ACC M118 Lecture Notes - Lecture 15: Income Statement, Net Income, Earnings Before Interest And Taxes

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orangeminnow841

7 Dec 2020

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The ending finished goods inventory budget supplies information needed for the balance sheet, and. Also serves as an important input for the preparation of the cost of goods sold budget. To prepare this budget, the unit cost of producing each t-shirt must be calculated by using information from the direct materials, direct labour, and overhead budgets. Reveals the expected cost of goods to be sold. The selling and administrative expenses budget outlines planned expenditures for nonmanufacturing activities. As with overhead, selling and administrative expenses can be broken down into fixed and variable components. Such items as sales commission, freight, and supplies vary with sales activity. Total selling and admin costs (variable + fixed expenses) By knowing when cash inflows and outflows are likely to occur, a manager can plan to. Repay the loans during periods of excess cash. Cash budget is one of the most important budgets in the master budget.

Related Questions

Show your work

Preparing a Comprehensive Budget

Ginnie Springs Company has been bottling and selling water since1940. The companyâs current owner would like to know how a newproduct would affect the companyâs rent income in the comingyear.

Required

Calculate Ginnie Springs net income for the new product in thecoming year by completing the operating budgets and budgeted incomestatement that follow. Assume that the selling price will remainconstant.

Sales budget

Ginnie Springs Company

Sales Budget

Forthe year Ended December 31

Quarter

	1	2	3	4	Year
Sales in Units	40,000	30,000	50,000	55,000	175,000
Selling price per unit	X $1	X ?	X ?	X ?	X ?
Totals Sales	40,000	$ ?	X ?	X ?	X ?

2. Production Budget:

Ginnie SpringsCompany

ProductionBudget

For the year Ended December31_____________

Quarter

	1	2	3	4	Year
Sales in Units	40,000	?	?	?	?
Plus desired units of ending finished goods inventory*	30,000	?	?	6000	6000
Desired total Units	43000	?	?	?	?
Less desired units of ending finished goods inventory*	4000	?	?	?	4000
Total Production units	39,000	?	?	?	?

*Desired units of ending finished goods inventory = 10% of nextquarterâs budgeted production needs in ounces. Desired ounces ofbeginning direct materials inventory = 20% of current quartersbudgeted production needs in ounces.

3.DirectMaterials Purchases budget

Ginnie SpringsCompany

Direct Materials PurchaseBudget

For the year Ended December31_____________

Quarter

	1	2	3	4	Year
Total production units	39,000	32,000	50,500	55,500	?
Ounces per unit	X 20	X 20	X 20	X 20	X 20
Total production needs in ounces	780,000	?	?	?	?
Plus desired ounces of ending direct materials inventory*	128,000 908,000	? ?	? ?	240,000 ?	240,000 ?
Less desired ounces of ending direct materials inventory*	156,000	?	?	?	156,000
Total ounces of direct material to be purchased	752,000	?	?	?	?
Cost per ounce	X $0.01	X ?	X ?	X ?	X ?
Total cost of direct materials purchases	$7520	?	?	?	?

Desired ounces of ending direct material inventory =20% of nextquarters budgeted production needs in ounces.

Desired ounces of beginning direct materials inventory = 20% ofcurrent quarters budgeted production needs in ounces.

4.Directlabor budget:

Ginnie SpringsCompany

Direct LaborBudget

For the year EndedDecember 31_____________

Quarter

	1	2	3	4	Year
Total production units	39,000	?	?	?	?
Direct labor hours per units	X 0.001	X ?	X ?	X ?	X ?
Total direct labor hours	39.0	?	?	?	?
Direct labor cost per hour	X $8	X ?	X ?	X ?	X ?
Total direct labor cost	$312	$ ?	$ ?	$ ?	$ ?

5.Overheadbudget

Ginnie SpringsCompany

Overhead Budget

For the year EndedDecember 31_____________

Quarter

	1	2	3	4	Year
Variable overhead costs:
Factory supplies ($0.01)	$ 390	$ ?	$ ?	$ ?	$ ?
Employee benefits ($0.05)	1,950	?	?	?	?
Inspection ($0.01)	390	?	?	?	?
Maintenance and repairs($0.02)	780	?	?	?	?
Utilities ($0.01)	390	?	?	?	?
Total Variable overheadcosts	$3900	$ ?	$ ?	$ ?	$ ?
Total fixed overhead costs	1416	?	?	?	?
Total overhead costs	$5,316	$ ?	$ ?	$ ?	$ ?

Note: The figures in parentheses are variable costs perunit.

