6:43 Fi © Gd « BN SB ll 86%R Solution Manual of Chapter x a studocu.com < = StuDocu Solution Manual of Chapter 8 -... ig cag, ih aN Exercise 8-1 (20 minutes) 1 April = May June ‘Total February sales: $230,000 x 10% ...... $23,000 $23,000 March sales: $260,000 % 70%, 10% nen 182,000 § 26,000 208,000 April sales: $300, 20%, 70%, 10%... 60,000 210,000 $30,000 300,000 May sales: $500,000 x 20%, 70% 100,000 350,000 450,000 Sune sales: $200,000 x 20% 40,000 __ 40,000 Total cash collections... $265,000 336.000 $420,000 $1,022,000 Notice that even though sales peak in May, cash collections peak in June, This occurs because the bulk of the company’s customers pay in ‘the month following sale. The lag in collections that this creates is even more pronounced in some companies. Indeed, itis not unusual for a company to have the least cash available in the months when sales are greatest. 2. Accounts receivable at June 30: From May sales: $500,000 x 10%. $50,000, From June sales: $200,000 x (708% + 10%)... 160,000 Total accounts receivable at June 30... $210,000 Exercise 8-2 (10 minutes) April «May june Quarter Budgeted unit sales... 50,000 75,000 90,000 215,000, ‘Add desired units of ending finished goods inventory"... 7500 9,000 8,000 __,000 Total needs svmennnnes 57,500 84,000 98,000 223,000, Less units of beginning finished Goods MVENEOTY.wnersneenee 5,000 7,500 9,000 5,000 Required production in units... 52,500 76,500 89,000 218,000 10% of the following month's sales in units. eestor Q eee Q v E356:43 fl FI © « x studocu.com = StuDocu a Solution Manual of Chapter aNS < Solution Manual of Chapter 8 -... Exercise 8-3 (15 minutes) Quarter—Vear 2 first’ Second Third — Fourth Required production in units of finished goods.. 60,000 90,000 150,000 100,000 Units of raw materials nes finished goods .. x3 x3 «3 _x3 Units of raw materials needed to meet production.. 180,000 270,000 450,000 300,000 Add desired units of ending raw materials, inventory, 54,000 _90,000 _60,000 _42,000 ‘Total units of raw materials needed 234,000 360,000 510,000 342,000, Less units of beginning raw materials inventory... 36,000 _54,000 _90,000 _60,000 Units of raw materials to be purchased 198,000 306,000 420,000 262,000 Unit cost of raw materials... x §1,50 x $1.50 x $1.50 x $1.50 Cost of raw materials to purchased... Exercise 8-4 (20 minutes) Vo) LET tl! ot Q Q Year 400,000 23 1,200,000 43 2,000 4,242,000 36,000 1,206,000 3 $1.50, $297,000 $459,000 $630,000 $423,000 $1,809,000 1. Assuming that the direct labor workforce is adjusted each quarter, the direct labor budget is: Required production in units wn Direct labor time per unit (hours)... Total direct labor-hours needed. Direct labor cost per hour. Total direct labor cost... paid, the direct labor budget ist Required production in units. Direct labor time per unit (hours). Total direct labor-hours needed Regular hours paid seem Overtime hours paid, Wages for regular hours (@ $12.00 per hour).. Overtime wages (@ 1.5 * $12.00 per hour) Total direct labor cost ian dst Ind ied th Quarter Quarter Quarter Quarter 8,000 ~ 6,500 | 7,000 7,500 xO35 x035 x035 «0.35 2,800 2,275 2,450 2,625 dst Ind 3rd ath Quarter Quarter Quarter Quarter 8,000 ° 6,500 7,000 » 7,500 x35 x035 x035 «0.35 2800 2,275 2,450 2,625 2800 2,600 2,609 2,600 20 9 oo 25 $31,200 $91,200 $91,200 Year 28,000 0.35 10,150 % $12.00 x $12,00 x $12,00 = $12.00 x $12.00 ". $33,600 § 27,300 $29,400 $31,500 $121,800 Assuming that the direct labor workforce is not adjusted each quarter and that overtime wages are Year $31,200 $124,800 3,500 — 0 "450 4,050 giao i200 2200 Baesd Hans TTT oor ring nN Exercise