Jesse Corporation Executive Summary
The marketing department of Jesse Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account):
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Units to be produced 11,000 12,000 14,000 13,000
The selling price of the company's product is $18.00 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to be "'uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $70,200. The company expects to start the first quarter with 1,650 units in finished goods inventory. Management desires an ending finished goods inventory …show more content…
in each quarter equal to 15% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,850 units.
• Prepare the company's sales budget and schedule of expected cash collections.
Q1 Sales = $11,000
Collections in Q1 = $11,000 x 65% = $7,150
Collections in Q2 = $11,000 x 30% = $3,300
Q2 Sales = $12,000
Collections in Q2 = $12,000 x 65% = $7,800
Collections in Q3 = $12,000 x 30% =$3,600
Q3 Sales = $14,000
Collections in Q3 = $14,000 x 65% = $9,100
Collections in Q4 = $14,000 x 30% = $4,200
Q4 Sales
Collections in Q4 = $13,000 x 65% = $8,450
Schedule of Expected Cash Collections
Quarter 1 2 3 4 Year
Beginning AR $70,200 $70,200
Q1 Sales 7,150 $3,300 10,450
Q2 Sales 7,800 $3,600 11,400
Q3 Sales 9,100 $4,200 …show more content…
13,300
Q4 Sales 8,450 8,450
5% Uncollectible 5,360
Total Collections 77,350 11,100 12,700 12,650 108,440
• Prepare the company's production budget for the upcoming fiscal year.
Quarter 1 2 3 4 Year
Budgeted Sales 11,000 12,000 14,000 13,000 50,000
Add desired (EI) of finished goods 1,180 2,100 1,950 1,850 1.850
Total Needs 11,180 14,100 15,950 14,850 56,080
Less (BI) of finished goods 1,650 1,180 2,100 1,950 6,880
Required Production 10,530 12,920 13,850 12,900 49,200
Direct Materials and Direct Labor Budgets (8-13): The production department of Hareston Company has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Units to be produced 7,000 8,000 6,000 5,000
In addition, the beginning raw materials inventory for the first quarter is budgeted to be 1,400 pounds and the beginning accounts payable for the first quarter is budgeted to be $2,940.
Each unit requires 2 pounds of raw material that costs $1.40 per pound. Management desires to end each quarter with an inventory of raw materials equal to 10% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 1,500 pounds. Management plans to pay for 80% of raw material purchases in the quarter acquired and 20% in the following quarter. Each unit requires 0.60 direct labor-hours and direct labor-hour workers are paid $14.00 per hour.
• Prepare the company's direct materials budget and schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year.
Quarter 1 2 3
4
Sales 7,000 8,000 6,000 3,000
Total Cash Receipts 7,000 8,000 6,000 3,000
Cash Disbursements
Purchases 700 800 600 300
80% 560 640 480 240
20% 140 160 120
Total Disbursements 1,260 1,580 1,240 660
• Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.
Quarter 1 2 3 4
Sales 7,000 8,000 6,000 3,000
Total Cash Receipts 7,000 8,000 6,000 3,000
Cash Disbursements
Purchases 700 800 600 300
80% 560 640 480 240
20% 140 160 120
Direct Labor costs (.60hrs/unit @$14.00/hr) 1,638 1,862 1,400 700
Disbursements 2,898 3,442 2,640 1,360
Direct Labor and Manufacturing Overhead Budgets (8-14): The production department of Raredon Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Units to be produced 12,000 14,000 13,000 11,000
Each unit requires 0.70 direct labor-hours, and direct labor-hour workers are paid $10.50 per hour.
In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $80,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $22,000 per quarter.
• Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.
Quarter 1 2 3 4
Units Produced 12,000 14,000 13,000 11,000
Direct labor (.70 hours @ $10.50/hr) 1,799 2,100 1,950 1,650
• Prepare the company's manufacturing overhead budget.
Quarters 1 2 3 4
Fixed Overhead 80,000 80,000 80,000 80,000
Units 12,000 14,000 13,000 11,000
Direct labor ($14.50/hr for .60 hours per unit) 1,799 2,100 1,950 1,650
Direct Labor ($1.50/hr) 257 300 279 236
Depreciation 22,000 22,000 22,000 22,000
Total Overhead 104,056 104,400 104,229 103,886
Reference
1) Noreen, E. W., Brewer, P. B., Garrison R. H. (2011). Managerial accounting for managers
2) New York, NY: McGraw Hill.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Units to be produced 11,000 12,000 14,000 13,000
The selling price of the company's product is $18.00 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to be "'uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $70,200. The company expects to start the first quarter with 1,650 units in finished goods inventory. Management desires an ending finished goods inventory …show more content…
in each quarter equal to 15% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,850 units.
