Question

Part A
Problem 10.34A a-e Greish Inc. is preparing its annual budgets for the year ending December 31, 2020. Accounting assistants have provided the following data: Product LN 35 Product LN 40 Sales budget Expected volume in units 402,000 241,000 Unit selling price $31 $35 Production budget Desired ending finished good units 31,000 21,000 Beginning finished goods units 21,000 16,000 Direct materials budget: Direct materials per unit (kilograms) 2 3 Desired kilograms of ending direct materials 47,000 15,000 Beginning kilograms of direct materials 40,000 10,000 Cost per kilogram $2 $3 Direct labour budget Direct labour time per unit (hours) 0.5 Direct labour rate per hour $13 $13 Budgeted income statement Total unit cost $12 $21 0.7 An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expenses budget. The latter shows selling expenses of $849,000 for product LN 35 and $388,000 for product LN 40, and administrative expenses of $521,000 for product LN 35 and $180,000 for product LN 40. Income taxes are expected to be 30%.

Part B

Answer 1

The following is the answer and working for the above question on Budjeting:

PARTA GRIESH INC. Sales Budget For the year ending December 31, 2020 LN 35 LN 40 Total Expected Sales (in Units) 402000 241000 Unit Selling price 31 35 Total Sales 12462000 8435000 20897000 GRIESH INC. Production Budget For the year ending December 31, 2020 LN 35 LN 40 Total Sales 402000 241000 Add: Desired Ending Inventory 31000 21000 Total Units needed 433000 262000 Deduct:Beginning Inventory 21000 16000 Production Requirements 412000 246000 658000 GRIESH INC. Direct Materials Budget For the year ending December 31, 2020 LN 40 Total Production Requirements 412000 246000 Raw Material Required per unit (kilograms) 2 3 Raw Material Required for production (kilograms) 824000 738000 Add: Desired Ending raw material Inventory(kg) 47000 15000 Total Raw materials needed(kg) 871000 Deduct:Beginning raw material Inventory(kg) 40000 10000 Raw materials to be purchased(kg) 831000 743000 Cost (per Kilogram) 2 3 Cost of purchase 1662000 2229000 3891000 GRIESH INC. Direct Labor Budget For the year ending December 31, 2020 LN 35 LN 40 Total Production Requirements 412000 246000 Direct labour Required per per (hours) 0.5 0.7 Direct labour Required for production (hours) 206000 172200 Direct Labour rate 13 13 Total Direct Labour Cost 2678000 2238600 4916600 PARTB LN 35 753000 Harrington Company December 0 Sales Budget Total Sales Cash Sales Credit Sales January February March Quarter April 28600 36800 46200 111600 25900 11440 14720 18480 44640 10360 17160 22080 27720 66960 15540 Total Cash Sales 44640 Cash Sales Credit Sales Total Collections Schedule of Expected Cash Collections January February March Quarter 11440 14720 18480 44640 10296 20112 25464 55872 21736 34832 43944 100512 10360 20412 Accounts receivable Balance at March End 11088 (27720*40%) Merchandise Purchase Budget 2600 4 10400 3520 Production in Units Raw Material Required per unit (kilograms) Raw Material Required for production (kilograms) Add: Closing Inventory Required Total needs Less:Beginning Inventory Required Purchases Cost per kg Total Cost of Purchase January February March Quarter 900 1400 2200 4500 4 4 4 4 3600 5600 8800 18000 2240 4160 9920 5840 9120 12960 27920 1050 2240 3520 6810 4790 6880 9440 21110 5 5 5 23950 34400 47200 105550 4160 kg Direct Materials Inventory Balance at End of March Materal Purchase cost for February 34400 Quarter Schedule of Expected cash disbursements for Merchandise Purchases January February March January Purchases 95801 143701 February Purchases 13760 20640 March Purchases 188801 Total Cash disbursements for Purchases 9580 281300 395201 23950 34400 18880 77230 Cash Payments on Account for February 28130 Ending Balance in Accounts Payable 28320 Harrington Company Cash Budget January February March Quarter Beginning Cash Balance 0 12156 18858 Add: Collections from Customers 21736 34832 43944 Total Cash Available 21736 46988 Less: Cash Disbursements: Inventory Purchase 9580 28130 39520 Total Cash Disbursements 9580 28130 39520 Excess / Deficiancy (-) of cash 12156 18858 23282 Ending Cash Balance 12156 18858 23282 62802 Change in Cash Balance for the period January - March 23282