Betty’s Beautiful Baskets Betty’s Beautiful Baskets, a manufacturing business th
ID: 2583543 • Letter: B
Question
Betty’s Beautiful Baskets
Betty’s Beautiful Baskets, a manufacturing business that sells baskets, wants a master budget prepared for the first three months of this year (January, February and March).
The managers of the different departments have provided the following information: The Sales Manager has projected the following sales:
o January
o February
o March
o April
o May
o Projected selling price is $35.00/unit
Your Production Manager gave the following information:
o Ending Inventory is to be 20% of next month’s production needs
o April’s Projected Sales 5,000 units
o December 20X5 Ending Inventory was 1,000 units and December unit
cost was $23.50.
The Manufacturing Manager has estimated the following:
o Each unit will require 4 grams of material
o Material in Ending Inventory is 20% of next month’s needs o December’s Ending Material Inventory was 4,800 g
o Projected cost of material: $2.50/gram
The Personnel Manager has estimated that Direct Labor will be projected at: o 0.75 hours of Direct Labor per unit
o Direct Labor Cost: $8.50/hour
The Facilities Manager has estimated that the Manufacturing Overhead will be projected at:
o Variable Overhead Rate to be $8 per Direct Labor hours o Fixed Overhead Rate to be $3,000 per month
The Accounting Department Manager has provided the following information: • Selling and Administrative Expenses are projected to be a monthly cost of:
o Salaries
o Rent
o Advertising o Telephone o Other
$6,000 $1,500 $1,100
$300 $500
5,000 units 4,000 units 6,000 units
5,000 units 11,250 units
Betty’s Beautiful Baskets Page 2
• Cash Receivable:
o December’s Sales were $150,000
o 80% of sales is collected in the month in which they were made
o 20% of sales collected in the following month in which they were made o Bad Debts is negligible
• Accounts Payable:
o 80% of Payables is paid for in the current month o 20% of Payables is paid for in the following month o December’s purchases were $50,000
Federal Income Tax is estimated at 22% average.
Betty’s Beautiful Baskets
o has a $20,000 cash balance for the beginning of January o pays Dividends of $8,000 to be paid in March
o pays projected Federal Income tax in March
o depreciation on the building is $150 per month
o does not carry any WIP inventory
o uses FIFO inventory costing
• From the beginning Balance Sheet: o Land = $150,000
o Building = $45,000
o Depreciation (Building) = $11,250 o Retained Earnings = $58,780
o Capital Stock = $200,470
For the Master Budget, you are expected to prepare the following:
Sales budget plus schedule of accounts receivable collections
Production budget
Direct materials budget and schedule of cash payments for purchases
Direct labor budget
Manufacturing overhead budget
Cost of Goods Sold Budget
Selling & Administrative Expenses Budget
Budgeted income statements
Cash budget
Budgeted balance sheet for each month plus a beginning balance sheet
When you prepare the cost of goods sold budget, you must calculate a unit cost for each month. You must also calculate cost of goods manufactured. Remember, there is no Work in Process inventory but you must calculate direct materials used.
Betty’s check figures
Total March sales, $210,000
Total February cash collections, $147,000
Total February units to produce, 4,400
Total March direct materials purchase, $58,900
Total February cash disbursements for raw materials, $46,400
Total January direct labor, $30,600
Total March overhead, $37,800
Total January selling & admin, $9,400
Total February cost of goods sold, $92,182
Total March cost per unit, $22.89
Total March cost of goods manufactured, $132,775
Total January 1 Assets, $269,250
Ending cash, March 31, $120,209
Net income, February, $29,849
Total Assets, March, $380,901
Explanation / Answer
Betty's Beautiful Basket A Sales Budget Month Sales in Units Selling Price Sales Value January 5000 35 175000 February 4000 35 140000 March 6000 35 210000 Total 500000 35 17500000 B Production Budget Month Sales Beginning Inventory Ending Inventory=20% of next month's sale Units to be produced January 5000 1000 800 4800 February 4000 800 1200 4400 March 6000 1200 1000 5800 April 5000 1000 2250 6250 May 11250 2250 Total 500000 C Direct Material Budget Month Raw Material Required for production Units to be produced Total Raw material Requirment in units Beginning Inventory Ending Inventory=20% of next month's needs Units to be purchased Cost per unit Total Raw Material Purchase cost January 4 4800 19200 4800 3520 17920 2.5 44800 February 4 4400 17600 3520 4640 18720 2.5 46800 March 4 5800 23200 4640 5000 23560 2.5 58900 April 4 6250 25000 5000 0 Total 150500 D Direct Labor Budget Month Production units Per Unit hour Total Hours needed for production Direct Labor Per hour Total Direct Labor Cost January 4800 0.75 3600 8.5 30600 February 4400 0.75 3300 8.5 28050 March 5800 0.75 4350 8.5 36975 Total 95625 As per policy of Chegg, we are supposed to answer maximum of four sub-parts of questions We appreciate the rating of our answers Thank You
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