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Duane Bennett

Master Budget

WASATCH MANUFACTURING
Master Budget

Unit Sales
Price Per Unit
Sales Revenue

$
$

Sales Budget
December
January
February
7000
8000
9000
15 $
15 $
15 $
105,000 $ 120,000 $ 135,000 $

Cash Sales
Credit Sales
Total cash collections

Unit sales
Plus: Desired ending inventory
Total needed
Less: Beginning inventory
Units to produce

Chapter 9: The Master Budget

Cash Collections Budget


January
February
$
36,000 $ 40,500
$
73,500 $ 84,000
$ 109,500 $ 124,500

Production Budget
January
February
8000
9000
1800
1720
9800
10720
-1600
-1800
8200
8920

$
$
$

March

April
May
8600
9400
6800
15 $
15 $
15
129,000 $ 141,000 $ 102,000

March
38,700
94,500
133,200

March
8600
1880
10480
-1720
8760

Quarter
$ 115,200
$ 252,000
$ 367,200

Quarter
25600
1880
27480
-1600
25880

Page 1 of 9

Duane Bennett

Master Budget

Direct Materials Budget


January
February
Units to be produced
8200
8920
4
4
Multiply by: Quantity of DM needed per unit
(lbs.)
Quantity of DM needed for production (lbs.)
32800
35680
Plus: Desired ending inventory of DM (lbs.)
5352
5256
Total quantity of DM needed (lbs.)
38152
40936
Less: Beginning inventory of DM (lbs.)
-4920
-5352
Quantity of DM to purchase (lbs.)
33232
35584
Multiply by: Cost per pound
$
1.00 $
1.00 $
Total cost of DM purchases

103520
15528
119048
-4920
114128
1.00

Quarter
$ 37,000
$ 33,232
$ 35,584
$ 11,328

Total Cash Payments

$ 117,144

33,820

35040
15528
50568
-5256
45312
1.00 $

Cash Payments for Direct Material Purchases Budget


January
February
March
December Purchases (from A/P)
$
37,000
January Purchases
$
8,308 $ 24,924
February Purchases
$
8,896 $
26,688
March Purchases
$
11,328
$

35,584

8760
4

$ 114,128

45,308

Quarter
25880
4

45,312

33,232

March

Cash Payments for Direct Labor Budget


January
February
Units Produced
8200
8920
Multiply by: Hours per unit
0.1
0.1
Direct Labors
820
892
Multiply by: Direct Labor Rate per Hour
$
15.00 $
15.00 $
Direct Labor Cost
$
12,300 $ 13,380 $

Chapter 9: The Master Budget

38,016

March

Quarter
8760
25880
0.1
0.1
876
2588
15.00 $
15.00
13,140 $ 38,820

Page 2 of 9

Duane Bennett

Chapter 9: The Master Budget

Master Budget

Page 3 of 9

Duane Bennett

Master Budget

Cash Payments for Manufacturing Overhead Budget


January
February
March
Rent (fixed)
$
10,000 $ 10,000 $
10,000
Other Manufacturing Overhead (fixed)
$
6,000 $
6,000 $
6,000
Variable Manufacturing Overhead Costs
Cash Payments for Manufacturing Overhead

Quarter
$ 30,000
$ 18,000

10,250

11,150

10,950

32,350

26,250

27,150

26,950

80,350

Cash Payments for Operating Expenses Budget


January
February
March
Variable Operating Expenses
$
10,400 $ 11,700 $
11,180
Fixed Operating Expenses
$
2,200 $
2,200 $
2,200

Quarter
$ 33,280
$
6,600

Cash Payments for Operating Expenses

Cash Balance, Beginning

13,900

13,380

39,880

Combined Cash Budget


January
February
$
17,000 $ 22,118

March
20,604

Quarter
17,000

Plus: Cash Collections


Total Cash Available
Less: Cash Payments
DM Purchases
Direct Labor
Manufacturing Overhead costs
Operating Expenses
Tax Payment
Equipment Purchases
Total Cash Payments
Chapter 9: The Master Budget

12,600

$
$

109,500
126,500

$ 124,500
$ 146,618

$
$

133,200
153,804

$ 367,200
$ 384,200

$
$
$
$

33,232
12,300
26,250
12,600

$
$
$
$

45,312
13,140
26,950
13,380

$
$

20,000
104,382

$ 35,584
$ 13,380
$ 27,150
$ 13,900
$ 28,000
$
8,000
$ 126,014

$
$

25,000
123,782

$ 114,128
$ 38,820
$ 80,350
$ 39,880
$ 28,000
$ 53,000
$ 354,178
Page 4 of 9

Duane Bennett
Ending Cash before Financing
Financing:
Borrowings
Repayments
Interest Payments
Cash Balance, Ending

Chapter 9: The Master Budget

Master Budget
$

22,118

20,604

30,022

30,022

$
$
$

$
$
$

22,118

20,604

30,022

30,022

Page 5 of 9

Duane Bennett

Master Budget

Budgeted Manufacturing Cost per Unit


Direct Materials- cost per unit
Direct Labor- cost per unit
Variable Manufacturing- cost per unit
Fixed Manufacturing- overhead per unit

$
$
$
$

4.00
1.50
1.25
1.85

Cost of Manufacturing- each unit

8.60

Budgeted Income Statement For the Quarter Ended March 31


Sales Revenue
$
384,000.00
Less: Cost of Goods Sold
$
220,280.68
Gross Profit
$
163,719.32
Less: Operating Expenses
$
39,880.00
Less: Depreciation Expense
$
10,000.00
Operating Income
$
113,839.32
Less: Interest Expense
$
Less: Income Tax Expense
$
26,183.04
Net Income

Chapter 9: The Master Budget

87,656.28

Page 6 of 9

Duane Bennett

Chapter 9: The Master Budget

Master Budget

Page 7 of 9

Duane Bennett

Master Budget

Current Assets as of Dec 31 (prior year)


Cash
Accounts Receivable, net
Inventory
Property, Plant & Equipment, Net
Accounts Payable
Capital Stock
Retained Earnings
December (actual)
January
February
March
April
May

$
$
$
$
$
$

$
$
$
$
$
$
$

17,000
73,500
20,000
105,000
37,000
95,000
40,000

105,000
120,000
135,000
129,000
141,000
102,000

Sales %
Cash
Credit

30%
70%

Ending Inventory Ratio

20%

Ending Direct Materials %

15%

Direct Material Payable Rate

Chapter 9: The Master Budget

Page 8 of 9

Duane Bennett

Master Budget

Current Month
Next Month

25%
75%

Variable Overhead/ Unit

1.25

Var. Exp. Rate/Unit sold

1.30

Loan Interest Rate


Company Income Tax Rate

Chapter 9: The Master Budget

1.25%
23%

Page 9 of 9