Here\'s the Question: I mainly need part 2 (selling and administrative budget an
ID: 2546378 • Letter: H
Question
Here's the Question:
I mainly need part 2 (selling and administrative budget and budget income statement) but part 1 has to be completed to complete part 2.
Please use the format below:
Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead. Sports Bars, Inc., produces energy bars and sells them by the case (1 unit - 1 case). Information to be used for the operating budget this coming year follows - Average sales price for each case is estimated to be $25. Unit sales for this coming year, ending ecember 31, are expected to be as follows First quarter 80,ooo Second quarter 84,0oo Third quarter 88,ooo Fourth quarter 97,000 Finished goods inventory is maintained at a level equal to 15 percent of the next quarter's sales Finished goods inventory at the end of the fourth quarter budget period is estimated to be 13,000 units Each unit of product requires 5 pounds of direct materials, at a cost of $3 per pound. Management prefers to maintain ending raw materials inventory equal to 10 percent of next quarter's materials needed in production. Raw materials inventory at the end of the fourth quarter budget period is estimated to be 43,0oo pounds Each unit of product requires o.10 direct labor hours at a cost of $14 per hour Variable manufacturing overhead costs are Indirect materials Indirect labor - - $o.20 per unit $0.15 per unit $o.10 per unit Other Fixed manufacturing overhead costs per quarter are - Salaries $80,0o0 Other $70,000 Depreciation $55,625 Required: a. Prepare a sales budget using the format shown in Figure 9.3. b. Prepare a production budget using the format shown in Figure 9.4. c. Prepare a direct materials purchases budget using the format shown in Figure 9.5 d. Prepare a direct labor budget using the format shown in Figure 9.6 e. Prepare a manufacturing overhead budget using the format shown in Figure 9.7. Round to the nearest dollar f As the production manager, what concerns, if any, do you have about production requirements for each of the four quarters? Selling and Administrative Budget and Budgeted Income Statement. (The previous problem must be completed before working this problem.) Sports Bars, Inc., produces energy bars Management estimates all selling and administrative costs are fixed. Quarterly selling and administrative cost estimates for the coming year follow Salaries Rent $170,000 $ 65,000 Advertising $120,000 Depreciation 75,000 Other $ 36,000 Required: a. Use the information presented previously to prepare a selling and administrative budget. Refer to the format shown in Figure 9.8. b. Use the information from the previous problem and from requirement a of this problem to prepare a budgeted income statement. Refer to the format shown in Figure 9.9. c. How will management use the information presented in the budgeted income statement?Explanation / Answer
Solution:
Part 1 --- Selling and Administrative Budget
Selling and Administrative Expense
Quarter
1
2
3
4
Year
Selling and Administrative Expense Budget
Salaries
$170,000
$170,000
$170,000
$170,000
$680,000
Rent
$65,000
$65,000
$65,000
$65,000
$260,000
Advertising
$120,000
$120,000
$120,000
$120,000
$480,000
Depreciation
$75,000
$75,000
$75,000
$75,000
$300,000
Other
$36,000
$36,000
$36,000
$36,000
$144,000
Total S&A Costs
$466,000
$466,000
$466,000
$466,000
$1,864,000
Deduct Depreciation (Since it is a non cash item)
$75,000
$75,000
$75,000
$75,000
$300,000
Cash Payment for Selling an Administrative
$391,000
$391,000
$391,000
$391,000
$1,564,000
Part 2 --- Budgeted Income Statement
Budgeted Income Statement
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Year
Budgeted Sales Revenue in dollars
$2,000,000
$2,100,000
$2,200,000
$2,425,000
$8,725,000
Deduct Cost of Goods Sold
(Refer Note 1)
$0
Gross Margin
$2,000,000
$2,100,000
$2,200,000
$2,425,000
Deduct Selling and administrative expense
$466,000
$466,000
$466,000
$466,000
$1,864,000
Net Income (loss)
Refer Note 1 --- Cost of Goods Sold
Per Unit Cost of Goods Sold Calculation:
Direct materials (5 pounds x $3)
$15.00
Direct labor (0.10 hour x $14)
$1.40
Manufacturing overhead (pls take this figure from manufacturing overhead budget)
Total Cost of Goods Sold Per Unit
By putting MFR Overhead figure from budget, pls total it and then you have the Cost of Goods sold per unit.
Cost of Goods Sold For Quarter 1 = Quarter 1 Unit Sold x Per Unit COGS = 80,000 x
Cost of Goods Sold For Quarter 2 = Quarter 1 Unit Sold x Per Unit COGS = 84,000 x
Cost of Goods Sold For Quarter 3 = Quarter 1 Unit Sold x Per Unit COGS = 88,000 x
Cost of Goods Sold For Quarter 4 = Quarter 1 Unit Sold x Per Unit COGS = 97,000 x
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Selling and Administrative Expense
Quarter
1
2
3
4
Year
Selling and Administrative Expense Budget
Salaries
$170,000
$170,000
$170,000
$170,000
$680,000
Rent
$65,000
$65,000
$65,000
$65,000
$260,000
Advertising
$120,000
$120,000
$120,000
$120,000
$480,000
Depreciation
$75,000
$75,000
$75,000
$75,000
$300,000
Other
$36,000
$36,000
$36,000
$36,000
$144,000
Total S&A Costs
$466,000
$466,000
$466,000
$466,000
$1,864,000
Deduct Depreciation (Since it is a non cash item)
$75,000
$75,000
$75,000
$75,000
$300,000
Cash Payment for Selling an Administrative
$391,000
$391,000
$391,000
$391,000
$1,564,000
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