6.Sellingand administrative expenses budget:

Ginnie SpringsCompany

Selling and Administrative Expenses Budget

For the year EndedDecember 31_____________

Quarter

	1	2	3	4	Year
Variable Selling and Administrative expenses
Delivery expenses ($0.01)	$ 400	$ ?	$ ?	$ ?	$ ?
Sales Commission ($0.02)	800	?	?	?	?
Accounting ($0.01)	400	?	?	?	?
Other administrative expenses($0.01)	400	?	?	?	?
Total Variable selling and administrative exp.	$2,000	$ ?	$ ?	$?	$?
Total fixed selling and administrative exp.	5000	?	?	$?	?
Total selling and administrative expenses	$ 7,000	$ ?	$ ?	$ ?	$ ?

Note: The figures in parentheses arevariable costs per unit

7. Cost of goods manufactured budget:

Ginnie SpringsCompany

Cost of Goods Manufactured Budget

For the year EndedDecember 31_____________

Direct Material Used:

Direct Material Inventory,Beginning

Purchases

Cost of Direct materials available foruse

Less: Direct materials Inventory,ending

Cost of Direct Materialsused

Direct laborcosts:

Overhead costs:

Total manufacturing costs

Work in Process Inventory,beginning*

Less: work in process inventory,ending*

Cost of Goods Manufactured

Units produced

Manufactured cost perunit

It is the companyâs policy to have no units in process at theend of theyear.

8. Budgeted income statement

Ginnie Springs Company

Selling and Administrative Expenses Budget

For the year EndedDecember 31_____________

Sales

Cost of goods sold

Finished goods inventory beginning

Cost of goods manufactured

Cost of Goods available for sale

Less finished goods inventory, ending

Cost of good sold

Gross margin

Selling and administrative expenses

Income from operations

Income taxes expenses (30% tax rate)

Net Income

lemonhamster976

Cost accounting (14th edition) Chapter 6, problem 28p ...

Budget schedules for a manufacturer.
Logo Specialties manufactures, among other things, woolen blanketsfor the athletic teams of the two local high schools. The companysews the blankets from fabric and sews on a logo patch purchasedfrom the licensed logo store site. The teams are as follows:

ï· Knights, with red blankets and the Knights logo ï· Raiders,with black blankets and the Raider logo

Also, the black blankets are slightly larger than the redblankets.
The budgeted direct-cost inputs for each product in 2012 are asfollows:

Manufacturing overhead (both variable and fixed) is allocated toeach blanket on the basis of budgeted direct manufacturinglabor-hours per blanket. The budgeted variable manufacturingoverhead rate for March 2012 is $15 per direct manufacturinglabor-hour. The budgeted fixed manufacturing overhead for March2012 is $9,200. Both variable and fixed manufacturing overheadcosts are allocated to each unit of finished goods. Data relatingto finished goods inventory for March 2012 are as follows:

Budgeted sales for March 2012 are 120 units of the Knightsblankets and 180 units of the Raiders blankets. The budgetedselling prices per unit in March 2012 are $150 for the Knightsblankets and $175 for the Raiders blankets. Assume the following inyour answer:

ï· Work-in-process inventories are negligible and ignored.
ï· Direct materials inventory and finished goods inventory arecosted using the FIFO

method.
ï· Unit costs of direct materials purchased and finished goods areconstant in March 2012.

Prepare the following budgets for March 2012:

a. Revenues budget
b. Production budget in units
c. Direct material usage budget and direct material purchasesbudget d. Direct manufacturing labor budget
e. Manufacturing overhead budget
f. Ending inventories budget (direct materials and finishedgoods)
g. Cost of goods sold budget

amberwoodchuck908

Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations:

The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and September are 9,000, 21,000, 23,000, and 24,000 units, respectively. All sales are on credit.

Thirty percent of credit sales are collected in the month of the sale and 70% in the following month.

The ending finished goods inventory equals 30% of the following monthâs unit sales.

The ending raw materials inventory equals 20% of the following monthâs raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.70 per pound.

Twenty percent of raw materials purchases are paid for in the month of purchase and 80% in the following month.

The direct labor wage rate is $14 per hour. Each unit of finished goods requires two direct labor-hours.

The variable selling and administrative expense per unit sold is $1.60. The fixed selling and administrative expense per month is $60,000.

1. If the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour, what is the estimated unit product cost? (Round your answer to 2 decimal places.) Unit product cost_________

2. What is the estimated finished goods inventory balance at the end of July, if the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour? Ending finished goods inventory__________

3. What is the estimated cost of goods sold and gross margin for July, if the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour?

Estimated cost of goods sold _________

Estimated gross margin __________

4. What is the estimated total selling and administrative expense for July? Total estimated selling and administrative expenses __________

5. What is the estimated net operating income for July, if the company always uses an estimated predetermined plantwide overhead rate of $8 per direct labor-hour? Net operating income ____________

THANK YOU SO VERY MUCH FOR YOUR SUPPORT!!!

skymink262

ACC M118 Lecture Notes - Lecture 15: Income Statement, Net Income, Earnings Before Interest And Taxes

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