L Variable manufacturing ovethead rate... its kien ae 4225 x6225 x65 frenna eoecen éo7 a7 a < Year 72,500 $3.25 36%E eee6:43 fl FI © « @N TB ull | 36%S Solution Manual of Chapter x a studocu.com < Q eee = StuDocu Q v Solution Manual of Chapter 8 -... rE Q anager counting, 1S Eaton Exercise 8-5 (15 minutes) L Yuwwell Corporation ‘Manufacturing Overhead Budget dst Ind 3rd th Quarter Quarter Quarter Quarter Year 8,000 "8,200 " 6,500 "7,800 32,500 x$325 x$125 26325 x4325 x $26,000 526,650 $27,625 $25,350 $105,625 48,000 48,000 48,000 48,000 192,000 Total manufacturing overhead 74000 74680 75.525 75,350 287 25 Less depreciation... 16,000 16,000 16,000 __64,000 Cash ditburcoments for manulocuring ovekead, G2aun0 sues Gases Gras) Sans 2. Total budgeted manufacturing overhead for the year(a)... $297,625 Budgeted direct labor-hours for the year (B) ern 32,500 Predetermined overhead rate for the year (a) + (b) « $8.16 Budgeted direct labor-hours Variable manufacturing overhead rate... Variable manufacturing overhead... Fixed manufacturing overhead Exercise 8-6 (15 minutes) Weller Company ‘Selling and Administrative Expense Budget ist 2nd rd th Quarter Quarter Quarter Quarter Year Budgeted unit sales 15,000 16,000 “24,000 “13,000 58,000 Variable selling and administrative expense per unit. x $2.50 x $2.50 x $2.50 $2.50 _x $2.50 Variable selling and administrative expense....... $37,500 § 40,000 § 35,000 $ 32,500 $145,000 Fixed selling and administrative expenses: Advertising 8,000 8,000 8,000 8,000 32,000 Executive salaries. 35,000 35,000 35,000 35,000 140,000, Insurance 5,000, 5,000 10,000 Property taxes. ‘8,000 8,000 Depreciation .. 20,000 _ 20,000 __20,000 _ 20,000 _80,000 Total Fixed selling and administrative expenses... 68,000 71,000 —68,000 —63.000 “270,000 Total selling and administrative expenses. 105,500 111,000 103,000 95,500 415,000 Less depreciation 20,000 _ 20,000 _20,000 _20,000 _ 80,000 Cash disbursements for selling and ‘administrative expenses, $85,500 $91,000 $ 83,000 $75,500 $335,000 Torre cering N6:43 fl FI © « x a Solution Manual of Chapter studocu.com = StuDocu @N TB ull | 36%S < Solution Manual of Chapter 8 -... Exercise 8-7 (15 minutes) Garden Depot ‘Cash Budget dst and rd Quarter Quarter Quarter Beginning cash balance. $ 20,000 $ 10,000 $35,800 Total cash receipts....... 180,000 330,000 210,000 Total cash available ..... 200,000 240,000 245,800 Less total cash disbursements... 260,000 230,000 220,000 Excess (deficiency) of cach available over disbursements... (60,000) 110,000 _ 25,800 Financing: Borrowings (at beginnings of quarters}*.. 70,000 Repayments (at ends of quarters) (70,000) Interest. (4,200) Total financing, 70,000 774,200 Ending cash balance .... $ 10,000 § 35,800 $25,800 ath Quarter Year $ 25,800 $ 20,000 [230,000 950,000 255,800 970,000 240,000 950,000 15,800 _20,000 70,000 (70,000) 3/200) 7.200) $15,800 $15,800 * since the deficiency of cash available over disbursements is $60,000, the company must borrow $70,000 to maintain the balance of $10,000, 5 $70,000 x 3% x 2 = $4,200. Exercise 8-8 (10 minutes) Gig Harbor Boating Budgeted Income Statement desired ending cash Sales (460 units x $1,950 per unit) $897,000 Cost of goods sold (460 units x $1,575 per unit)... 224,500 Gross margin... 172,500, Selling and administrative expenses 139,500 Net operating income.. 33,000 Interest expense... 