Operating Budget, Comprehensive Analysis
Allison Manufacturing produces a subassembly used in the production of jet aircraft engines. The assembly is sold to engine manufacturers and aircraft maintenance facilities. Projected sales in units for the coming 5 months follow:
January | 40,000 | ||
February | 50,000 | ||
March | 60,000 | ||
April | 60,000 | ||
May | 62,000 |
The following data pertain to production policies and manufacturing specifications followed by Allison Manufacturing:
Direct Material | Per-Unit Usage | DM Unit Cost ($) | |
Metal | 10 lbs. | 8 | |
Components | 6 | 5 |
Fixed-Cost Component ($) |
Variable-Cost Component ($) |
||
Supplies | — | 1.00 | |
Power | — | 0.50 | |
Maintenance | 30,000 | 0.40 | |
Supervision | 16,000 | — | |
Depreciation | 200,000 | — | |
Taxes | 12,000 | — | |
Other | 80,000 | 0.50 |
Fixed Costs ($) |
Variable Costs ($) |
||
Salaries | 50,000 | — | |
Commissions | — | 2.00 | |
Depreciation | 40,000 | — | |
Shipping | — | 1.00 | |
Other | 20,000 | 0.60 |
Required:
1. Prepare a monthly operating budget for the first quarter with the following schedules. (Note: Assume that there is no change in work-in-process inventories.)
a. Schedule 1: Sales Budget. Do not include a multiplication symbol as part of your answer.
Allison Manufacturing | ||||
Sales Budget | ||||
For the Quarter Ended March 31 | ||||
January | February | March | Total | |
Units | ||||
Selling price | $ | $ | $ | $ |
Sales | $ | $ | $ | $ |
b. Schedule 2: Production Budget.
Allison Manufacturing | ||||
Production Budget | ||||
For the Quarter Ended March 31 | ||||
January | February | March | Total | |
Sales | ||||
Desired ending inventory | ||||
Total needs | ||||
Less: Beginning inventory | ||||
Units to be produced |
c. Schedule 3: Direct Materials Purchases Budget. Do not include a multiplication symbol as part of your answer.
Allison Manufacturing | ||||||||
Direct Materials Purchases Budget | ||||||||
For the Quarter Ended March 31 | ||||||||
January Metal | January Components | February Metal | February Components | March Metal | March Components | Total Metal | Total Components | |
Units to be produced | ||||||||
Direct materials per unit | ||||||||
Production needs | ||||||||
Desired ending inventory | ||||||||
Total needs | ||||||||
Less: Beginning inventory | ||||||||
Direct materials to be purchased | ||||||||
Cost per unit | $ | $ | $ | $ | $ | $ | $ | $ |
Total cost | $ | $ | $ | $ | $ | $ | $ | $ |
d. Schedule 4: Direct Labor Budget. If required, round amounts to the nearest cent. Do not include a multiplication symbol as part of your answer.
Allison Manufacturing | ||||
Direct Labor Budget | ||||
For the Quarter Ended March 31 | ||||
January | February | March | Total | |
Units to be produced | ||||
Direct labor time per unit (hours) | ||||
Total hours needed | ||||
Cost per hour | $ | $ | $ | $ |
Total cost | $ | $ | $ | $ |
e. Schedule 5: Overhead Budget. If required, round amounts to the nearest cent. Do not include a multiplication symbol as part of your answer.
Allison Manufacturing | ||||
Overhead Budget | ||||
For the Quarter Ended March 31 | ||||
January | February | March | Total | |
Budgeted direct labor hours | ||||
Variable overhead rate | $ | $ | $ | $ |
Budgeted variable overhead | $ | $ | $ | $ |
Budgeted fixed overhead | ||||
Total overhead | $ | $ | $ | $ |
f. Schedule 6: Selling and Administrative Expenses Budget. If required, round amounts to the nearest cent. Do not include a multiplication symbol as part of your answer.
Allison Manufacturing | ||||
Selling and Administrative Expenses Budget | ||||
For the Quarter Ended March 31 | ||||
January | February | March | Total | |
Planned sales | ||||
Variable selling and administrative expenses per unit | $ | $ | $ | $ |
Total variable expense | $ | $ | $ | $ |
Fixed selling and administrative expenses: | ||||
Salaries | $ | $ | $ | $ |
Depreciation | ||||
Other | ||||
Total fixed expenses | $ | $ | $ | $ |
Total selling and administrative expenses | $ | $ | $ | $ |
g. Schedule 7: Ending Finished Goods Inventory Budget. If required, round amounts to the nearest cent.
Allison Manufacturing | ||
Ending Finished Goods Inventory Budget | ||
For the Quarter Ended March 31 | ||
Unit cost computation: | ||
Direct materials: | ||
Metal | $ | |
Components | $ | |
Direct labor | ||
Overhead: | ||
Variable | ||
Fixed | ||
Total unit cost | $ | |
Finished goods inventory | $ |
h. Schedule 8: Cost of Goods Sold Budget.
Allison Manufacturing | ||
Cost of Goods Sold Budget | ||
For the Quarter Ended March 31 | ||
Direct materials | ||
Metal | $ | |
Components | $ | |
Direct labor used | ||
Overhead | ||
Budgeted manufacturing costs | $ | |
Add: Beginning finished goods | ||
Cost of goods available for sale | $ | |
Less: Ending finished goods | ||
Budgeted cost of goods sold | $ |
i. Schedule 9: Budgeted Income Statement. Use a minus sign to indicate a negative amount.
