© 	Copyright 2004 South-Western, a division of Thomson Learning.  All rights reserved.
Download
1 / 56

chapter 20 - PowerPoint PPT Presentation


  • 204 Views
  • Updated On :

© Copyright 2004 South-Western, a division of Thomson Learning. All rights reserved. . Task Force Image Gallery clip art included in this electronic presentation is used with the permission of NVTech Inc. Chapter 20. Budgeting. Financial and Managerial Accounting 8th Edition

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'chapter 20' - jaden


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Slide1 l.jpg

© Copyright 2004 South-Western, a division of Thomson Learning. All rights reserved.

Task Force Image Gallery clip art included in this electronic presentation is used with the permission of NVTech Inc.

Chapter 20

Budgeting

Financial and Managerial Accounting

8th Edition

Warren Reeve Fess

PowerPoint Presentation by Douglas CloudProfessor Emeritus of AccountingPepperdine University


Slide2 l.jpg

Some of the action has been automated, so click the mouse when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.


Slide3 l.jpg

Nature and Objectives of Budgeting when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Estimated portion of your total monthly income that should be budgeted


Slide4 l.jpg

Objectives when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

1.Describe budgeting, its objectives, and its impact on human behavior.

2. Describe the basic elements of the budget process, the two major types of budgeting, and the use of computers in budgeting.

3.Describe the master budget for a manufacturing business.

4.Prepare the basic income statement budgets for a manufacturing business.

5.Prepare balance sheet budgets for a manufacturing business.

After studying this chapter, you should be able to:


Slide5 l.jpg

Feedback when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

DIRECTING

CONTROLLING

Nature and Objectives of Budgeting

Objectives of Budgeting

  • Establishing specific goals

  • Executing plans to achieve the goals

  • Periodically comparing actual results to the goals

PLANNING


Slide6 l.jpg

Nature and Objectives of Budgeting when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Human Behavior and Budgeting

Setting budget goals too tightly

Setting budget goals too loosely

Setting conflicting budget goals


Slide7 l.jpg

Nature and Objectives of Budgeting when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Goal conflict occurs when individual self-interest differs from business objectives.

A student’s question, “Will this be on the test?” is evidence of goal conflict.


Continuous budgeting l.jpg

One-Year Budget when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Mar. 2006

Apr. 2006

May 2006

June 2006

July 2998

Aug. 2006

Sep. 2006

Oct. 2006

Nov. 2006

Dec. 2006

Jan. 2007

Delete on February 28

Continuous Budgeting

Feb. 2006


Slide9 l.jpg

One-Year Budget when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Mar. 2006

Apr. 2006

May 2006

June 2006

July 2998

Aug. 2006

Sep. 2006

Oct. 2006

Nov. 2006

Dec. 2006

Jan. 2007

Add February 2007

Continuous Budgeting

Feb. 2007


Slide10 l.jpg

Static Budgets when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Description:A budget that does not reflect potential changes in volume or activity level

Strength:It is simple—all expenses are budgeted as fixed costs

Weakness:It does not reflect changes in revenues and expenses that occur as volumes change

Typical usage:Service organizations or administrative departments of retailers and manufacturers


Slide11 l.jpg

Static Budgets when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Colter Manufacturing Company

Assembly Department Budget

For the Month Ending July 31, 2006

Direct labor $40,000

Electric Power 5,000

Supervisor salaries 15,000

Total department costs $60,000


Slide12 l.jpg

Flexible Budgets when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Description:A budget that shows revenues and expenses for a variety of volumes or activity levels

Strength:Provides information needed to analyze the impact of volume changes on actual operating results

Weakness:Requires greater research into costs—must differentiate fixed and variable costs

Typical usage: Operational departments of retailers and manufacturers whose costs change with sales and production


Slide13 l.jpg

Cost per unit is $5.50 at all levels of activity when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Colter Manufacturing Company

Assembly Department Budget

For the Month Ending July 31, 2006

Variable cost:

Direct labor $40,000 $45,000 $50,000

Electric power 4,000 4,500 5,000

Total variable cost $44,000 $49,500 $55,000

Units of production 8,000 9,000 10,000


Slide14 l.jpg

Colter Manufacturing Company when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Assembly Department Budget