14,000 Net income. $12,000 (460 units» $75 per ui) + $108,000 = $130,500 (14 out of 60 Il O ad Q eee Q v E356:43 fl FI © « x @ Solution Manual of Chapter studocu.com = StuDocu aes Solution Manual of Chapter 8 -... Fea ect, I En Exercise 8-9 (15 minutes) Mecca Copy Budgeted Balance Sheet Assets Current assets Cash es o Accounts receivable.. Supplies inventory. Total current assets... Plant and equipment: Equipment... Accumulated depreciatior Plant and equipment, net. Total assets... Liabilities and Stockholders’ Equity Current liabilities: Accounts payable. Stockholders’ equity: Common st0¢K nm Retained earings -nrnun Total stockholders’ eauity.. Total liabilties and stockholders’ equity. *Plug figure. # Retained earings begining balance Add net income.. - Deduct dividends. Retained earnings, Exercise 8-10 (45 minutes) 1, Production budget: uty Budgeted unit sales. 35,000 Add desired units of ending finished goods inventory... 11,000 Total needs.. 46,000 Less units of beginning finished goods inventory... 10,000 Required production in units... 36,000 $12,200 8,100 3,200 $23,500 $28,000 11,500 39,500 4,800 4,700 11,000 42,000 13,000 45,000 2. During July and August the company is building inventories in anticipation of peck sales in September, Therefore, production exceeds sales during these months. In September and October inventories are being reduced in anticipation of a forthcoming decrease in sales. ‘Therefore, production is less than sales during these months. D 16 out of 60 &, voy Stet tll tl) S6% < October 30,000 7,900 37,000 9,000 28,000 Q eee Q v E356:43 fl FI © « x @ Solution Manual of Chapter studocu.com = StuDocu @ xe ) Stet tll tl) S6% < Solution Manual of Chapter 8 -... Exercise 8-10 (continued) 3. Direct materials budget: Required production in units of finished goods Units of raw materials needed per unit of finished goods .. Units of raw materials needed to meet production. Add desired units of ending raw materials inventory. . Total units of raw materials needed. . Less unt of begining raw materials inventory Units of raw materials to be purchased.. * 28,000 units (October production) x 3 cc per unt = 83,000 cc; 184,000 ce x 1/2 = 42,000 cc. Fg Septem- July August ber 36,000 42,000 46,000 x3c x3c x3cc 108,000 126,000 138,000 63,000 69,000 42,000 * 171,000 195,000 180,000 54,000 _63,000 _69,000 1iz000 152,000 111,000 Q eee Q v E35 Third Quarter 124,000 x3cc 372,000 42,000 414,000 54,000 260,000 {As shown in part (4), production is greatest in September; however, as shown in the raw material purchases budget, purchases of matenals are greatest a month earlier—in August. The reason for the large purchases of materials in August is that the materials must be on hand to support the heavy production scheduled for September. Exercise 8-11 (20 minutes) Beginning cash balance Add collections from customers . Total cash available... Less cash disbursement Purchase of Inventory... Selling and administrative expenses Equipment purchases... Dividends .. ‘Total cash disbursements Excess (deficiency) of cash avaiable over disbursements .. Financing: Borrowings... Repayments (including interest) Total financing... Ending cash balance... * Given Quarter (000 omitted) t 2 3 4 Year $6* $5 $5 $5 $6 $5 2 _96* 92 32a" at % a 7 329 35* 45% 4835 163 28 30* 30" 25 13" at 8* * 40 36% 2* 2% _2* _2* _8 73 as* 90 72 320 2y 0) a * 28 7 is* 0 0 22 9 9 _{6) 437)" _@3) 2 38 (6) (47) cy 5 $5 $8 $8 Tanager Reng, TSB EBON (D 19 out of 60 From accounts receivable. From July sales $136,000 O $136:43 fl FI © « @N TB ull | 36%S x @ Solution Manual of Chapter studocu.com oo = StuDocu Solution Manual of Chapter 8 -. Exercise 8-12 (30 minutes) 1. Schedule of expected cash collections Month Jiy August Sept. Quarter From accounts racehable, $136,000 $136,000 From July sales: "35% X 210,000 73,500 73:50 ‘506 x 220,000. $136,500 136,500 From August sales! 