LB Enterprises (LB) is preparing its budget for the first quarter of 2019. LB's balance sheet as of December 31, 2018 is as follows: Assets Liabilities Cash $5,000 Accounts Payable $9500 Accounts Recievable 28,000 Inventories Direct Materials 8,100 Finished Goods (500 Units) 16,870 Stockholders Equity Equipment - gross 45,000 Accumulated depreciation 15.000 Common Stock $15,000 Net Equipment 30,000 Retained Earnings 63,470 Total Assets $87,970 Total Liabilities and $87,960 Equity LB sells one product for $45/unit. The Company forecasts that it will sell 2,000; 1,500; 1,600; and 1,700 units in January, February, March and April, respectively. • Sales to customers are all on credit. 40% of the cash for these sales is collected in the month of the sale and the remaining 60% is collected in the following month. LB wants finished goods inventory equal to 25% of the next month's sales on hand at the end of each month. LB wants direct materials equal to 75% of the current month's production requirements on hand at the end of each month. Each unit of finished goods inventory requires 2.5 pound of direct materials at $3 per pound and 2 hours of direct labor at $10.00 per hour. Direct material purchases are paid 15% in the month they are purchased and 85% in the following month. All other costs of the company are paid for as they are incurred. Manufacturing Overhead consists of the following o Indirect Materials (S.15/unit) o Indirect Labor (S.40/unit) Other ($.35/unit) Production supervisors' salaries - $6,000 per month Depreciation - $950 per month Other fixed - $2,000 per month Selling and Adminitstraion costs consist of the following Commissions ($1.10/unit sold) Freight (S.15/unit sold) Salaries - $8,500 per month Rent - $800 per month Depreciation $150 per month LB will purchase new equipment at a cost of $10,000 on March 31, 2019 11. Calculate total “cost of goods sold" for each month and for the quarter (all the information is available above). Total Qtr January February March
LB Enterprises (LB) is preparing its budget for the first quarter of 2019. LB's balance sheet as of December 31, 2018 is as follows: Assets Liabilities Cash $5,000 Accounts Payable $9500 Accounts Recievable 28,000 Inventories Direct Materials 8,100 Finished Goods (500 Units) 16,870 Stockholders Equity Equipment - gross 45,000 Accumulated depreciation 15.000 Common Stock $15,000 Net Equipment 30,000 Retained Earnings 63,470 Total Assets $87,970 Total Liabilities and $87,960 Equity LB sells one product for $45/unit. The Company forecasts that it will sell 2,000; 1,500; 1,600; and 1,700 units in January, February, March and April, respectively. • Sales to customers are all on credit. 40% of the cash for these sales is collected in the month of the sale and the remaining 60% is collected in the following month. LB wants finished goods inventory equal to 25% of the next month's sales on hand at the end of each month. LB wants direct materials equal to 75% of the current month's production requirements on hand at the end of each month. Each unit of finished goods inventory requires 2.5 pound of direct materials at $3 per pound and 2 hours of direct labor at $10.00 per hour. Direct material purchases are paid 15% in the month they are purchased and 85% in the following month. All other costs of the company are paid for as they are incurred. Manufacturing Overhead consists of the following o Indirect Materials (S.15/unit) o Indirect Labor (S.40/unit) Other ($.35/unit) Production supervisors' salaries - $6,000 per month Depreciation - $950 per month Other fixed - $2,000 per month Selling and Adminitstraion costs consist of the following Commissions ($1.10/unit sold) Freight (S.15/unit sold) Salaries - $8,500 per month Rent - $800 per month Depreciation $150 per month LB will purchase new equipment at a cost of $10,000 on March 31, 2019 11. Calculate total “cost of goods sold" for each month and for the quarter (all the information is available above). Total Qtr January February March
Chapter8: Budgets And Bank Reconciliations
Section: Chapter Questions
Problem 2.3C
Related questions
Question
Transcribed Image Text:LB Enterprises (LB) is preparing its budget for the first quarter of 2019. LB's balance sheet as of December 31, 2018
is as follows:
Assets
Liabilities
Cash
$5,000
Accounts Payable
$9500
Accounts Recievable
28,000
Inventories
Direct Materials
8,100
Finished Goods (500
Units)
16,870
Stockholders Equity
Equipment - gross
45,000
Accumulated depreciation
15.000
Common Stock
$15,000
Net Equipment
30,000
Retained Earnings
63,470
Total Assets
$87,970
Total Liabilities and
$87,960
Equity
LB sells one product for $45/unit. The Company forecasts that it will sell 2,000; 1,500; 1,600; and 1,700 units
in January, February, March and April, respectively.
• Sales to customers are all on credit. 40% of the cash for these sales is collected in the month of the sale and
the remaining 60% is collected in the following month.
LB wants finished goods inventory equal to 25% of the next month's sales on hand at the end of each
month.
LB wants direct materials equal to 75% of the current month's production requirements on hand at the end
of each month.
Each unit of finished goods inventory requires 2.5 pound of direct materials at $3 per pound and 2 hours of
direct labor at $10.00 per hour.
Direct material purchases are paid 15% in the month they are purchased and 85% in the following month. All
other costs of the company are paid for as they are incurred.
Manufacturing Overhead consists of the following
o Indirect Materials (S.15/unit)
o Indirect Labor (S.40/unit)
Other ($.35/unit)
Production supervisors' salaries - $6,000 per month
Depreciation - $950 per month
Other fixed - $2,000 per month
Selling and Adminitstraion costs consist of the following
Commissions ($1.10/unit sold)
Freight (S.15/unit sold)
Salaries - $8,500 per month
Rent - $800 per month
Depreciation $150 per month
LB will purchase new equipment at a cost of $10,000 on March 31, 2019
Transcribed Image Text:11. Calculate total “cost of goods sold" for each month and for the quarter (all the
information is available above).
Total Qtr
January
February
March
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