For the Month Ending July 31, 2006

Variable cost:

Direct labor $40,000 $45,000 $50,000

Electric power 4,000 4,500 5,000

Total variable cost $44,000 $49,500 $55,000

Fixed cost:

Electric power $ 1,000 $ 1,000 $ 1,000

Supervisor salaries 15,000 15,000 15,000

Total fixed cost $16,000 $16,000 $16,000

Units of production 8,000 9,000 10,000


Slide15 l.jpg

Colter Manufacturing Company when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Assembly Department Budget

For the Month Ending July 31, 2006

Variable cost:

Direct labor $40,000 $45,000 $50,000

Electric power 4,000 4,500 5,000

Total variable cost $44,000 $49,500 $55,000

Fixed cost:

Electric power $ 1,000 $ 1,000 $ 1,000

Supervisor salaries 15,000 15,000 15,000

Total fixed cost $16,000 $16,000 $16,000

Total department costs $60,000 $65,500 $71,000

Units of production 8,000 9,000 10,000


Static and flexible budgets l.jpg

Overbudget when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Actual Results

Static Budget

Static and Flexible Budgets

$60,000

$72,000


Slide17 l.jpg

Overbudget when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Actual Results

8,000 units

9,000 units

10,000 units

Static and Flexible Budgets

Flexible Budget

$60,000

$65,500

$71,000

$72,000


Master budget l.jpg
Master Budget when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Budgeted Income Statement

Budgeted Balance Sheet

Cash budget

Capital expenditure budget

Sales budget

Cost of goods sold budget:

Production budget

Direct materials purchases budget

Direct labor cost budget

Selling and administrative expense budget


Slide19 l.jpg

Income Statement Budgets when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.


Slide20 l.jpg

Production Budget when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Expected units of sales

+ Desired units in ending inventory

– Estimated units in beginning inventory

Total units to be produced

Sales

Budget


Slide21 l.jpg

Production Budget when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Materials needed for production

+ Desired ending materials inventory

– Est. beginning materials inventory

Direct materials to be purchased

Sales

Budget

Direct Materials

Purchases Budget


Slide22 l.jpg

Production Budget when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Cost of Goods

Sold Budget

Sales

Budget

Direct Materials

Purchases Budget

Direct Labor

Cost Budget

Selling & Administrative

Expenses

Budget

Factory Overhead

Cost Budget


Slide23 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Sales Budget

For the Year Ending December 31, 2006

Unit Sales Unit Selling Total

Product and Region Volume Price Sales

Wallet:

East……………….. 287,000 $12.00 $ 3,444,000

West………………. 241,000 12.00 2,892,000

Total……………. 528,000 $ 6,336,000

Handbag:

East……………….. 156,400 $25.00 $ 3,910,000

West………………. 123,600 25.00 3,090,000

Total……………. 280,000 $ 7,000,000

Total revenue from

Sales……………….. $13,336,000


Slide24 l.jpg

From sales budget when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Elite Accessories Inc.

Production Budget

For the Year Ending December 31, 2006

Units

Wallet Handbag

Expected units to be sold 528,000 280,000


Slide25 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Production Budget

For the Year Ending December 31, 2006

Units

Wallet Handbag

Expected units to be sold…………. 528,000 280,000

Plus desired ending inventory, December 31, 2006……………. 80,000 60,000

Total 608,000 340,000


Slide26 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Production Budget

For the Year Ending December 31, 2006

Units

Wallet Handbag

Expected units to be sold…………. 528,000 280,000

Plus desired ending inventory, December 31, 2006……………. 80,000 60,000

Total………………………………. 608,000 340,000

Less estimated beginning inventory, January 1, 2006…………………. 88,000 48,000

Total units to be produced………… 520,000 292,000


Slide27 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Direct Materials Purchases Budget

For the Year Ending December 31, 2006

Direct Materials

Leather Lining Total

Square yards required for production:

Wallet (Note A)………………….. 156,000 52,000

Note A: Leather: 520,000 units x 0.30 sq. yd. per unit = 156,000 sq. yds.

