Heartbreaker Inc. manufactures a product with a selling price of $60 per unit. Units andmonthly cost data follow:Variable:Selling and administrative.Direct materials.Direct labor....Variable manufacturing overhead.Fixed:Selling and administrative..Manufacturing (including depreciation of $11,000)..5 per unit sold12 per unit manufactured12 per unit manufactured6 per unit manufactured$17,000 per month34,000 per monthHeartbreaker pays all bills in the month incurred. All sales are on account with 50percent collected the month of sales and the balance collected the following monthThere are no sales discounts or bad debts.Heartbreaker desires to maintain an ending finished goods inventory equal to 20percent of the following month's sales and a raw materials inventory equal to 10 percentof the following month's production. January 1, 2017, inventories are in line with thosepoliciesActual unit sales for December and budgeted unit sales for January, February andMarch of 2017 are as follows:December January11,250$675,000 $600,000February15,000$900,000MarchSales UnitsSales Dollars10,00013,000$780,000Additional Information:The January 1 beginning cash balance is projected to be $6,000For the purpose of operational budgeting, units in the January 1 inventory offinished goods are valued at variable manufacturing costEach unit of finished product requires one unit of raw materials.Heartbreaker intends to pay a cash dividend of $12,000 in January.Required:a. Prepare a production budget for January and Februaryb. Prepare a purchases budget in units for January.c. Prepare a manufacturing cost budget for Januaryd. Prepare a cash budget for JanuaryPrepare a contribution income statement for January.е.

Question
Asked Nov 27, 2019
  1. Prepare a production budget for January and February
  2. Prepare a purchases budget in units for January.
  3. Prepare a manufacturing cost budget for January.
  4. Prepare a cash budget for January
  5. Prepare a contribution income statement for January.
Heartbreaker Inc. manufactures a product with a selling price of $60 per unit. Units and
monthly cost data follow:
Variable:
Selling and administrative.
Direct materials.
Direct labor....
Variable manufacturing overhead.
Fixed:
Selling and administrative..
Manufacturing (including depreciation of $11,000)..
5 per unit sold
12 per unit manufactured
12 per unit manufactured
6 per unit manufactured
$17,000 per month
34,000 per month
Heartbreaker pays all bills in the month incurred. All sales are on account with 50
percent collected the month of sales and the balance collected the following month
There are no sales discounts or bad debts.
Heartbreaker desires to maintain an ending finished goods inventory equal to 20
percent of the following month's sales and a raw materials inventory equal to 10 percent
of the following month's production. January 1, 2017, inventories are in line with those
policies
Actual unit sales for December and budgeted unit sales for January, February and
March of 2017 are as follows:
December January
11,250
$675,000 $600,000
February
15,000
$900,000
March
Sales Units
Sales Dollars
10,000
13,000
$780,000
Additional Information:
The January 1 beginning cash balance is projected to be $6,000
For the purpose of operational budgeting, units in the January 1 inventory of
finished goods are valued at variable manufacturing cost
Each unit of finished product requires one unit of raw materials.
Heartbreaker intends to pay a cash dividend of $12,000 in January.
Required:
a. Prepare a production budget for January and February
b. Prepare a purchases budget in units for January.
c. Prepare a manufacturing cost budget for January
d. Prepare a cash budget for January
Prepare a contribution income statement for January.
е.
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Heartbreaker Inc. manufactures a product with a selling price of $60 per unit. Units and monthly cost data follow: Variable: Selling and administrative. Direct materials. Direct labor.... Variable manufacturing overhead. Fixed: Selling and administrative.. Manufacturing (including depreciation of $11,000).. 5 per unit sold 12 per unit manufactured 12 per unit manufactured 6 per unit manufactured $17,000 per month 34,000 per month Heartbreaker pays all bills in the month incurred. All sales are on account with 50 percent collected the month of sales and the balance collected the following month There are no sales discounts or bad debts. Heartbreaker desires to maintain an ending finished goods inventory equal to 20 percent of the following month's sales and a raw materials inventory equal to 10 percent of the following month's production. January 1, 2017, inventories are in line with those policies Actual unit sales for December and budgeted unit sales for January, February and March of 2017 are as follows: December January 11,250 $675,000 $600,000 February 15,000 $900,000 March Sales Units Sales Dollars 10,000 13,000 $780,000 Additional Information: The January 1 beginning cash balance is projected to be $6,000 For the purpose of operational budgeting, units in the January 1 inventory of finished goods are valued at variable manufacturing cost Each unit of finished product requires one unit of raw materials. Heartbreaker intends to pay a cash dividend of $12,000 in January. Required: a. Prepare a production budget for January and February b. Prepare a purchases budget in units for January. c. Prepare a manufacturing cost budget for January d. Prepare a cash budget for January Prepare a contribution income statement for January. е.

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Expert Answer

Step 1

 

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Step 2
  1. Preparation of production budget for January and February:
Production budget
Feb
$900,000
15,000
$60
Dec
$675,000
11,250
$60
March
$780,000
13,000
$60
Particulars
Sales
Jan
$600,000
10,000
$60
Units
Selling price per unit
Opening Finished Goods
(20% of units)
2,250
2,000
3,000
2,600
Closing Finished Goods
(20% of following month
sales)
2,000
3,000
2,600
Production in units
(Closing+ sales-
Opening)
11,000
11,000
14,600
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Production budget Feb $900,000 15,000 $60 Dec $675,000 11,250 $60 March $780,000 13,000 $60 Particulars Sales Jan $600,000 10,000 $60 Units Selling price per unit Opening Finished Goods (20% of units) 2,250 2,000 3,000 2,600 Closing Finished Goods (20% of following month sales) 2,000 3,000 2,600 Production in units (Closing+ sales- Opening) 11,000 11,000 14,600

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Step 3

2.  Preparation of purchase b...

Purchase budget
Particulars
Raw material units
Opening Raw Material
(10% of Production
Closing Raw Material
Dec
Jan
Feb
14,600
1,460
11,000
1,100
11,000
1,100
1,460
11,360
1,100
11,000
Purchases of Raw Material
(units) (Closing+Raw
material units Opening)
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Purchase budget Particulars Raw material units Opening Raw Material (10% of Production Closing Raw Material Dec Jan Feb 14,600 1,460 11,000 1,100 11,000 1,100 1,460 11,360 1,100 11,000 Purchases of Raw Material (units) (Closing+Raw material units Opening)

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