Managerial Accounting

Final Project

Requirements:

 The cover page must contain:

Name and logos of the University and the School

Name of the Program
Subject
Project´s title
Full names
Student id numbers
Group
Due date

 Index.

 Pages must be numbered

 The project will be uploaded in a PDF document and an Excel document.

 The information must be organized and clear.

 Points will be subtracted if your project does not meet the criteria listed
above.
Introduction:

 Describe the activity of your manufacturing company and the type of product
you sell.
 Describe the objectives of preparing the Master Budget for “Best Design
Store”, doing the Cost-Volume-Profit Analysis and implementing an Activity-
Based Costing System.
(At least 1 page)

Contents

I. Prepare the Master Budget for the year ended December 2023.

a) Sales Budget
b) Cash Receipts Budget
c) Production Budget
d) Direct Material Budget
e) Direct Labor Budget
f) Manufacturing Overhead Budget
g) Selling, General and Administrative Expenses Budget
h) Cash Disbursements Budget
i) Cash Budget
j) Budgeted Schedule of Cost of Goods Manufactured and Sold
k) Budgeted Income Statement

II. Do the following calculations:

a) Fixed Costs
b) Variable Cost
c) Unit cost
d) Unit variable cost
e) Break-even point in units
f) Break-even sales revenue
g) Contribution Income Statement to prove the break-even point
h) Units to be sold to obtain a target net profit of $4,000,000
i) Contribution Income Statement to prove the target net profit
 III. Make a list of the activities required to manufacture and sell the dining tables,
describe each activity and the cost driver to be used for each one.

Conclusion:

Write down, in two pages, your conclusion about the projected results of the
company, and your opinion about the cost of operations in the process of
manufacturing your product. Which are your improvement opportunities? Do you
think your break-even point is reasonable? What actions can you do to improve your
results? (2 pages)
 Contents

Best Design Store manufactures dining tables that are sold in various stores
around the city. The following information was provided by diverse departments:

The company set a sales price per unit of $500.

The materials needed to produce each dining table are oak wood and stained
wood. The following are the requirements:

• Oak wood: 3 meters at $12 per meter

• Stained wood: 2 meters at $10 per meter

Two stages of direct labor are required to produce each unit:

• Cutting labor: 2 hours at $18 per hour

• Finishing labor: 1 hour at $20 per hour

Best Design Store sells 70% in cash and 30% on credit, which is collected the
quarter after the sale was made. They estimate uncollectible accounts of 2%.

The quarterly sales forecast in units for the year is:

• March quarter 3,000

• June quarter 4,300
• September quarter 5,000
• December quarter 5,500

The sales in units in December quarter 2022 is 2,200 and the sales in units
expected in March quarter 2024 is 5,000.

The company requires an ending inventory of oak wood raw material of 20% of the
next quarter´s production requirements. Stained wood is purchased in a just in time
system.
Best Design Store payments to suppliers are made 80% in the quarter of the
purchase and 20% the next quarter.

The company expects to keep an ending inventory of finished goods of 20% of the
next quarter´s expected sales.

The company begins the year with a work-in-process inventory of $400,000, and
expects to complete the 100% of production by the end of the year.

The cost of the finished goods inventory beginning and ending balances are
$91,002 and $151,670, respectively.

The beginning inventory of oak wood in the year is 1,956 meters. The oak wood
required for production in March quarter 2024 is 13,320 meters.

Total cost of raw material purchases in December quarter 2022 is $138,640.

The beginning inventory of finished goods in the year is 600 units.

The cash balance on January 1st 2023 is $2,293,000.

The projected costs of indirect materials are:

• March quarter $18,000

• June quarter $20,000
• September quarter $22,000
• December quarter $22,000

The indirect labor cost per quarter is $30,000

Other quarterly manufacturing overhead costs:

Utilities (including Electricity) $55,000

Maintenance $4,000
Rent on factory building $50,000
Insurance $11,000
Depreciation $10,000
The general expenses per quarter are as follows:

Salaries to administrative personnel $220,000

Salaries to sales personnel $90,000
Commissions 5% of sales
Other administrative expenses $11,000
Advertising $30,000
Computer operator salaries $20,000

Additional information:

• Utilities are considered fixed costs.

• Uncollectible accounts are classified as selling expenses.
• A $500,000 loan will be obtained in March quarter 2023.
• Loan payments will be $70,000 each quarter plus an interest expense of
$9,000 per quarter.
• Best Design Store is going to invest in machinery for $300,000 in March, and
in equipment for $100,000 in April.
• Income taxes 30%