Lining: 520,000 units x 0.10 sq. yd. Per unit = 52,000 sq. yds.


Slide28 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Direct Materials Purchases Budget

For the Year Ending December 31, 2006

Direct Materials

Leather Lining Total

Square yards required for production:

Wallet(Note A)……..……..…….. 156,000 52,000

Handbag (Note B)……………….. 365,000 146,000

Note B: Leather: 292,000 units x 1.25 sq. yd. per unit = 365,000 sq. yds.

Lining: 292,000 units x 0.50 sq. yd. Per unit = 146,000 sq. yds.


Slide29 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Direct Materials Purchases Budget

For the Year Ending December 31, 2006

Direct Materials

Leather Lining Total

Square yards required for production:

Wallet(Note A)……....………….. 156,000 52,000

Handbag (Note B).………………. 365,000 146,000

Plus desired inventory, Dec. 31, 2006 20,000 12,000

Total……………………………… 541,000 210,000


Slide30 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Direct Materials Purchases Budget

For the Year Ending December 31, 2006

Direct Materials

Leather Lining Total

Square yards required for production:

Wallet (Note A) …………………. 156,000 52,000

Handbag (Note B) ………………. 365,000 146,000

Plus desired inventory, Dec. 31, 2006 20,000 12,000

Total……………………………… 541,000 210,000

Less estimated inventory, Jan. 1, 2006 18,000 15,000

Total square yards to be produced.. 523,000 195,000


Slide31 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Direct Materials Purchases Budget

For the Year Ending December 31, 2006

Direct Materials

Leather Lining Total

Square yards required for production:

Wallet (Note A)………………….. 156,000 52,000

Handbag (Note B).………………. 365,000 146,000

Plus desired inventory, Dec. 31, 2006 20,000 12,000

Total……………………………… 541,000 210,000

Less estimated inventory, Jan. 1, 2006 18,000 15,000

Total square yards to be produced.. 523,000 195,000

Unit price (per square yard)…………. x $4.50x $1.20

Total direct materials to be purchased. $2,353,500 $234,000 $2,587,500


Slide32 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Direct Labor Cost Budget

For the Year Ending December 31, 2006

Cutting Sewing Total

Hours required for production:

Wallet (Note A)………….52,000 130,000

Note A: Cutting Department: 520,000 units x 0.10 hr. per unit = 52,000 hrs.

Sewing Department: 520,000 units x 0.25 hr. per unit = 130,000 hrs.


Slide33 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Direct Labor Cost Budget

For the Year Ending December 31, 2006

Cutting Sewing Total

Hours required for production:

Wallet (Note A)………….52,000 130,000

Handbag (Note B)……….. 43,800 116,800

Note A: Cutting Department: 520,000 units x 0.10 hr. per unit = 52,000 hrs.

Sewing Department: 520,000 units x 0.25 hr. per unit = 130,000 hrs.

.

Note B: Cutting Department: 292,000 units x 0.15 hr. per unit = 43,800 hrs.

Sewing Department: 292,000 units x 0.40 hr. per unit = 116,800 hrs


Slide34 l.jpg

Note A: when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.Cutting Department: 520,000 units x 0.10 hr. per unit = 52,000 hrs.

Sewing Department: 520,000 units x 0.25 hr. per unit = 130,000 hrs.

.

Note B: Cutting Department: 520,000 units x 0.15 hr. per unit = 43,800 hrs.

Sewing Department: 520,000 units x 0.40 hr. per unit = 116,800 hrs

Elite Accessories Inc.

Direct Labor Cost Budget

For the Year Ending December 31, 2006

Cutting Sewing Total

Hours required for production:

Wallet (Note A)………….52,000 130,000

Handbag (Note B)……….. 43,800 116,800

Total……………………... 95,800 246,800


Slide35 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Direct Labor Cost Budget

For the Year Ending December 31, 2006

Cutting Sewing Total

Hours required for production:

Wallet (Note A)………….52,000 130,000

Handbag (Note B)……….. 43,800 116,800

Total……………………... 95,800 246,800

Hourly rate…………………… x $12.00x $15.00

Total direct labor cost………… $1,149,600 $3,702,000 $4,851,600

Note A: Cutting Department: 520,000 units x 0.10 hr. per unit = 52,000 hrs.

