Accounting



Accounting - Analysis

Introduction

The modern market system significantly alters the fundamental principles of the formation of information on the cost of services and requires the development of new approaches to the construction of management accounting in enterprises service. There is the need to integrate different methods capturing information about the costs and performance of the business entities of services to address the operational and medium-term objectives. This has become an evident need for improved methods of management accounting cost, the development of new criteria for the composition and classification of costs that meet the requirements of different users which is in the modification of the content of the entire system flow accounting information for budgeting system in the enterprise.

Part A - Prepare a Master Budget

Wittgenstein Pty Ltd

Sales Budget

 

Jan

Feb

Mar

Apr

Total sales

428,794,000 343,012,000 385,932,000 514,576,000

Net Sales

428,794,000 343,012,000 385,932,000 514,576,000

 

 

Collections

 

From Jan: 78% Rec

334,459,320 267,549,360 301,026,960 401,369,280 : 20% Rec

85,758,800 68,602,400 77,186,400

Sales of the Month

334,459,320 353,308,160 369,629,360 478,555,680

 

 

 

 

 

Production Budget

Production

Month

Budgeted Unit sales

Desired ending Units *

Desired Beginning Units **

Units to be Produced

Propeller

Jan

73930

11828

14786

70972

Feb

59140

17308

11828

64620

Mar

86540

17744

17308

86976

Apr

88720

 

 

88720

*10% of next month's sales

 

**previous Month's ending

 

 

 

 

 

Wittgenstein Pty Ltd

Direct Material Budget

Material

Month

Product

Units to be produced

Quantity Budgeted Per unit

Quantity Needed for Production

Part 714

Jan

Propeller

70972

4

283888

Feb

Propeller

64620

4

258480

Mar

Propeller

86976

4

347904

890,272

Material

Month

Product

Units to be produced

Quantity Budgeted Per unit

Quantity Needed for Production

Part 502

Jan

Propeller

70972

6

425,832

Feb

Propeller

64620

6

387720

Mar

Propeller

86976

6

521856

1,335,408

Wittgenstein Pty Ltd

Material Purchased

Material

Month

Quantity needed for production

*Desired Ending Quantity

Desired Beginning Quantity

Quantity Needed to be purchased

Part 714

Jan

283,888

51,696.0

56,777.60

278,806.40

Feb

258,480

69,580.8

51,696.00

276,364.80

Mar

347,904

69,580.80

Part 502

Jan

425,832

77544

85166

418210

Feb

387,720

104371

77544

414547

Mar

521,856

*20% of the next month's production needed

Cost of Material Purchased & cash payment

Month

Material

Quantity to be purchased

Budgeted Price

Budgeted Costs

Jan

Part 714

278,806

$89

$24,813,770

Part 502

418210

$118

$49,348,733

$74,162,502

Feb

Part 714

276,364.80

$89

$24,596,467

Part 502

414547

$118

$48,916,570

$73,513,037

Cash payment for material purchased *

 

Jan

Feb

 

For Jan Purchased

$74,162,502

$73,513,037

 

Total Cash Payments

74162502

73513037

 

 

* Paid in the month the material purchased

 

 

Cost of Material to be used in Production

Month

Material

Quantity Needed for production

Budgeted Price

Budgeted D.M Cost

Jan

Part 714

283888

$89

$25,266,032

Part 502

425,832

$118

$50,248,176

$75,514,208

Feb

Part 714

258480

$89

$23,004,720

Part 502

387720

$118

$45,750,960

$68,755,680

Direct Labour Budget

Labour Requirements

Month

Product

Units to be Produced

D.L Hrs Budgeted Per unit

D.L hrs needed for production

Jan

Propeller

70972

9

638748

Feb

Propeller

64620

9

581580

 

1220328

Cost of Labour to be used in production

Month

D.L Hrs Needed for production

Budgeted Rate per hr

Budgeted D.L Cost

Jan

638748

50

31937400

31937400

Feb

581580

50

29079000

29079000

Factory Overhead Budget

a. Budgeted Overhead Costs

Month

Depreciation

Fixed Cost

Variable cost*

Total Budgeted Overhead Costs

Jan

Indirect Lab

-

(638748)*(62.10)

39666250.8

Power

-

(638748)*(5.91)

3775000.68

Maintainers

89418325

(638748*61)

38963628

82404879.48

Feb

Indirect Lab

(581580)*(62.10)

36116118

Power

(581580)*(5.91)

3437137.8

Maintenance

89418325

(581580*61)

35476380

75029635.8

*(D.L hrs needed for production) ( Variable overhead rate)

Ending Inventory Budget

a. Ending Direct Materials

Material

Month

Desired Ending Mat Quantity

Budgeted Price

Desired Ending Mat in $

Part 714

Jan

51,696

89

4,600,944

 

Feb

69,581

89

6,192,691

 

 

 

Part 504

Jan

77544

118

9150192

 

Feb

104371

118

12315802

b. Budgeted Unit Cost

Product

Material

Budgeted Quantity Per unit

Budgeted Price

Budgeted Cost Per unit

Propeller

Part 714

4

89

356

 

Part 504

6

118

708

 

Direct Lab

9

50

450

 

1514

 

 

 

 

 

 

c. Ending Finished Goods

Product

Month

Desired Ending Quantity

Budgeted Cost Per unit

Desired Ending Finished Goods in $

Propeller

Dec

14786

1514

22386004

 

Jan

11828

1514

17907592

 

Feb

17308

1514

26204312

 

 

66497908

Budgeted Cost of Goods sold

 

Jan

Feb

Direct Mat Used

$75,514,208

$68,755,680

Direct Labour Used

31937400

29079000

Factory Overhead

82404879.48

75029635.8

Total Man Cost *

$189,856,487

$172,864,316

 

 

Add: Beg Finished Goods:

22386004

17907592

Less: End Finished Goods

17907592

26204312

Cost of Goods Sold

$194,334,899

$164,567,596

 

 

 

 

*Assuming no change in work in process, total manufacturing cost will be equal to the cost of goods manufactured)

Budgeted Income Statement

 

Jan

Feb

Mar

Sales

428,794,000

343,012,000

385,932,000

Less: cost of goods sold

$194,334,899

$164,567,596

Gross Profit

$234,459,100.5

$178,444,404.2

 

Less: Sell & admin exp

90933900

72743600

 

Net Income Before Taxes

$143,525,200.5

$105,700,804.2

 

Cash Budget

 

Jan

Feb

Mar

Beginning Cash Balance

3696500

$40,931,138

$172,953,026

Add: Receipts

Collections

334,459,320

353,308,160

369,629,360

Other Receipts

137214000

0

Total Cash Available

475369820

394239298.1

542582385.5

 

Less: Payment

Direct Material

$74,162,502

$73,513,037

Direct Labour

31937400

0

Factory Overhead

82404879.48

75029635.8

Sell & admin

90933900

72743600

Dividends

155000000

0

Other payments

0

0

 

Excess

$40,931,138

172953025.5

 

Financing:

Borrowing

0

Repayment

0

Ending Cash Balance

$40,931,138

$172,953,026

Part B - Report on the impact of Cost Structures

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