ACCOUNTING

Assignment 1

Assignment 1

Part A

Sales Budget

The Sales Budget:

January

Feb

March

Quarter

Budgeted Sales (units)

73,250

58,600

65,930

197,780

SP/unit

5,700

5,700

5,700

5,700

Total Sales

417,525,000

334,020,000

375,801,000

1,127,346,000

Production Budget

The Production Budget:

January

Feb

March

Quarter

Budgeted Sales (units)

73250

58600

65930

197780

Add: desired ending Inventory

11720

13186

17580

17580

Total needed

84970

71786

83510

215360

Less: Beg. Inventory

46900

11720

13186

46900

Required Production

38070

60066

70324

168460

Expected Cash Collections

January

Feb

March

Quarter

Accounts Receivable 3/31

133608000

 

 

133608000

April Sales:

 

 

 

 

78% X 417525000

$325,669,500.00 $ 325,669,500.00

22% X 417525000

 

$ 91,855,500.00 $ 91,855,500.00

May Sales:

 

 

 

 

78% X 334020000

 

$260,535,600.00 $ 260,535,600.00

22% X 334020000

 

 

$ 73,484,400.00 $ 73,484,400.00

June Sales:

 

 

 

 

78% X 375801000

 

 

$293,124,780.00 $ 293,124,780.00

22% X 375801000

 

 

 

 

Total Cash collections:

459277500

352391100

366609180

1178277780

Direct Material budget

The Direct Materials Budget: PART-714

January

Feb

March

Quarter

Production (units)

38,070

60,066

70,324

168,460

Materials per unit

4

4

4

4

Production Needs

152,280

240,264

281,296

673,840

Add: desired ending Inventory

11,720

13,186

17,580

17,580

Total needed

164,000

253,450

298,876

691,420

Less: Beg. Inventory

43,950

35,160

39,558

43,950

Materials to be purchased

120,050

218,290

259,318

597,658

cost per part

$ 88 $ 88 $ 88 $ 88

Total Cost

10564400

19209520

22819984

52593904

 

 

 

 

 

The Direct Materials Budget: PART-502

January

Feb

March

Quarter

Production (units)

38070

60066

70324

168460

Materials per unit

6

6

6

6

Production Needs

228420

360396

421944

1010760

Add: desired ending Inventory

11720

13186

17580

17580

Total needed

240140

373582

439524

1028340

Less: Beg. Inventory

43950

35160

39558

43950

Materials to be purchased

196190

338422

399966

934578

cost per part

$ 117 $ 117 $ 117 $ 117

Total cost

$ 22,954,230 $ 39,595,374 $ 46,796,022 $ 109,345,626

Direct Labour Budget

The Direct Labor Budget

January

Feb

March

Quarter

Production (units)

38070

60066

70324

168460

Direct labor hours

9

9

9

9

Labor hours required

342630

540594

632916

1516140

Labor hours paid

342630

540594

632916

1516140

Wage rate

$ 50.00 $ 50.00 $ 50.00 $ 50.00

Total direct labor cost

$ 17,131,500.00 $ 27,029,700.00 $ 31,645,800.00 $ 75,807,000.00

Maintenance cost will be around = 89418325, therefore this would be around 60.43 i.e. variable per unit.

Manufacturing Overhead rate= total Fixed budgeted overhead/total budgeted units

=291.90

Factory Overhead Budget

Factory overhead budget

Jan

Feb

March

Quarter

Labor hours paid

342630

540594

632916

1516140

Indirect labor

$ 61.53 $ 61.53 $ 61.53 $ 61.53

total indirect labour

$ 21,082,023.90 $ 33,262,748.82 $ 38,943,321.48 $ 93,288,094.20

Maintenance (DLH*60.43)

$ 20,705,130.90 $ 32,668,095.42 $ 38,247,113.88 $ 91,620,340.20

power (DLH*variable cost power)