Allison Manufacturing | |
Budgeted Income Statement | |
For the Quarter Ended March 31 | |
Sales | $ |
Less: Cost of goods sold | |
Gross margin | $ |
Less: Selling and administrative expenses | |
Income before taxes | $ |
j. Schedule 10: Cash Budget. If an amount is zero, enter "0". Use a minus sign to enter a negative amount.
Allison Manufacturing | ||||
Cash Budget | ||||
For the Quarter Ended March 31 | ||||
January | February | March | Total | |
Beginning balance | $ | $ | $ | $ |
Cash receipts | ||||
Cash available | $ | $ | $ | $ |
Less Disbursements: | ||||
Purchases | $ | $ | $ | $ |
Direct labor | ||||
Overhead | ||||
Selling & admin. | ||||
Total | $ | $ | $ | $ |
Tentative ending balance | $ | $ | $ | $ |
Borrowed/repaid | ||||
Interest paid | ||||
Ending balance | $ | $ | $ | $ |
As per the policy, we are bound to provide answers to first four schedules only.
Operating Budget, Comprehensive Analysis Allison Manufacturing produces a subassembly used in the production of jet aircraft...
Operating Budget, Comprehensive Analysis Allison Manufacturing produces a subassembly used in the production of jet aircraft engines. The assembly is sold to engine manufacturers and aircraft maintenance facilities. Projected sales in units for the coming 5 months follow: January 40,000 February 50,000 March 60,000 April 60,000 May 62,000 The following data pertain to production policies and manufacturing specifications followed by Allison Manufacturing: 1 a. Finished goods inventory on January 1 is 32,000 units, each costing $166.06. The desired ending inventory...
Operating Budget, Comprehensive Analysis Allison Manufacturing produces a subassembly used in the production of jet aircraft engines. The assembly is sold to engine manufacturers and aircraft maintenance facilities. Projected sales in units for the coming 5 months follow: January 40,000 February 50,000 March 60,000 April 60,000 May 62,000 The following data pertain to production policies and manufacturing specifications followed by Allison Manufacturing: Finished goods inventory on January 1 is 32,000 units, each costing $166.06. The desired ending inventory for each...
Projected sales in units for the coming 5 months follow: January 40,000 February 50,000 March 60,000 April 60,000 May 62,000 Finished goods inventory on January 1 is 32,000 units, each costing $166.06. The desired ending inventory for each month is 80% of the next month's sales. The data on materials used are as follows: Direct Material Per-Unit Usage DM Unit Cost ($) Metal 10 lbs. 8 Components 6 5 Inventory policy dictates that sufficient materials be on hand at the...
Operating Budget, Comprehensive Analysis Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world. Projected sales in units for the coming five months are given below. January 10,000 February 10,500 March 13,100 April 16,000 May 18,500 The following data pertain to production policies and manufacturing specifications followed by Ponderosa: Finished goods inventory on January 1 is 900 units. The desired ending inventory for each...
Operating Budget, Comprehensive Analysis Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world. Projected sales in units for the coming five months are given below. January 10,000 February 10,600 March 13,300 April 16,000 May 18,500 The following data pertain to production policies and manufacturing specifications followed by Ponderosa: Finished goods inventory on January 1 is 900 units. The desired ending inventory for each...
Operating Budget, Comprehensive Analysis Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world. Projected sales in units for the coming five months are given below. January 10,000 February 10,600 March 13,500 April 16,000 May 18,500 The following data pertain to production policies and manufacturing specifications followed by Ponderosa: Finished goods inventory on January 1 is 900 units. The desired ending inventory for each...
Operating Budget, Comprehensive Analysis Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world. Projected sales in units for the coming five months are given below. January 10,000 February 10,600 March 13,300 April 16,000 May 18,500 The following data pertain to production policies and manufacturing specifications followed by Ponderosa: Finished goods inventory on January 1 is 900 units. The desired ending inventory for each...
Operating Budget, Comprehensive Analysis Ponderosa, Inc., produces wiring harness assemblies used in the production of semi-trailer trucks. The wiring harness assemblies are sold to various truck manufacturers around the world. Projected sales in units for the coming five months are given below. January 10,000 February 10,500 March 13,300 April 16,000 May 18,500 The following data pertain to production policies and manufacturing specifications followed by Ponderosa: Finished goods inventory on January 1 is 900 units. The desired ending inventory for each...
Budgeted income statement and supporting budgets for three months Bellaire Inc. gathered the following data for use in developing the budgets for the first quarter (January, February, March) of its fiscal year: a. Estimated sales at $125 per unit: January 25,000 units February 30,000 units March 45,000 units April 50,000 units b. Estimated finished goods inventories: January 1 2,000 units January 31 10% of next month’s sales February 28 10% of next month’s sales March 31 10% of next month’s...
The Master Budget 555 PROBLEMS Group A P9-54A Comprehensive budgeting problem (Le Damon Manufacturing is preparing its master budget for the first que budgeting problem (Learning Objectives 2 & 3) ing year. The following data pertanto s preparing its master budget for the first quarter of the upcom- u facturing's operations Current Assets as of December 31 (prior year): Cash.. $ 4,600 Accounts receivable, net $ 46,000 Inventory $ 15,600 Property, plant, and equipment, net $121,000 Accounts payable. $ 43,000...