Question

LBL Corporation is preparing its master budget for the first quarter of the upcoming year. The...

LBL Corporation is preparing its master budget for the first quarter of the upcoming year. The following contains detail on LBL’s operations necessary for their master budget:

  • Sales Information:
    • Actual / Projected Sales are as follows:
      • December (Prior Year; Actual):   $75,000
      • January (Estimated):   $85,000
      • February (Estimated):   $91,000
      • March (Estimated):   $96,000
      • April (Estimated):   $112,000
      • May (Estimated):   $120,000
    • Units are sold at $11 each
    • Sales in a month are paid in cash for 40% and on credit for the remainder with credit collection occurring in the month following the sale.

HINT: To help you with several budgets, you will need sales in UNITS (not total dollars as listed above). You can calculate the number of sales units by taking the total sales / sales price per unit.

  • Partial balance sheet as of 12/31 of the prior year:
    • Cash                                        $5,050
    • A/R, net                                 $112,000
    • Inventory                               $37,600
    • PP&E                                      $145,000
    • A/P                                         $35,700
    • Capital Stock                         $140,900
    • Retained Earnings                $29,000

HINT: You may not need all this information.

  • LBL plans to produce enough units for sales expected in the period as well as have a cushion in ending finished goods inventory of 20% of the following month’s sales units expected.

  • Direct Materials:
    • Three pounds of materials are needed to create each unit.
    • When LBL purchases raw materials, they pay 30% in the month of purchase and the rest the following month. The cost is $1.50 per pound of material.
    • Management wants ending inventory to be equal to 20% of next month’s production needs.

HINT: Direct materials are the only thing that LBL pays for, in part, in the following month. All other expenses are paid for in the month they occur. Therefore, the balance for A/P is for raw materials.

  • Direct Labor:
    • There is little DL necessary at LBL with only 0.05 direct labor hours needed per unit.
    • Labor costs are paid in the month incurred at a rate of $9 per hour.

  • Other Manufacturing Costs:
    • Variable overhead costs $1.10 per unit.
    • LBL pays plant rent at a steady rate of $6,000 per month and $4,000 per month for all other fixed manufacturing costs. For the units expected for the year, fixed overhead costs are $0.80 per unit.
    • All expenses are paid in the period incurred, and the above costs do not include depreciation.

  • Capital Expenditures: New computer equipment will be phased into LBL’s admin offices over the next year with first quarter purchases as follows: January: $10,000, February: $13,000, and March: $15,000.

  • Operating/SG&A Expenses:
    • Budgeted costs are $1.25 per unit.
    • Depreciation for the admin office’s buildings/equipment is estimated at $5,000 for the quarter.
    • Additionally, they pay $2,000 for fixed operating expenses per month

  • Financing:
    • LBL wants cash to be at a minimum balance of $5,000 each month.
    • In case of a cash shortage, they have a line of credit with a bank for up to $75,000, which is borrowed and repaid in $1,000 increments. Simple interest applies to borrowed amounts at 1% per month outstanding with accumulated interest paid at the end of each quarter for any borrowed amounts throughout the period. If the company has surplus cash beyond the minimum balance required in a month, it would repay as much of any outstanding loans as possible without violating its minimum balance policy.

  • Taxes:
    • The current applicable tax rate is 35%.
    • While taxes are incurred each month of operations, it is paid quarterly with a $12,000 payment expected in February only.

Homework Required: Using the information above, prepare the following budgets for the first quarter (January, February, March AND a Quarter total, where applicable) in Excel:

  1. Combined cash budget

HINT: Many of the items on here will come from previous budgets you created in 1-5 above.

  1. Budgeted manufacturing overhead per unit (HINT: There is no time period/monthly budget needed for this)

HINT: The Fixed MOH per unit was given to you.

  1. Budgeted income statement for the quarter ending March 31 (Hint 1: This is a quarterly statement, so you do not need to do each month but rather a combined statement for January 1 through March 31; Hint 2: The COGS amount is found, in part, by using the COGS per unit you find in budget 7. above).
0 0
Add a comment Improve this question Transcribed image text
Answer #1

ANSWER

1. Sales Budget Working
Jan Feb Mar Total Apr May
Budgeted Units                              7,727                      8,273                                8,727                           24,727            10,182            10,909
Budgeted Selling Price $                                11 $                        11 $                                  11 $                               11 $                11 $                11
Budgeted Sale $                        85,000 $               91,000 $                          96,000 $                       24,738 $      112,000 $      120,000
2. Production Budget
Jan Feb Mar Total Apr May
Budgeted No of Units                              7,727                      8,273                                8,727                           24,727            10,182            10,909
Add: Desired ending inventory 20%                              1,655                      1,745                                2,036                              2,036               2,182
Units available                              9,382                    10,018                              10,764                           26,764            12,364
Less: Beginning Inventory                             -1,545                    -1,655                               -1,745                            -1,545             -2,036
Budgeted Production units                              7,836                      8,364                                9,018                           25,218            10,327
3. Direct Material Budget
Jan Feb Mar Total Apr
Budgeted Production Units                              7,836                      8,364                                9,018                           25,218            10,327
Material needed per unit                                       3                              3                                         3                                      3                       3
Total Material needed                            23,509                    25,091                              27,055                           75,655            30,982
Add: Desired ending inventory 20%                              5,018                      5,411                                6,196                              6,196
Units available                            28,527                    30,502                              33,251                           81,851
Less: Beginning Inventory                             -4,702                    -5,018                               -5,411                            -4,702
Budgeted Purchases Units                            23,825                    25,484                              27,840                           77,149
Unit price of Material $                            1.50 $                    1.50 $                              1.50 $                            1.50
Total Budgeted Purchase $                        35,738 $               38,225 $                          41,760 $                     115,724
4. Schedule of cash collection
Jan Feb Mar Total
Same month Sale 40% $                        34,000 $               36,400 $                          38,400 $                     108,800
Following month 60% $                     112,000 $               51,000 $                          54,600 $                     217,600
Total $                     146,000 $               87,400 $                          93,000 $                     326,400

_____________________________________________

If you have any query or any Explanation please ask me in the comment box, i am here to helps you.please give me positive rating.