$ 2,007,811.80 $ 3,167,880.84 $ 3,708,887.76 $ 8,884,580.40

Total variable overhead

$ 43,794,966.60 $ 69,098,725.08 $ 80,899,323.12 $193,793,014.80

Supervision

41020000

41020000

41020000

123060000

Depreciation

3662500

3662500

3662500

10987500

rates and utilities

3026700

3026700

3026700

9080100

Others (other VC * DLH)

15058588.5

23759106.3

27816658.2

66634353

Total factory overhead

$106,562,755.10 $140,567,031.38 $156,425,181.32 $403,554,967.80

Ending Finished Good

Ending Finished Goods Inventory Budget

Budgeted Unit Cost

Product

Propeller

Material

Part 714

Part 504

Direct Lab

Budgeted Quantity Per unit

4

6

9

Budgeted Price

88

117

50

Budgeted Cost Per unit

352

708

450

Total cost per unit

1510

Jan

Feb

March

Ending inventory in units

11720

13186

17580

Unit product cost

1510

1510

1510

Ending finished goods inventory

$ 17,697,200 $ 19,910,860 $ 26,545,800

Selling & Administration Budget

January

Feb

March

Quarter

Budgeted Sales (units)

73250

58600

65930

197780

Variable Expense

62628750

5010300

56370150

124009200

Fixed S&A Expense

26370000

21096000

23733000

71199000

Total Expense

88998750

26106300

80103150

195208200

Less: Non Cash Expenses

3662500

3662500

3662500

10987500

Cash Disbursements for S&A

85336250

22443800

76440650

184220700

Cost of goods sold

Budgeted CGS

Cost of Goods Sold

Direct Material

$ 109,345,626

Direct Labor

$ 75,807,000.00

Manufacuting overhead

$ 57,731,982.00

Total manufacturing cost

$ 242,884,608

Add Finished good beginning

46900

less Finished good ending

17580

Cost of Goods Sold

$ 242,913,928

Budgeted Income Statement

Sales (@$3648.79)

$ 1,127,346,000

 

 

Cost of goods sold $ 242,913,928

Gross margin

$ 884,432,072

Selling & Administrative expenses

$ 184,220,700

Operating Income

$ 700,211,372

Interest expense

$ -

Net Income

$ 700,211,372

Cash Budget

The CASH Budget

January

Feb

March

Quarter

Beginning cash balance

3662500

$260,535,600.00 $293,124,780.00

557322880

Add: cash collections

$325,669,500.00 $ 83,505,000.00 $ 66,804,000.00 $475,978,500.00

Total available:

329332000

344040600

359928780

1033301380

Less: Disbursements

85336250

22443800

76440650

184220700

Materials

 

 

 

 

Direct labor

$ 17,131,500.00 $ 27,029,700.00 $ 31,645,800.00 $ 75,807,000.00 Mfg. Overhead

19433942.6

23771113.88

25793786.32

68998842.8

Equipment purchase

38090000

 

 

 

Dividends

170000000

 

 

 

Total disbursements

$329,991,692.60 $ 73,244,613.88 $133,880,236.32 $537,116,542.80

Excess (deficiency) of cash available over disbursements

$ (659,692.60)

$270,795,986.12 $226,048,543.68 $496,184,837.20

 

 

 

 

 

Financing:

 

 

 

 

Borrowing

700000

 

 

 

Repayments

 

700000

 

 

Interest

 

10500

 

 

Total Financing

 

710500

 

 

Ending cash balance:

$ 40,307.40 $270,085,486.12 $133,880,236.32 $404,006,029.84

Part B

Before discussing the potential alternative, let's have a look on the new budgeted labor cost if production manager go for the investment alternative:

The Direct Labor Budget

January

Feb

March

Quarter

Production (units)

38070

60066

70324

168460

Direct labor hours

9

9

9

9

Labor hours required

342630

540594

632916

1516140

Labor hours paid

342630

540594

632916

1516140

Wage rate

$ 50.00

$ ...