Last Name First Name ageting Case Winter 2018 deline Company produces and distri
ID: 2548996 • Letter: L
Question
Last Name First Name ageting Case Winter 2018 deline Company produces and distributes a special rose fertilizer called Better Red. The information below describes Adeline's operations for the year just ended 2014. This information has been given to you to help you prepare a master budget for the first quarter of 2015. The budget will detail each month's activities as well as activities for the quarter. Round dollar totals to nearest dollar. Use four decimal places for rates per unit. Required In groups of two or alone, use the following information and the worksheets provided to finish the case Each student is required to prepare and turn in their own case. This case is an in class assignment and cannot be removed from your classroom for any reason. papers are allowed on your desk other than your exam. No scrap paper is a All other books, bags phones, etc., are to be placed in the front of the class. You may consult your textbook, no other llowed in or out of the room. A. Selling price is $75 per bag and is not expected to change for the first two quarters of 2015. Actual and estimated sales are as follows: Estimated 2015 Actual 2014 12,500 bags 15,000 bags anuary 13.750 bags February12,500 units March April 13,750 units May November December 16,250 units 12,500 units The company produces enough units each month to meet that month's needs plus a desired inventory level equal to 40% of next month's sales. Finished goods inventory at the end of 2014 consisted of 2,750 units at a variable cost of $41.25 each. The company purchases enough raw materials each month for the current month's production requirement and 45% of next month's production requirements. Each unit of product requires 7 kgs of raw materials inputs, purchased at a price of $0.80 per kg. There are 16,875 kgs of raw 8. C. materials in inventory at the end of 2014, Adeline's payment pattern is 35% are paid for in the month of purchase and the remaining 65% are paid for in the month following. D. Each unit of finished product requires 2.5 labor hours. The average wage rate is $10. E. Variable manufacturing overhead is 42.60% of the direct labor cost. F. Credit sales are 75% of total sales. The company collects 35% of credit sales in the month of sale, 40% in the month following the sale and 25% in the second month following the sale.Explanation / Answer
Sales Budget January February March Total Sales units 13750 12500 16250 42500 Unit selling price 75 75 75 75 Budgeted Sales 1031250 937500 1218750 3187500 Cash sales - 25% 257813 234375 304688 796875 Credit Saes - 75% 773438 703125 914063 2390625 Schedule of collections January February March Total Cash sales 257813 234375 304688 796875 Credit Sales: December Balance 470770 294230 765000 January Sales 270703 309375 193359 773438 February Sales 246094 281250 527344 March Sales 319922 319922 Total collections 999286 1084074 1099219 3182578 Receivables 796964 650391 769922 769922 Production Budget January February March Total Budgeted Sales units 13750 12500 16250 42500 Add: Ending Inventory 5000 6500 5500 5500 (40% of next month's sales) Total units needed 18750 19000 21750 48000 Less: Beginning inventory 2750 5000 6500 2750 Budgeted Production 16000 14000 15250 45250 Raw material budget January February March Total Budgeted Production 16000 14000 15250 45250 Raw material required for one unit (kg) 7 7 7 7 Raw material required for production 112000 98000 106750 316750 Add: Desired ending inventory 44100 48038 41738 41738 (45% of next month's requirement) Total material needed 156100 146037.5 148487.5 358487.5 Less: Begining Inventory 16875 44100 48038 16875 Raw material purchases (kg) 139225 101938 100450 341613 Cost per kg ($) 0.8 0.8 0.8 0.8 Budgeted Raw material purchases 111380 81550 80360 273290 Schedule of cash payments for purchases January February March Total December purchases 30000 30000 January purchases 38983 72397 111380 February purchases 28543 53008 81550 March purchases 28126 28126 Total payments 68983 100940 81134 251056 Payables 72397 53008 52234 52234 Direct labor budget January February March Total Production budget 16000 14000 15250 45250 Direct labour hours per unit 2.5 2.5 2.5 2.5 Direct labor hours for production 40000 35000 38125 113125 Direct labor cost per hour $10.00 $10.00 $10.00 $10.00 Direct labor cost 400000 350000 381250 1131250 Manufacturing overhead budget January February March Total Variable manufacturing overhead (42.6 % of direct labor) 170400 149100 162413 481913 Fixed manufacturing overhead: Factory salaries - Suprvisors 93750 93750 93750 281250 Factory Insurance 1750 1750 1750 5250 Factory Rent 10000 10000 10000 30000 Depreciation 1500 1500 1500 4500 Total manufacturing overhead 277400 256100 269413 802913 Cash payment for manufacturing overheads 275900 254600 267913 798413 Selling and administrative expenses budget January February March Total Variable selling and admin. expenses: Shipping expenses ($5 per unit of sales) 68750 62500 81250 212500 Sales commission (15% of sales) 154688 140625 182813 478125 Total variable selling and admin. expenses 223438 203125 264063 690625 Fixed selling and admin. Expenses Advertising 375 375 375 1125 Depreciation - office equipment 11250 11250 11250 33750 Insurance 312 312 312 936 Salaries 5000 5000 5000 15000 Ofice Parking Area - executives and sales staff 18188 18188 18188 54564 Total fixed selling andadmin. Expenses 35125 35125 35125 105375 Selling and administrative expenses budget 258563 238250 299188 796000 Cash payment for selling and admin. Expenses 247313 227000 287938 762250 CASH BUDGET January February March Total Beginning cash balance 100000 50090 201624 100000 Add: Collections from sales 999286 1084074 1099219 3182578 total cash available for disbursements 1099286 1134164 1300843 3282578 Cash disbursements: For raw material 68983 100940 81134 251056 For direct labor 400000 350000 381250 1131250 For manufacturing overhead 275900 254600 267912.5 798412.5 For selling and administrative expenses 247313 227000 287938 762250 For purchase of assets 375000 375000 Total cash disbursements 1367196 932540 1018234 3317969 Cash Surplus -267910 201624 282610 -35390 Minimum cash balance 50000 50000 50000 50000 Excess / (shortage) -317910 151624 232610 -85390 Financing Borrowing 318000 318000 Repayments -227000 -227000 Interest -4770 -4770 Total financing 318000 0 -231770 86230 Ending cash balance 50090 201624 50840 50840
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