35% % 230,000 ure 80,500 180,500 ‘50a x 230,000. 149,500 145,500 From September sl "35¥ % 220,000. ‘otal cach collections. 77900 _ 77000 2s Bio aes sso 2. 2, Merchandise purchases budget: July August Sept, Total Budgeted cost of goods sold (609% Of sales} sersennenone$126,000 $138,000 $132,000 $396,000 ‘dé desired ending ‘merchandise inventory® nme 41,400 39,600 43,200 _43,200 ‘etal needs. {67,400 “477,600 "175,200 “439,200 Less beginning chars Trenton re v-+ 62,000 _41,490 _ 38,600 __62,000 Required purchases wnsuenrns $105,800 $136,200 $135,500 $377,200 “Ak July 31: $138,000 x 30% = 541,400. . Schedule of cash disbursements for purchases: July August Sept, Total From accounts payablevinaion $ 71200 $71,100 For July purchases. 22,160 $63,240 105/400 For August purchaszs. 54/490 $91,720 136,200 For September purchases "54.240 _ 54,240 “otal cach disbursements... $15260 $117,720 $135,950 $366,340 Exercise 8-12 (continued) 3 Beech Corporation Income Statement For the Quarter Ended Sentember 30 Seles (3210 000 $250,000 + 220.000). $960,000 Cost of goods sold (Part 28) exer 336,000 Gross margin. eens 268,000, Seling and administrative experses (360,000 © 3 months) 10,000 Nat operating income. ‘84,000 Interest expense... 9 Nat income 334.000 4 Beach Corporation Balance Sheet September 30 Assets Cath (590,000 + $653,000 ~ $356,940 ~ ($55,000 x 3) Accounts receivable (5220,000 * 65%) « Irventory (Part 2a). Pant andl equipment, nat ($210,000 ~ (35, 0003) 195,000 “etal azzete. Liabities and Stockhoiders’ Equity Accounts payable ($135,600 60%). ‘commen stock (Given) Retained earrings ($93,900 + $94,000) Total lables and stockholders’ equ... Exercise 8-13 (30 minutes) Q eee Q v Ea6:43 fl FI © « x @ Solution Manual of Chapter studocu.com = StuDocu Vo) QBN AB all ll 86%E Solution Manual of Chapter 8 -. Exercise 8-13 (30 minutes) 1. Schedule of expected cash collections From accounts receivable, $136,000 From July sales: 45% % 210,000... '55%e x 210,000... From August sales: “45M X 230,000. Total eth eoleebans.. Month Jip August 134,500 $135,500 103,500 2. s; Merchandise purchases budget: Budgsted cost of goods sold. Ad desired ending ‘September Quarter 135,000 94,500 115,500, 103,S00 $126,500 126,500 _98,000 9,000 ROEM Dien e500 se7000 July August Sept, Total ‘merchandise inventory® 27.600 ‘etal needs. Less beginning merchandise inventory re Required purchases “Ae July 34: $138,000 x 20% = $27,600. . Schedule of cash disbursements for purchases For July purchases. For August purchase $136,000 $138,000 $132,000 $336,000, 26.400 _28.800 _28,900 753,600 “is4,400 “60,800 24,800 v=» 62,000 _27600 _ 26,400 _ 62,000 $81,500 $136,500 $134,400 $362,500 July August Sept, Total From accounts payables $7100 For September purchases Total cach dleburserments, Exercise 8-13 (continued) 3 Beech Corporation Income Statement $71,100 77480 $64,120 91,600 41/090 $95,760 136,800 "40,320 _ 40.320 FATESOAUIESESCORSIENS] For the Quarter Ended Sentember 30 Seles (5210000 5230.00 + 220000). 60.000 Cost of goods: (Gress margin. 3 Gat 23) Seling and administrative expenses (380,000 * 3 months) Net operating Interest expense Nt income Beech Corporation Balance Sheet September 30 Assets Cash (390,000 + $675,000 ~ $333,820 ~ ($55,000 x 3)) enn ' . 336,000 254,000 10,000 ‘84,000 9 =aam00 $260,180 423,000 28,000 Hart and equa rat (S315,050~ S660 "3). 