Budget Assignment
Dudley Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Dudley Manufacturings operations:
Cash $ 4,500.00
Accounts receivable, net 49,000.00
Inventory 12,657.50
Property, Plant, and Equipment, net 122,500.00
Accounts Payable 42,400.00
Capital stock 126,000.00
Retained Earnings 22,920.00
a. Actual sales in December were $70,000. Selling price per unit is projected to remain stable at $10 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows:
January $83,000
February $92,000
March $94,000
April $97,000
May $89,000
b. Sales are 30% cash and 70% credit. All credit sales are collected in the month following the sale.
c. Dudley Manufacturing has a policy that states that each months ending inventory of finished goods should be 25% of the following months sales (in units)
d. Of each months direct material purchases, 10% are paid for in the month of the purchase, while the remainder is paid for in the month following purchase. Two pounds of direct material is needed per unit at $2 per pound. Ending inventory of direct materials should be 10% of next months production needs.
e. Most of the labor at the manufacturing facility is indirect, but there is some direct labor incurred. The direct labor hour per unit is 0.02. The direct labor rate per hour is $10 per hour. All direct labor is paid for in the month in which the work is performed. The direct labor total cost for each of the upcoming three months is as follows:
January $1,705
February $1,850
March $1,895
f. Monthly manufacturing overhead costs are $5,000 for factory rent, $3,000 for other fixed manufacturing expenses, and $1.20 per unit produced for variable manufacturing overhead. No depreciation is included in these figures. All expenses are paid in the month in which they are incurred.
g. Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, Dudley Manufacturing will purchase equipment for $6,200 (cash), while Februarys cash expenditures will be $12,000 and Marchs cash expenditure will be $16,800.
h. Operating expenses are budgeted to be $1.00 per unit sold plus fixed operating expenses of $1,400 per month. All operating expenses are paid in the month in which they are incurred.
i. Depreciation on the building and equipment for the general and administrative offices is budgeted to be $4,700 for the entire quarter, which includes depreciation on new acquisitions.
j. Dudley Manufacturing has a policy that the ending cash balance in each month must be at least $4,000. It has a line of credit with a local bank. The company can borrow in increments of $1,000 at the beginning of each month, up to a total outstanding loan balance of $160,000. The interest rate on these loans is 2% per month simple interest (not compounded). Dudley Manufacturing would pay down on the line of credit balance if it has excess funds at the end of the quarter. The company would also pay the accumulated interest at the end of the quarter on the funds borrowed during the quarter.
k. The companys income tax rate is projected to be 30% of operating income less interest expense. The company pays $11,000 cash at the end of February in estimated taxes.
Requirements:
Please complete project using excel spreadsheet
Upload completed budget to Connect by the due date and bring hard copy to class
Properly label all schedules (points will be taken off if headings are not included)
Each schedule should include: January, February, March and Total for Quarter
Project should include the following schedules:
1. Schedule of Cash Collections for January, February, March, and for the quarter in total
2. Production budget for January, February, March, and for the quarter in total
3. Direct materials budget for January, February, March, and for the quarter in total
4. Cash payments budget for the direct material purchases from requirement 3 for January, February, March, and for the quarter in total
5. Cash payments budget for direct labor for January, February, March, and for the quarter in total
6. Cash payments budget for manufacturing overhead costs for January, February, March, and for the quarter in total
7. Cash payments budget for operating expenses for January, February, March, and for the quarter in total
8. Cash budget for January, February, March, and for the quarter in total
9. Calculate the budgeted manufacturing cost per unit (assume that fixed manufacturing overhead is budgeted to be $0.70 per unit for the year) for January, February, March, and for the quarter in total
10. Prepare a budgeted income statement for the quarter ending March 31, xxxx 10 points
11. Calculate ending balances as of March 31, xxxx for:
a) Accounts Receivable
b) Ending Inventory
c) Property, Plant and Equipment net of depreciation
d) Accounts Payable
e) Note Payable
f) Retained Earnings