• Prepare the company's sales budget and schedule of expected cash collections.
Q1 Sales = $11,000
Collections in Q1 = $11,000 x 65% = $7,150
Collections in Q2 = $11,000 x 30% = $3,300
Q2 Sales = $12,000
Collections in Q2 = $12,000 x 65% = $7,800
Collections in Q3 = $12,000 x 30% =$3,600
Q3 Sales = $14,000
Collections in Q3 = $14,000 x 65% = $9,100
Collections in Q4 = $14,000 x 30% = $4,200
Q4 Sales
Collections in Q4 = $13,000 x 65% = $8,450
Schedule of Expected Cash Collections
Quarter 1 2 3 4 Year
Beginning AR $70,200 $70,200
Q1 Sales 7,150 $3,300 10,450
Q2 Sales 7,800 $3,600 11,400
Q3 Sales 9,100 $4,200 …show more content…
13,300
Q4 Sales 8,450 8,450
5% Uncollectible 5,360
Total Collections 77,350 11,100 12,700 12,650 108,440
• Prepare the company's production budget for the upcoming fiscal year.
Quarter 1 2 3 4 Year
Budgeted Sales 11,000 12,000 14,000 13,000 50,000
Add desired (EI) of finished goods 1,180 2,100 1,950 1,850 1.850
Total Needs 11,180 14,100 15,950 14,850 56,080
Less (BI) of finished goods 1,650 1,180 2,100 1,950 6,880
Required Production 10,530 12,920 13,850 12,900 49,200
Direct Materials and Direct Labor Budgets (8-13): The production department of Hareston Company has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Units to be produced 7,000 8,000 6,000 5,000
In addition, the beginning raw materials inventory for the first quarter is budgeted to be 1,400 pounds and the beginning accounts payable for the first quarter is budgeted to be $2,940.
Each unit requires 2 pounds of raw material that costs $1.40 per pound. Management desires to end each quarter with an inventory of raw materials equal to 10% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 1,500 pounds. Management plans to pay for 80% of raw material purchases in the quarter acquired and 20% in the following quarter. Each unit requires 0.60 direct labor-hours and direct labor-hour workers are paid $14.00 per hour.
• Prepare the company's direct materials budget and schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year.
Quarter 1 2 3
4
Sales 7,000 8,000 6,000 3,000
Total Cash Receipts 7,000 8,000 6,000 3,000
Cash Disbursements
Purchases 700 800 600 300
80% 560 640 480 240
20% 140 160 120
Total Disbursements 1,260 1,580 1,240 660
• Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.
Quarter 1 2 3 4
Sales 7,000 8,000 6,000 3,000
Total Cash Receipts 7,000 8,000 6,000 3,000
Cash Disbursements
Purchases 700 800 600 300
80% 560 640 480 240
20% 140 160 120
Direct Labor costs (.60hrs/unit @$14.00/hr) 1,638 1,862 1,400 700
Disbursements 2,898 3,442 2,640 1,360
Direct Labor and Manufacturing Overhead Budgets (8-14): The production department of Raredon Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Units to be produced 12,000 14,000 13,000 11,000
Each unit requires 0.70 direct labor-hours, and direct labor-hour workers are paid $10.50 per hour.
In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $80,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $22,000 per quarter.
• Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.
Quarter 1 2 3 4
Units Produced 12,000 14,000 13,000 11,000
Direct labor (.70 hours @ $10.50/hr) 1,799 2,100 1,950 1,650
• Prepare the company's manufacturing overhead budget.
Quarters 1 2 3 4
Fixed Overhead 80,000 80,000 80,000 80,000
Units 12,000 14,000 13,000 11,000
Direct labor ($14.50/hr for .60 hours per unit) 1,799 2,100 1,950 1,650
Direct Labor ($1.50/hr) 257 300 279 236
Depreciation 22,000 22,000 22,000 22,000
Total Overhead 104,056 104,400 104,229 103,886
Reference
1) Noreen, E. W., Brewer, P. B., Garrison R. H. (2011). Managerial accounting for managers
2) New York, NY: McGraw Hill.