*****************THANK YOU**************

Add a comment
Know the answer?
Add Answer to:
LBL Corporation is preparing its master budget for the first quarter of the upcoming year. The...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • LBL Corporation is preparing its master budget for the first quarter of the upcoming year. The...

    LBL Corporation is preparing its master budget for the first quarter of the upcoming year. The following contains detail on LBL’s operations necessary for their master budget: LBL Corporation is preparing its master budget for the first quarter of the upcoming year. The following contains detail on LBL's operations necessary for their master budget: Sales Information Actual Projected Sales are as follows: December (Prior Year; Actual): $75,000 January (Estimated) $85,000 February (Estimated): $91,000 March (Estimated): $96,000 April (Estimated): $112,000 May...

  • LBL Corporation is preparing its master budget for the first quarter of the upcoming year. The...

    LBL Corporation is preparing its master budget for the first quarter of the upcoming year. The following contains detail on LBL’s operations necessary for their master budget: •Sales Information: oActual / Projected Sales are as follows: ♣December (Prior Year; Actual): $75,000 ♣January (Estimated): $85,000 ♣February (Estimated): $91,000 ♣March (Estimated): $96,000 ♣April (Estimated): $112,000 ♣May (Estimated): $120,000 oUnits are sold at $11 each oSales in a month are paid in cash for 40% and on credit for the remainder with credit...

  • Please complete the rest LBL Corporation is preparing its master budget for the first quarter of...

    Please complete the rest LBL Corporation is preparing its master budget for the first quarter of the upcoming year. The following contains detail on LBL's operations necessary for their master budget: • Sales Information: o Actual / Projected Sales are as follows: : December (Prior Year; Actual): $75,000 January (Estimated): $85,000 February (Estimated): $91,000 March (Estimated): $96,000 . April (Estimated): $112,000 . May (Estimated): $120,000 o Units are sold at $11 each o Sales in a month are paid in...

  • Dalley Manufacturing is preparing its master budget for the first quarter of the upcoming year. The...

    Dalley Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Dalley Manufacturing's operations: (Click the icon to view the data.) (Click the icon to view additional data.) Read the requirements. Requirement 1. Prepare a schedule of cash collections for January, February, and March, and for the quarter in total. Dalley Manufacturing Cash Collections Budget For the Quarter Ended March 31 Month January February March Quarter Cash sales Credits sales Total...

  • Decker Manufacturing is preparing its master budget for the first quarter of the upcoming year. The...

    Decker Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to deckers manufacturing s operation Current Assets as of December 31 (prior year): Cash 4600 Accounts receivable, net 47000 Inventory 15100 Property, plant, and equipment, net 123000 Accounts payable. 43000 Capital stock. 123500 Retained earnings. 23100 a. Actual sales in December were $71,000. Selling price per unit is projected to remain stable at $12 per unit throughout the budget period. Sales...

  • Webster Corporation is preparing a master budget for the first quarter of the year. The company...

    Webster Corporation is preparing a master budget for the first quarter of the year. The company budgets production of 2,760 units in January, 2,640 units in February and 2,940 units in March. Each unit requires 0.5 hours of direct labor. The direct labor rate is $13 per hour. Compute the budgeted direct labor cost for the first quarter budget. Multiple Choice $51,480. $54,210. $108,420. $102,960. $41,700.

  • Webster Corporation is preparing a master budget for the first quarter of the year. The company...

    Webster Corporation is preparing a master budget for the first quarter of the year. The company budgets production of 2,680 units in January, 2,600 units in February and 2,740 units in March. Each unit requires 0.6 hours of direct labor. The direct labor rate is $12 per hour. Compute the budgeted direct labor cost for the first quarter budget. Multiple Choice $48,120. $57,744. $56,160. $93,600. $96,240.

  • Waterways Corporation is preparing its budget for the coming year, 2020. The first step is to...

    Waterways Corporation is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process. Sales Unit sales for November 2019 114,000 Unit sales for December 2019 102,000 Expected unit sales for January 2020 114,000 Expected unit sales for February 2020 113,000 Expected unit sales for March 2020 117,000 Expected unit sales for April 2020 126,000...

  • Webster Corporation is preparing a master budget for the first quarter. The company budgets production of...

    Webster Corporation is preparing a master budget for the first quarter. The company budgets production of 3,040 units in January, 2,780 units in February and 3,640 units in March. Each unit requires 0.7 hours of direct labor. The direct labor rate is $14 per hour. Compute the budgeted direct labor cost for the first quarter budget.

  • Waterways Corporation is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. The company has gathered information from its managers in preparation of the budgeting process.

    SalesUnit sales for November 2019114,000Unit sales for December 2019103,000Expected unit sales for January 2020114,000Expected unit sales for February 2020111,000Expected unit sales for March 2020116,000Expected unit sales for April 2020125,000Expected unit sales for May 2020136,000Unit selling price$12Waterways likes to keep 10% of the next month’s unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT