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Introduction to Management Accounting

Solutions Manual

Problems: Set A

P9-59A Comprehensive budgeting problem (Learning Objectives 2 & 3)


Requirements
1. Prepare a schedule of cash collections for January, February, and March, and for the quarter
in total.
2. Prepare a production budget.
3. Prepare a direct materials budget.
4. Prepare a cash payments budget for the direct material purchases from Requirement 3.
5. Prepare a cash payments budget for conversion costs.
6. Prepare a cash payments budget for operating expenses.
7. Prepare a combined cash budget.
8. Calculate the budgeted manufacturing cost per unit.
9. Prepare a budgeted income statement for the quarter ending March 31.

Solution:
Given
Sales Budget
December
Unit sales

January

7,000

Unit selling price

Total sales Revenue

8,000

10 $
70,000

10
80,000

Req. 1

Cash Sales
Credits Sales
Total Cash Collections

Cash Collections
January
$24,000
$
49,000.0
$
73,000.0

February
$27,600
$
56,000
$83,600

Req. 2

Unit sales

Production Budget
January
8,000

Chapter 9: The Master Budget and Responsibility Accounting

February
9,200

Introduction to Management Accounting

Solutions Manual

Plus: Desired ending inventory


Total Needed
Less: Beginning
Units to produce

2,300
10,300
2,000
8,300

2,475
11,675
2,300
9,375

Req. 3
Direct Materials Budget
January
Units to be produced
8,300
Multiply by: Pounds needed for production
2
Quantity (pounds) needed for production
16,600
Plus: Desired ending inventory of DM
1,875
Total quantity (ponds) needed
18,475
Less: Beginning inventory of DM
1,660
Quantity (pounds) to purchase
16,815
Multiply by: Cost per pound
2
Total Cost of DM purchases
$33,630

Units to be produced
Multiply by: Pounds needed for production
Quantity (pounds) needed for production
Plus: Desired ending inventory of DM
Total quantity (ponds) needed
Less: Beginning inventory of DM
Quantity (pounds) to purchase
Multiply by: Cost per pound
Total Cost of DM purchases

February
9,375
2
18,750
1,970
20,720
1,875
18,845
2
$37,690

April

May

9,400

6,375

2
18,800
1,275
20,075
1880
18,195
2
36,390

2
12,750
0
12,750
2550
10,200
2
20,400

Req. 4
Schedule of Expected Cash DisbursementsMaterial Purchases
January
February
December Purchases (from accounts
payable)
January Purchases
February Purchases
March Purchases

$42,400
$6,726.0
0
0

Chapter 9: The Master Budget and Responsibility Accounting

0
$26,904.0
$7,538.0
0

Introduction to Management Accounting


Total Cash Payments for DM Purchases

Solutions Manual
$49,126

Chapter 9: The Master Budget and Responsibility Accounting

$34,442

Introduction to Management Accounting

Solutions Manual

Req. 5
Schedule of Expected Cash DisbursementsConversion Costs
January
February
Variable Conversion Costs
$9,960
$11,250
Rent (fixed)
$5,000
$5,000
Other Fixed MOH
3000
3000
Total Payments for Conversion Costs
$17,960
$19,250

Req. 6
Schedule of Expected Cash Disbursements -- Operating Expenses
January
February
Variable Operating Expenses
8000
9200
Fixed Operating Expenses
$1,000
$1,000
Total Payments for Operating Expenses
$9,000
$10,200

Req. 7

Cash Balance, Beginning


Add Cash Collections
Total Cash Available
Less Cash Payments:
Direct Material Purchases
Conversion Costs
Operating Expenses
Equipment Purchases
Tax Payments
Total Cash Payments
Ending Cash Balance Before Financing
Financing:
Plus Borrowings
Less Repayments
Less Interest Payments
Ending Cash Balance

Total interest

Combined Cash Budget


January
$4,500
73,000
77,500
49,126
17,960
9,000
5,000

February
$4,414
83,600
88,014

81,086
-3,586

34,442
19,250
10,200
12,000
10,000
85,892
2,122

8,000

2,000

4,414

4,122

$280

Chapter 9: The Master Budget and Responsibility Accounting

Introduction to Management Accounting

Solutions Manual

Req. 8
Budgeted Manufacturing Cost per Unit
Direct Materials Cost Per Unit
Conversion Costs Per Unit
Fixed Manufacturing Overhead Per Unit
Budgeted Cost of manufacturing Each Unit

$4.00
$1.20
$1.00
$6.20

Req. 9
Silverman Manufacturing
Budgeted Income Statement
For the Quarter Ended March 31
Sales
Cost of Goods Sold
Gross Profit
Operating Expenses
Depreciation
Operating Income
Less Interest Expense
Less Provision for Income Taxes
Net Income

271,000
168,020
102,980
30,100
4,800
68,080
280
20,340
$47,740

Chapter 9: The Master Budget and Responsibility Accounting

Introduction to Management Accounting

Solutions Manual

(60 min.) P 9-59A

ch, and for the quarter

om Requirement 3.

dget
February
9,200

March

April

9,900

May

9,700

8,500

10 $

10 $

10

10

92,000 $

99,000 $

97,000

85,000

March
Quarter
$29,700
$81,300
$ 64,400.0 $ 169,400.0
$94,100
$250,700

March
9,900

Quarter
27,100

Chapter 9: The Master Budget and Responsibility Accounting

Introduction to Management Accounting


2425
12,325
2,475
9,850

2,425
29,525
2,000
27,525

March
9,850
2
19,700
1880
21,580
1,970
19,610
2
$39,220

Quarter
27,525
2
55,050
1,880
56,930
1,660
55,270
2
$110,540

Solutions Manual

Need June info. To properly complete May

erial Purchases
March
0
0
$30,152.0
$7,844.0

Quarter
$42,400
$33,630
$37,690
$7,844

Chapter 9: The Master Budget and Responsibility Accounting

Introduction to Management Accounting


$37,996

Solutions Manual

$121,564

Chapter 9: The Master Budget and Responsibility Accounting

Introduction to Management Accounting

nversion Costs
March
$11,820
$5,000
3000
$19,820

Quarter
$33,030
$15,000
$9,000
$57,030

rating Expenses
March
9900
$1,000
$10,900

Quarter
$27,100
$3,000
$30,100

March
$4,122
94,100
98,222

Quarter
$4,500
250,700
255,200

37,996
19,820
10,900
16,000
84,716
13,506

121,564
57,030
30,100
33,000
10,000
251,694
3,506

9,000
280
4,226

10,000
9,000
280
4,226

Chapter 9: The Master Budget and Responsibility Accounting

Solutions Manual

Introduction to Management Accounting

Chapter 9: The Master Budget and Responsibility Accounting

Solutions Manual

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