335.000 Total aezete 603 380 Liabities and Stockholders’ Equity ‘Accounts payable (§134,400 x 70%), ‘commen stack (Given) Retained earrings ($98,900 + $9,000). “otal lables and stodcholder’ quo. Exercise 8-14 (30 minutes) L Jessi Corporation. ‘Sales Sudget O $94,080 327,000 183,300 A Oo6:44 fl FI © « x @ Solution Manual of Chapter studocu.com = StuDocu @ oS x ) Tet LTET at Vo) ul! 36% A Oo Solution Manual of Chapter 8 -... Liaputies ang Stocsrovaers equity ‘Accounts payable ($134,400 x 70%), ‘commen stack (Given) Ratained earings ($93; “otal lables and stockholders’ equty. Exercise 8-14 (30 minutes) L Jessi Corporation. Year 30,000 x $18.00 ‘$800,000 $70,200 188,200 205,200 233,400 452,100 855,000 Year 50,000 1.950 51,850 44,000 ? ‘Sales Sudget dst 2nd rd ath Quarter Quarter Quarter Quarter Budgeted unit sales. 41,000 "12,000 “14,000 13,000, Seling price per unit. x $18,00 x $1800 x $18.00 x $18.00 Total alae. 198,000 $216,000 $252,000 $234,000 Schedule of Expacted Cash Collections Beginning accounts eceivable- $70,200 1 Quarter soles. 128,700 $ 59,400, 24 Quarter sales. 140,400 § 64,800 3° Quatter sale 163,800 $75,600 4° Quarter ess. 152,100 Total cath collections. HSS500 $ ek 96,000 Total cach reese 10.000, Schade of cash payments for purchases: ‘Apri 20 accounts payable balance May purchases (S058 5120000) Total cash payments. Minden Company Cash Budget For the Month of May Beginning cash balance = 9,000 ‘Add collections from customers Ghee). 220,000 ‘otal exch avalabe.. 218,000 Less cath dichursements Purchase of inventory (abote) we 123,000 Sling and admnnistabve expences 72,000 Purchases of equipment, 6.500 Total cach ciabursements, 31500 Excess of cash avaliable over Gsbursa 7.509 Franca: Borrowing —note, 20,000 Repayments—neta. Gas00) Interest, 100) “otal financing, So Ending cash balance “ $733%200 tm) &, voy Fe Et al ul! 36% A OooS 644 © - a4 oo x @ Solution Manual of Chapter studocu.com = StuDocu Solution Manual of Chapter 8 -. Problem 8-18 (coetinued) Be Minden Company Budgeted Income Statement For the Month of May, Sales $220,000 Cost of goods sald: Beginning inventory « 30,000 Add purchases 430,000 ‘Goods available fr sale 150,000, Ending inventor. "40,000 cost of goods sald 410.000 Gross margin 110,000 Seling and administrative expenses {572.000 = $2,000). 74,000 Net operating income. 35,000 Interest expense. 100 Net income Eass00 3 Minden Company Budgeted Balance Sheet May 38 5 22,900 4,000 40,000 Buildings and equipment, net of deprecation (5207,000 + $6,500 ~ £2,000), 211,500 Total azzete. : $336,400, Libis and Soctliers Egy ‘Accounts payable (50% % 120,000). $60,000 Note payable. . 20,000 Capital stock 180,000 Ratained earrings ($42,500 » $35,900). 73,400 “otal lables and stodcholders’ equty nn 338.400 Problem 8-19 (30 minutes) 4, Decamber cath sales, 83,000 Collections on account ‘October sales! $400,000 = 18%. 72,000 November sales: $525,000 x 60%, 315,000 December sales: $600,000 x 20 120,000 “Total cath collections 530,000 2, Payments to suppliers November purchases (accounts payable)... $161,000 Dacersber purchases: $280,000 > 30%... 94,000 Total cash payments 5.000 Ashton Company Cash Budget For the Month of December Beginning cash balance $40,000 [Add collections from customers $90.00 ‘otal each avaliable. 530,000 Liss cath dicnursemnents Payments to suppliers for inventory $245,000 Salig ad adnate exes" 380,000, 76,000 000 20.000 Excess (defciency) of cash avaible over ‘Sebureements 7 (90,000 Financing: Borrowings. 100,000 Repayments . ° Interest 2 “otal Financing, 700,000 Ending cash balance. $20,000 *3430,000 ~ $50,000 = $380,000, Problem 8-20 (30 minutas) 1. The budget at Sortie isan inposed "top-davn” budost that falls to Consider bth the ne for esi cata a the umn stescton stentl fo an effective budgetng/ontal process, The Prsiert has O Vo) LET tl! ot 36%E Q eee Q E35