BettyBaskets_Budget question

| September 28, 2018

Betty s Beautiful BasketsBetty s Beautiful Baskets, a manufacturing business that sells baskets, wants a master budget prepared for the first three months of this year (January, February and March).The managers of the different departments have provided the following information:The Sales Manager has projected the following sales:o January 5,000 unitso February 4,000 unitso March 6,000 unitso April 5,000 unitso May 11,250 unitso Projected selling price is $35.00/unitYour Production Manager gave the following information:o Ending Inventory is to be 20% of next month s production needso April s Projected Sales 5,000 unitso December 20X5 Ending Inventory was 1,000 units and December unit cost was $23.50.The Manufacturing Manager has estimated the following:o Each unit will require 4 grams of materialo Material in Ending Inventory is 20% of next month s needso December s Ending Material Inventory was 4,800 go Projected cost of material: $2.50/gramThe Personnel Manager has estimated that Direct Labor will be projected at:o 0.75 hours of Direct Labor per unito Direct Labor Cost: $8.50/hourThe Facilities Manager has estimated that the Manufacturing Overhead will be projected at:o Variable Overhead Rate to be $8 per Direct Labor hourso Fixed Overhead Rate to be $3,000 per monthThe Accounting Department Manager has provided the following information:Selling and Administrative Expenses are projected to be a monthly cost of:o Salaries $6,000o Rent $1,500o Advertising $1,100o Telephone $300o Other $500Betty s Beautiful Baskets Page 2Cash Receivable:o December s Sales were $150,000o 80% of sales is collected in the month in which they were madeo 20% of sales collected in the following month in which they were madeo Bad Debts is negligibleAccounts Payable:o 80% of Payables is paid for in the current montho 20% of Payables is paid for in the following montho December s purchases were $50,000Federal Income Tax is estimated at 22% average.Betty s Beautiful Basketso has a $20,000 cash balance for the beginning of Januaryo pays Dividends of $8,000 to be paid in Marcho pays projected Federal Income tax in Marcho depreciation on the building is $150 per montho does not carry any WIP inventoryo uses FIFO inventory costingFrom the beginning Balance Sheet:o Land = $150,000o Building = $45,000o Depreciation (Building) = $11,250o Retained Earnings = $58,780o Capital Stock = $200,470For the Master Budget, you are expected to prepare the following:Sales budget plus schedule of accounts receivable collectionsProduction budgetDirect materials budget and schedule of cash payments for purchasesDirect labor budgetManufacturing overhead budgetCost of Goods Sold BudgetSelling & Administrative Expenses BudgetBudgeted income statementsCash budgetBudgeted balance sheet for each month plus a beginning balance sheetWhen you prepare the cost of goods sold budget, you must calculate a unit cost for each month. You must also calculate cost of goods manufactured. Remember, there is no Work in Process inventory but you must calculate direct materials used.

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