DED Homework 1 of 1 1 complete More Info Unless otherwise no

DED Homework 1 of 1 (1 complete) More Info (Unless otherwise noted, assume all ae 1l f tfe folowing events oocured during 2018 and that any balances oiven the are stated as of December 31, 2018.) a. Budgeted sales are 1,000 tires for the first quarter and expected to increase by 200 tires per quarter. Cash sales are expected to be 10% of total sales, with the remaining 90% of sales on account. Finished Goods Inventory on December 31, 2018 consists of 700 tires at $30 each. Desired ending Finished Goods Inventory is 40% of the next quarter\'s sales; first quarter sales for 2020 are expected be 1,800 tires. FIFO inventory costing method is used Raw Materials Inventory on December 31, 2018, consists of 1,400 pounds of rubber compound used to manufacture the tires. b. c. d. e Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of the compound is | f. $6.50 per pound. Desired ending Raw Materials Inventory is 20% of the next quarter\'s direct materials needed for production; desired ending inventory for December 31, 2019 is 1,400 pounds; indirect materials are insignificant and not considered for budgeting purposes g. Each tire requires 0.20 hours of direct labor, direct labor costs average $16 per hour h. Variable manufacturing overhead is $1 per tire. . Fixed manufacturing overhead includes $3,500 per quarter in depreciation and $6,679 per quarter for other costs, such as utilities, insurance, and property taxes. j. Fixed selling and administrative expenses include $12,000 per quarter for salaries; $1,800 per quarter for rent $1,650 per quarter for insurance; and $2,000 per quarter for depreciation. Variable selling and administrative expenses indude supplies at 3% of sales. k. Print Done F7 F8 19

Solution

1. Sales Budget Q1 Q2 Q3 Q4 Q1 Full Year Sale (Units) 1000 1200 1400 1600 1800 5200 Selling Price 65 65 65 65 65 65 Total Sales Revenue 65000 78000 91000 104000 117000 338000 Cash Receipt Schedule: Q1 Q2 Q3 Q4 Q1 Full Year Accounts Receivable Accounts Receivable-Last Year 30000 30000 Q1 Sale Collection-Cash 6500 6500 Q1 Sale Collection-Credit 40950 17550 58500 Q2 Sale Collection-Cash 7800 7800 Q2 Sale Collection-Credit 49140 21060 70200 Q3 Sale Collection-Cash 9100 9100 Q3 Sale Collection-Credit 57330 24570 81900 Q4 Sale Collection-Cash 10400 10400 Q4 Sale Collection-Credit 65520 65520 28080 Total Cash disbursment 77450 74490 87490 100490 0 339920 2. Production Budget- Q1 Q2 Q3 Q4 Q1 Expected units to be sold 1000 1200 1400 1600 1800 add: desired ending inventory 480 560 640 720 Total Units available for sale 1480 1760 2040 2320 Less: Beginning invenory -700 -480 -560 -640 Production Needed 780 1280 1480 1680 3. Material Budget Q1 Q2 Q3 Q4 Q1 Material Needed for production: 2lbs for one unit 1560 2560 2960 3360 add: desired ending inventory 512 592 672 1400 Total Units available for usage 2072 3152 3632 4760 Less: Beginning invenory -1400 -512 -592 -672 Total Purchases to be made 672 2640 3040 4088 Per Unit Purchase Price 6.5 6.5 6.5 6.5 Total Purchases in $ 4368 17160 19760 26572 4. Cash Disbursment for Material Q1 Q2 Q3 Q4 Q1 Accounts Payable Accounts Payable-Last Year 12000 12000 Q1 3931 437 4368 Q2 15444 1716 17160 Q3 17784 1976 19760 Q4 23915 23915 2657 Total Cash disbursment 15931 15881 19500 25891 0 77203 4. Direct Labor Cost Budget Q1 Q2 Q3 Q4 Q1 Labor Hour Requried: Budgeted Production of Tires 780 1280 1480 1680 0 Hours needed for each tire 0.2 0.2 0.2 0.2 0 Total Hour Required 156 256 296 336 0 Per Hour Cost 16 16 16 16 Total Labor Cost 2496 4096 4736 5376 0 5. Manufacturing Overhead Budget Q1 Q2 Q3 Q4 Full Year Budgeted Production of Tires 780 1280 1480 1680 5220 Variable Overhead Rate per Tire 1 1 1 1 Variable manufacturing overhead Cost 780 1280 1480 1680 5220 0 0 0 5220 Fixed Overhead: Depreciation 3500 3500 3500 3500 14000 Other Cost 6679 6679 6679 6679 26716 0 0 Fixed Manufacturing overhead Cost 10179 10179 10179 10179 40716 Total Manufacturing Overhead Cost 10959 11459 11659 11859 45936 Less: Non Cash Cost -3500 -3500 -3500 -3500 -14000 Cash Disbursment for Manufacturing cost 7459 7959 8159 8359 31936 Predetermined Overhead Rate: Direct Labor Hours 156 256 296 336 1044 Budgeted Manufacturing Overhead 40716 Predetermined Overhead Rate 39.00 5. Sales, General and Administrative Q1 Q2 Q3 Q4 Full Year Budgeted Sales 65000 78000 91000 104000 338000 Variable SG&A Supplies 3% of Sale 1950 2340 2730 3120 10140 0 Variable SG&A Expense 1950 2340 2730 3120 10140 Fixed SG&A Salaries 12000 12000 12000 12000 48000 Rent 1800 1800 1800 1800 7200 Insurance 1650 1650 1650 1650 6600 Depreciation 2000 2000 2000 2000 8000 0 Fixed SG&A 17450 17450 17450 17450 69800 Total SG&A 19400 19790 20180 20570 79940 Less: Non Cash Expense -2000 -2000 -2000 -2000 -8000 Cash Disbursment for SG&A 17400 17790 18180 18570 71940 6. Cost of Goods Sold Budget Working Finished goods inventory, Beg 21000 700*30 Work in process inventory, Beg 0 Direct materials: Direct materials inventory, Beg 9100 Direct materials purchases 67860 From Mat Budget Cost of direct materials available for use 76960 Direct materials inventory, End -9100 1400*6.5 Cost of direct materials placed in production 67860 Direct labor 16704 Factory overhead - Variable 5220 Factory overhead - Fixed 40716 Total manufacturing costs 130500 Total work in process during period 130500 Work in process inventory, End 0 Cost of goods manufactured 130500 Cost of finished goods available for sale 151500 Finished goods inventory, End -18000 720*25 Cost of goods sold 133500