Question

CC241 Uses of Accounting Info ll - Online/Course - Smr 3 2020 Afnan Aluwaill & 07/31/20 2:56 AM Save HW Score: 93.99%, 8.46 of 9 pts Homework: Chapter 9 Homework (required) bore: 0.46 of 1 pt 9 of 99 complete BP9-57A (similar to) Derry Manufacturing is preparing is master budget for the first quarter of the upcoming year. The following dito pertanto Derry Man's persone (Click the icon to view the data) Read the requirements More Info Question Help Requirement 1. Prepare a schedule of cash Derry Manufactu 2.Actual sales in December were $70,000. Selling price per unit is projected to remain stable et $10 per hout a budget period. Sales for the first five months of the upcoming yew websted to be follows: Cash Collections January $ 80,000 For the Quarter Ended February $ 92,000 Mon March 3.000 Fabre April S97000 Cashes $ 24,000 27 May $ 5.000 40.000 Credits Sales we 30cash and 70% Allerede sales are collected in the morning the sale Total cash collections 73.000 6.Derry Manufacturing has a policy that states that each monending invertory of Fished 20% of the following monissa on units) d. Of each montis direct material purchas, 20% we paid for in the month of purchase. While the remander is paid for in a month Requirement 2. Prepare a production budget foliowing purchase. Two pounds of direct material is needed per unit 52.00 per pound Erding inventory of direct materias Derry Manut should be 10% of remont's production neede . Most of the labor at the manufacturing facility is indirect, but there is some decor incurred. The direct labor hours per Production 0.01. The direct labore per hour is 512 per hour. Aldrect laboris paid for in the month in which the work is performed The director cost for each of the upcoming three months is as folows: For the Quarter End January 5 996 January February 5 1.125 March S 8.000 Unit Sales . Monthly manufacturing overhead costs we 56.000 for factory rent, $3.000 for the feed dating expenses and 51.20 per unit for variatie man acturing overhead. No depreciation is included in these for Alexpenses are paid in the month in which Enter any number in the edities and then they are incred Computer and for the adminive offices will be purchased in the upcoming out in Jawy, Derry Manufacturing wil hasa wash hehehe parts Check Answer MacBook Air

Answer 1

Solution:

Derry Manufacturing Schedule of Expected Cash Collections For the Quarter ended March 31 January February March Quarter Credit Sales (70%) $ 56,000 $ 64,400 $ 69,300 $ 1,89,700 Collection from credit sales: In the month following sales $ 56,000 $ 64,400 $ 1,20,400 A/R as on Dec 31 $ 48,000 $ 48,000 Cash Sales (30%) $ 24,000 $ 27,600 $ 29,700$ 81,300 Total Cash Collections $ 72,000 $ 83,600 $ 94,100 $ 2,49,700

April 9,700 Derry Manufacturing Production Budget For the Quarter ended March 31 January February March 8,000 9,200 9,900 2,300 2,475 2,425 10,300 11,675 12,325 2,000 2,300 2,475 8,300 9,375 9,850 May 8,500 Sales in units Add: Desired units of Ending Inventory Total Needed Less: Units in Beginning Inventory Units to Produce Quarter 27,100 2,425 29,525 2,000 27,525 2,125 11,825 2,425 9,400

April 9,400 2 2 Derry Manufacturing Direct Materials Budget For the Quarter ended March 31 January February March Quarter Units Produced 8,300 9,375 9,850 27,525 Quantity (pounds) of DM needed per unit 2 2 2 Quantity needed for Production 16,600 18,750 19,700 55,050 Add: Desired Ending Inventory of DM 1,875 1,970 1,880 1,880 Total Quantity needed 18,475 20,720 21,580 56,930 Less: Yards in Beginning Inventory 1,660 1,875 1,970 1,660 Quantity to Purchases 16,815 18,845 19,610 55,270 Cost per pound $ 2.00 $ 2.00 $ 2.00 $ 2.00 Total Cost of DM Purchases $ 33,630 $ 37,690 $ 39,220 $ 1,10,540 18,800

Derry Manufacturing Cash Payment for Direct Materials Budget For the Quarter ended March 31 January February March Quarter $ Cash Paid for DM purchases: 20% paid in the month of purchase 80% paid in the month following purchase A/P as on Dec 31 Total Cash payment for purchases 7,538 $ 26,904 $ 6,726 $ $ 42,400 49,126 $ 7,844 $ 22,108 30,152 $ 57,056 $ 42,400 37,996 $1,21,564 $ $ 34,442 $