Sewing Department: 520,000 units x 0.25 hr. per unit = 130,000 hrs.

Note B: Cutting Department: 520,000 units x 0.15 hr. per unit = 43,800 hrs.

Sewing Department: 520,000 units x 0.40 hr. per unit = 116,800 hrs


Slide36 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Factory Overhead Cost Budget

For the Year Ending December 31, 2006

Indirect factory wages……………………... $ 732,800

Supervisory salaries………………………... 360,000

Power and light…………………………….. 306,000

Depreciation of plant and equipment………. 288,000

Indirect materials…………………………… 182,800

Maintenance………………………………... 140,280

Insurance and property taxes………………. 79,200

Total factory overhead cost………………... $2,089,080


Slide37 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Cost of Goods Sold Budget

For the Year Ending December 31, 2006

Finished goods inventory, January 1 ,2006….. $ 1,095,600

Work in process inventory, January 1, 2006… $ 214,400

Direct materials:

Direct materials inventory, January 1, 2006

(Note A)…………………………………. $ 99,000

Note A: Leather: 18,000 sq. yds. x $4.50 per sq. yd $81,000

Lining: 15,000 sq. yds. x $1.20 per sq. yd 18,000

Direct materials

inventory,

January 1, 2006 $99,000


Slide38 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Cost of Goods Sold Budget

For the Year Ending December 31, 2006

Finished goods inventory, January 1 ,2006….. $ 1,095,600

Work in process inventory, January 1, 2006… $ 214,400

Direct materials:

Direct materials inventory, January 1, 2006

(Note A)…………………………………. $ 99,000

Note B: Leather: 20,000 sq. yds. x $4.50 per sq. yd $ 90,000

Lining: 12,000 sq. yds. x $1.20 per sq. yd 14,400

Direct materials inventory, December 31, 2006 $104,400


Slide39 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Cost of Goods Sold Budget

For the Year Ending December 31, 2006

Finished goods inventory, January 1 ,2006…. $ 1,095,600

Work in process inventory, January 1, 2006... $ 214,400

Direct materials:

Direct materials inventory, January 1, 2006

(Note A)…………………………………. $ 99,000

Direct materials purchases (Slide 31)……..2,587,500

Cost of direct materials available for use…. $2,686,500

Less direct materials inventory,

December 31, 2006 (Note B)……………. 104,400

Cost of direct materials placed in production $2,582,100

Direct labor (Slide 35)……………………….4,851,600

Factory overhead (Slide 36)………………….. 2,089,080

Total manufacturing costs……………………. 9,522,780

Total work in process during period…………. $9,737,180


Slide40 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Cost of Goods Sold Budget

For the Year Ending December 31, 2006

Finished goods inventory, January 1 ,2006………... $ 1,095,600

Work in process inventory, January 1, 2006……….. $ 214,500

Total manufacturing costs………………………….. 9,522,780

Total work in process during period……………….. $9,737,180

Less work in process inventory, December 31, 2006 220,000

Cost of goods manufactured………………………... 9,517,180

Cost of finished goods available for sale…………... $10,612,780

Less finished goods inventory, December 31, 2006.. 1,565,000

Cost of goods sold………………………………….. $ 9,047,780


Slide41 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Selling and Administrative Expenses Budget

For the Year Ending December 31, 2006

Selling expenses:

Sales salaries expense…………………………. $715,000

Advertising expense…………………………... 360,000

Travel expense…………………………………. 115,000

Total selling expenses………………………... $1,190,000

Administrative expenses:

Officers’ salaries expense………………………. $360,000

Office salaries expense…………………………. 258,000

Office rent expense……………………………... 34,500

Office supplies expense…………………………. 17,500

Miscellaneous administrative expense………….. 25,000

Total administrative expenses………………… 695,000

Total selling and administrative expenses………… $1,885,000


Slide42 l.jpg

Elite Accessories Inc. when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.

