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.January10,000February10,500March13,000April16,000May18,500The 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 month is 20 percent of the next month’s sales.The data on materials used are as follows:Direct MaterialPer-Unit UsageUnit CostPart #K2982 $4 Part #C303 7 Inventory policy dictates that sufficient materials be on hand at the beginning of the month to satisfy 30 percent of the next month’s production needs. This is exactly the amount of material on hand on January 1.The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20.Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.) Fixed CostComponentVariable CostComponentSupplies$ — $1.00 Power— 0.20 Maintenance12,500 1.10 Supervision14,000 — Depreciation45,000 — Taxes4,300 — Other86,000 1.60 Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.) Fixed CostsVariable CostsSalaries$ 88,500 — Commissions— $1.40 Depreciation25,000 — Shipping— 3.60 Other137,000 1.60 The unit selling price of the wiring harness assembly is $110.In February, the company plans to purchase land for future expansion. The land costs $68,000.All sales and purchases are for cash. The cash balance on January 1 equals $62,900. The firm wants to have an ending cash balance of at least $25,000. If a cash shortage develops, sufficient cash is borrowed to cover the shortage and provide the desired ending balance. Any cash borrowed must be borrowed in $1,000 increments and is repaid the following month, as is the interest due. The interest rate is 12 percent per annum.Required:7. Ending finished goods inventory budget. Round intermediate calculations to the nearest cent. Round your answers to the nearest cent, if required. Unit cost computation: Direct materials: Part K298$Part C30 Direct labor Overhead: Variable Fixed Total unit cost$Number of units Finished goods$ 8. Cost of goods sold budget Direct materials used Part K298$ Part C30 $Direct labor used Overhead Budgeted manufacturing costs $Add: Beginning finished goods Goods available for sale $Less: Ending finished goods Budgeted cost of goods sold 9. Budgeted income statement (ignore income taxes) Sales$Less: Cost of goods sold Gross margin$Less: Selling and administrative expense Income before income taxes$ 10. Cash budgetEnter a negative balance as a negative amount, and if an amount is zero enter "0". JanuaryFebruaryMarchTotalBeginning balance$$$$Cash receipts Total cash available$$$$Disbursements: Purchases$$$$DL payroll Overhead Marketing & admin Land Total disbursements$$$$Ending balance$$$$Financing: Borrowed/repaid Interest paid Ending cash balance$$$$

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Ending finished goods inventory budget. Round intermediate calculations to the nearest cent. Round your answers to the nearest cent, if required. Unit cost computation: Direct materials: Part K298 $ Part C30 Direct labor Overhead: Variable Fixed Total unit cost $ Number of units Finished goods $ 8. Cost of goods sold budget Direct materials used Part K298 $ Part C30 $ Direct labor used Overhead Budgeted manufacturing costs $ Add: Beginning finished goods Goods available for sale $ Less: Ending finished goods Budgeted cost of goods sold 9. Budgeted income statement (ignore income taxes) Sales $ Less: Cost of goods sold Gross margin $ Less: Selling and administrative expense Income before income taxes $ 10. Cash budget Enter a negative balance as a negative amount, and if an amount is zero enter "0". January February March Total Beginning balance $ $ $ $ Cash receipts Total cash available $ $ $ $ Disbursements: Purchases $ $ $ $ DL payroll Overhead Marketing & admin Land Total disbursements $ $ $ $ Ending balance $ $ $ $ Financing: Borrowed/repaid Interest paid Ending cash balance $ $ $

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 14PA: Total Pops data show the following information: New machinery will be added in April. This machine...

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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	13,000
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 month is 20 percent of the next month’s sales.
The data on materials used are as follows:

Direct Material Per-Unit Usage Unit Cost

Part #K298 2 $4

Part #C30 3 7

Inventory policy dictates that sufficient materials be on hand at the beginning of the month to satisfy 30 percent of the next month’s production needs. This is exactly the amount of material on hand on January 1.
The direct labor used per unit of output is one and one-half hours. The average direct labor cost per hour is $20.

Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.)

	Fixed Cost Component	Variable Cost Component
Supplies	$ —	$1.00
Power	—	0.20
Maintenance	12,500	1.10
Supervision	14,000	—
Depreciation	45,000	—
Taxes	4,300	—
Other	86,000	1.60

Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.)

	Fixed Costs	Variable Costs
Salaries	$ 88,500	—
Commissions	—	$1.40
Depreciation	25,000	—
Shipping	—	3.60
Other	137,000	1.60

The unit selling price of the wiring harness assembly is $110.
In February, the company plans to purchase land for future expansion. The land costs $68,000.
All sales and purchases are for cash. The cash balance on January 1 equals $62,900. The firm wants to have an ending cash balance of at least $25,000. If a cash shortage develops, sufficient cash is borrowed to cover the shortage and provide the desired ending balance. Any cash borrowed must be borrowed in $1,000 increments and is repaid the following month, as is the interest due. The interest rate is 12 percent per annum.

Required:

7. Ending finished goods inventory budget. Round intermediate calculations to the nearest cent. Round your answers to the nearest cent, if required.


Unit cost computation:
Direct materials:
Part K298	$
Part C30
Direct labor
Overhead:
Variable
Fixed
Total unit cost	$
Number of units
Finished goods	$

8. Cost of goods sold budget


Direct materials used
Part K298	$
Part C30		$
Direct labor used
Overhead
Budgeted manufacturing costs		$
Add: Beginning finished goods
Goods available for sale		$
Less: Ending finished goods
Budgeted cost of goods sold

9. Budgeted income statement (ignore income taxes)


Sales	$
Less: Cost of goods sold
Gross margin	$
Less: Selling and administrative expense
Income before income taxes	$

10. Cash budget
Enter a negative balance as a negative amount, and if an amount is zero enter "0".

	January	February	March	Total
Beginning balance	$	$	$	$
Cash receipts
Total cash available	$	$	$	$
Disbursements:
Purchases	$	$	$	$
DL payroll
Overhead
Marketing & admin
Land
Total disbursements	$	$	$	$
Ending balance	$	$	$	$
Financing:
Borrowed/repaid
Interest paid
Ending cash balance	$	$	$	$

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Direct Material	Per-Unit Usage	Unit Cost
Part #K298	2	$4
Part #C30	3	7