Derry Manufacturing Cash payment for Direct Labor Budget For the Quarter ended March 31 January February 9,375 0.01 March 8,300 9,850 Quarter 27,525 0.01 0.01 0.01 Units Produced Labor Hours per Unit Total Labor Hours Required Rate per Labor Hour Total Direct Labor Cost 83 94 99 275 12.00 $ $ 12.00 $ 996 $ 12.00 $ 1,125$ 12.00 $ 1,182 $ 3,303

Derry Manufacturing Cash payment for Manufacturing Overhead Budget For the Quarter ended March 31 January February March Quarter Units Produced 8,300 9,375 9,850 27,525 Variable Overhead rate per unit $ 1.20 $ 1.20 $ 1.20 $ 1.20 Total Variable Overhead Cost $ 9,960 $ 11,250 $ 11,820 $ 33,030 Fixed Overhead: Factory Rent $ 5,000 $ 5,000 $ 5,000 $ 15,000 Other Fixed Manufacturing Expense $ 3,000 $ 3,000 $ 3,000 $ 9,000 Total Fixed Overhead $ 8,000 $ 8,000 $ 8,000 $ 24,000 Total Cash payment for Overhead 17,960 $ 19,250 $ 19,820 $ 57,030 $

Derry Manufacturing Cash payment for Operating Expense Budget For the Quarter ended March 31 January February March Quarter Unit Sales 8,000 9,200 9,900 27,100 Variable operating expense per unit $ 1.00 $ 1.00 $ 1.00 $ 1.00 Total Variable S&A $ 8,000 $ 9,200 $ 9,900 $ 27,100 Fixed operating expense $ 1,000 $ 1,000 $ 1,000 $ 3,000 Total cash payment for operating expense $ 9,000 $ 10,200 $ 10,900 $ 30,100

Derry Manufacturing Cash Budget For the Quarter ended March 31 January February March Quarter $ 4,500 $ 4,418$ 4,001$ 4,500 $ 72,000 $ 83,600 $ 94,100 $ 2,49,700 $ 76,500 $ 88,018$ 98,101 $ 2,54,200 $ $ $ $ $ Beginning Cash Balance Cash Collections Available Cash Balance Cash Payments for: Direct Material Purchase Direct Labor Manufacturing Overhead Operating Expense Equipment Purchase Income tax expense Total cash disbursements Excess (Deficiency) of cash Financing: Borrowings Repayments Interest Total Financing Ending cash balance 49,126 $ 996 $ 17,960 $ 9,000 $ 5,000 $ $ $82,082 -$5,582 34,442 $ 1,125$ 19,250 $ 10,200 $ 12,000 $ 10,000 $87,017 $1,001 37,996 $ 1,21,564 1,182 $ 3,303 19,820 $ 57,030 10,900 $ 30,100 16,000 $ 33,000 $ 10,000 $85,898 $2,54,997 $12,203 $797 $10,000 $3,000 -$7,000 -$360 -$7,360 $4,843 $13,000 -$7,000 -$360 $5,640 $4,843 $10,000 $4,418 $3,000 $4,001

$ 1,10,100 $ 3,303 Derry Manufacturing Budgeted Manufacturing Cost per unit Direct Materials (55,050 pounds * $2.00 per pound) Direct Labor Manufacturing Overhead Variable $ Fixed (27,525 units * $0.70) $ Total Manufacturing Cost (+) Budgeted No. of units Produced Manufacturing Cost per unit 33,030 19,268 $ 52,298 $ 1,65,701 $ 27,525 $ 6.02

Derry Manufacturing Budgeted Income Statement For the Quarter ended March 31 Sales Revenue Less: Cost of Goods Sold ($6.02 * 27,100 units) Gross Profit Operating Expense $ Depreciation Expenses $ Operating Income Less: Interest Expense Income before tax Less: Income Tax @ 30% $ 2,71,000 $ 1,63,142 $ 1,07,858 30,100 4,800 $ 34,900 $ 72,958 $ 360 $ 72,598 $ 21,779 $ 50,819 Net Income