Budgeted Income Statement

For the Year Ending December 31, 2006

Revenue from sales (slide 23) $13,336,000

Cost of goods sold (slide 40) 9,047,780

Gross profit $ 4,288,220

Selling & administrative expenses:

Selling expenses (slide 41) $1,190,000

Administrative expenses (slide 41) 695,000

Total sell. & Admin. Expenses 1,885,000

Income from operations $ 2,403,220

Other income:

Interest revenue $ 98,000

Other expense:

Interest expense 90,000 8,000

Income before income tax $ 2,411,220

Income tax 600,000

Net income $ 1,811,220


Slide43 l.jpg

Budgeted Balance Sheet when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen.


Slide44 l.jpg

The cash budget is one of the most important elements of the budgeted balance sheet. We’ll begin with a schedule of collection from sales.


Slide45 l.jpg

Elite Accessories Inc. budgeted balance sheet. We’ll begin with a schedule of collection from sales.

Schedule of Collections from Sales

For the Three Months Ending March 31, 2006

January February March

Receipts from cash sales:

Cash sales (10%)(see

Note A)……………………... $108,000 $ 124,000 $ 97,000

Note A: $108,000 = $1,080,000 x 10%

$124,000 = $1,240,000 x 10%

$ 97,000 = $ 970,000 x 10%


Slide46 l.jpg

Elite Accessories Inc. budgeted balance sheet. We’ll begin with a schedule of collection from sales.

Schedule of Collections from Sales

For the Three Months Ending March 31, 2006

January February March

Receipts from cash sales:

Cash sales (10%)(see

Note A)……………………... $108,000 $ 124,000 $ 97,000

Receipts from sales on account:

Collections from prior month’s

sales (40%)(see Note B)……. $370,000 $ 388,800 $446,400

Note B: $370,000, given as January 1, 2006 Accounts

Receivable balance

$388,800 = $1,080,000 x 90% x 40%

$446,400 = $1,240,000 x 90% x 40%


Slide47 l.jpg

Elite Accessories Inc. budgeted balance sheet. We’ll begin with a schedule of collection from sales.

Schedule of Collections from Sales

For the Three Months Ending March 31, 2006

January February March

Receipts from cash sales:

Cash sales (10%)(see

Note A)……………………... $108,000 $ 124,000 $ 97,000

Receipts from sales on account:

Collections from prior month’s

sales (40%)(see Note B)……. $370,000 $ 388,800 $446,400

Collections from current month’s sales (60%)(see Note

C)…………………………… 583,200 669,600 523,800

Note C: $583,200 = $1,080,000 x 90% x 60%

$669,600 = $1,240,000 x 90% x 60%

$523,800 = $ 970,000 x 90% x 60%


Slide48 l.jpg

Elite Accessories Inc. budgeted balance sheet. We’ll begin with a schedule of collection from sales.

Schedule of Collections from Sales

For the Three Months Ending March 31, 2006

January February March

Receipts from cash sales:

Cash sales (10%)(see

Note A)……………………... $108,000 $ 124,000 $ 97,000

Receipts from sales on account:

Collections from prior month’s

sales (40%)(see Note B)……. $370,000 $ 388,800 $446,400

Collections from current month’s sales (60%)(see Note

C)…………………………… 583,200 669,600 523,800

Total receipts from sales on account……………………... $953,200 $1,058,400 $970,200


Slide49 l.jpg

Elite Accessories Inc. budgeted balance sheet. We’ll begin with a schedule of collection from sales.

Schedule of Payments for Manufacturing Costs

For the Three Months Ending March 31, 2006

January February March

Payment of prior month’s

manufacturing costs (25%) (see Note A)………………… $190,000 $204,000 $189,000

Note A: $190,000, given as January 1, 2006 Accounts

Payable balance

$204,000 = ($840,000 –$24,000) x 25%

$189,000 = ($780,000 – $24,000) x 75%


Slide50 l.jpg

Elite Accessories Inc. budgeted balance sheet. We’ll begin with a schedule of collection from sales.

