

Direct Labour Budget

Hours Per
Units Unit Total Hours Rate per Hour Labour Cost
Assembly 300,000 0.04 12,000 $ 16 $ 197,160
Packing 300,000 0.005 1,500 $ 10 $ 15,000
Total 0.045 13,500 $ 212,160
Comprehensive Master Budget Problem

Part 2 - Basic Information

Estimated variable manufacturing overhead costs:
Supplies $ 12,500
Indirect Labour $ 7,500
Maintenance $ 5,750
Miscellaneous $ 7,000
Total Variable overhead costs $ 32,750

Estimated fixed manufacturng overhead costs:

Depreciation $ 750
Property taxes $ 350
Insurance $ 450
Plant management $ 1,500
Fringe beneefits $ 3,750
Miscellaneous $ 5,500
Total Fixed overhead costs $ 12,300
Comprehensive Master Budget Problem

Manufacturing Overhead Budget

Variable manufacturing overhead costs
Supplies $ 12,500
Indirect Labour $ 7,500
Maintenance $ 5,750
Miscellaneous $ 7,000
Total $ 32,750

Units Produced 300,000

Variable overhead rate per unit $ 0

Fixed manufacturing overhead costs

Depreciation $ 750
Property taxes $ 350
Insurance $ 450
Plant management $ 1,500
Fringe beneefits $ 3,750
Miscellaneous $ 5,500
Total $ 12,300

Total labour hours 13,500

Fixed overhead rate per labour hour $ 1

Direct Labour hours per unit 0.045

Fixed overhead rate per unit $ 0

Cost of Ending Finished Goods Inventory

Unit Costs:
Direct Materials: Cost per unit
Cotton $ 3
Dyeng Chemica $ 0
Stiching threa $ 0
Total Direct Materials $ 3.10

Director Labor:
Assembly $ 0.66
Packaging $ 0.05
Total Director Labor $ 0.71

Manufacturing Overhead:
Variable $ 0.11
Fixed $ 0.041
Total Manufacturing Overhead $ 0.15

Total UNIT COST $ 3.96

Ending Inventories Budget
Raw Materials
Cotton $ 49,100
Dyeng Chemical $ 500
Stiching threads & Embroidery $ 600
Total Raw Materials $ 50,200

Units Cost per Unit

Finished goods 150000 $ 3.96 $ 593,605

Total Ending Inventory $ 643,805

Cost of Good Sold Budget

Beginning Finished Goods $ 4
Manufacturing Costs Incurred:
Direct Materials $ 930,000
Direct Labour $ 212,160
Variable overhead $ 32,750
Fixed overhead $ 12,300
Cost of goods manufactured $ 1,187,210
Total available $ 1,187,214
Less: Ending Finished Goods $ 593,605
Cost of Goods Sold $ 593,609
 Income statement(Absorption costing)
Particulars Amount Amount
Sales 900000
Less: Cost of goods sold 593608.99
Gross Profit 306391.01

Less: Marketing & Administrating exp

Variable expenses 32750
Fixed Expenses 12300 45050

Net Operating income 261341.01

Less: Taxes @30% 78402.303
Net Income 182938.707