Schedule of Payments for Manufacturing Costs

For the Three Months Ending March 31, 2006

January February March

Payment of prior month’s

manufacturing costs (25%) (see Note A)………………… $190,000 $204,000 $189,000

Payment of current month’s

manufacturing costs (75%)

(see Note B)…………………. 612,000 567,000 591,000

Note B: $612,000 = ($840,000 – $24,000) x 75%

$567,000 = ($780,000 – $24,000) x 75%

$591,000 = ($812,000 – $24,000) x 75%


Slide51 l.jpg

Elite Accessories Inc. budgeted balance sheet. We’ll begin with a schedule of collection from sales.

Schedule of Payments for Manufacturing Costs

For the Three Months Ending March 31, 2006

January February March

Payment of prior month’s

manufacturing costs (25%) (see Note A)………………… $190,000 $204,000 $189,000

Payment of current month’s

manufacturing costs (75%)

(see Note B)…………………. 612,000 567,000 591,000

Total payments………………. $802,000 $771,000 $780,000


Slide52 l.jpg

Elite Accessories Inc. budgeted balance sheet. We’ll begin with a schedule of collection from sales.

Cash Budget

For the Three Months Ending March 31, 2006

January February March

Estimated cash receipts:

Cash sales (Slide 45)………….. $ 108,000 $ 124,000 $ 97,000

Collections of accounts

receivable (Slide 48)………... 953,200 1,058,400 970,200

Interest revenue………………... —— 24,500

Total cash receipts……………. $1,061,200$1,182,400$1,091,700


Slide53 l.jpg

Elite Accessories Inc. budgeted balance sheet. We’ll begin with a schedule of collection from sales.

Cash Budget

For the Three Months Ending March 31, 2006

January February March

Estimated cash receipts:

Cash sales (Slide 45)………….. $ 108,000 $ 124,000 $ 97,000

Collections of accounts

receivable (Slide 48)………... 953,200 1,058,400 970,200

Interest revenue………………... —— 24,500

Total cash receipts……………. $1,061,200$1,182,400$1,091,700

Estimated cash payments for:

Manufacturing costs (Slide 51).. $ 802,000 $ 771,000 $ 780,000

Selling and administrative expenses……………………… 160,000 165,000 145,000

Capital additions 274,000

Interest expense 22,500

Income taxes 150,000


Slide54 l.jpg

Elite Accessories Inc. budgeted balance sheet. We’ll begin with a schedule of collection from sales.

Cash Budget

For the Three Months Ending March 31, 2006

January February March

Estimated cash receipts:

Cash sales (Slide 45)………….. $ 108,000 $ 124,000 $ 97,000

Collections of accounts

receivable (Slide 48)………... 953,200 1,058,400 970,200

Interest revenue………………... —— 24,500

Total cash receipts……………. $1,061,200$1,182,400$1,091,700

Estimated cash payments for:

Manufacturing costs (Slide 51).. $ 802,000 $ 771,000 $ 780,000

Selling and administrative expenses……………………… 160,000 165,000 145,000

Capital additions 274,000

Interest expense 22,500

Income taxes 150,000

Total cash payments…………. $ 984,500$1,210,000$1,075,000


Slide55 l.jpg

Elite Accessories Inc. budgeted balance sheet. We’ll begin with a schedule of collection from sales.

Cash Budget

For the Three Months Ending March 31, 2006

January February March

Estimated cash receipts:

Cash sales (Slide 45)………….. $ 108,000 $ 124,000 $ 97,000

Collections of accounts

receivable (Slide 48)………... 953,200 1,058,400 970,200

Capital additions 274,000

Interest expense……………….. 22,500

Income taxes…………………... 150,000

Total cash payments…………. $ 984,500$1,210,000 $1,075,000

Cash increase (decrease)…………. $ 76,700 $ (27,600) $ 16,700

Cash balance at beginning of month 280,000 356,700 329,100

Cash balance at end of month……. $ 356,700 $ 329,100 $ 345,800

Minimum cash balance…………… 340,000 340,000 340,000

Excess (deficiency)………………. $ 16,700 $ (10,900) $ 5,800


Slide56 l.jpg

Chapter 20 budgeted balance sheet. We’ll begin with a schedule of collection from sales.

The End


ad