NameSchedule 1- Sales Budget오2Q1Q3Q4TotalUnitsUnit priceTotal SalesSchedule 2 - Production Budget오2오4Q1Q3TotalSales in UNITSPlus: Desired finished goods ending inventoryTotal needsLess: Beginning finished goods inventoryFinished goods production needs Schedule 3: Direct Materials Purchases BudgetQ1Q2Q3Q4TotalProduction unitsx Materials per unitProduction needs for direct materialsPlus: Desired ending inventory of direct materialsTotal needsLess: Beginning direct materials inventoryPurchases of direct materialsx Cost per unitDirect materials purchases costSchedule 4: Direct labor BudgetQ1Q2Q3Q4TotalProduction unitsxLabor Hours per unitLabor hours neededx Cost per labor hourTotal direct labor costSchedule 5: Overhead BudgetQ1Q2Q3Q4TotalBudgeted hoursx Variable rate per hourBudgeted variable overheadBudgeted fixed overheadTotal Overhead

Question
Asked Nov 7, 2019
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Optima Company is a high-technology organization that produces a mass-storage system. The design of Optima's system is unique and represents a breakthrough in the industry. The units Optima produces combine positive features of both compact and hard disks. The company is completing its fifth year of operations and is preparing to build its master budget for the coming year (20X1). The budget will detail each quarter's activity and the activity for the year in total. The master budget will be based on the following information:

Fourth-quarter sales for 20X0 are 55,000 units.

Unit sales by quarter (for 20X1) are projected as follows:

First quarter 65,000    
Second quarter 70,000    
Third quarter 75,000    
Fourth quarter 90,000    

The selling price is $400 per unit. All sales are credit sales. Optima collects 85% of all sales within the quarter in which they are realized; the other 15% is collected in the following quarter. There are no bad debts.There is no beginning inventory of finished goods. Optima is planning the following ending finished goods inventories for each quarter:

First quarter 13,000 units    
Second quarter 15,000 units    
Third quarter 20,000 units    
Fourth quarter 10,000 units    

Each mass-storage unit uses 5 hours of direct labor and three units of direct materials. Laborers are paid $10 per hour, and one unit of direct materials costs $80.

There are 65,700 units of direct materials in beginning inventory as of January 1, 20X1. At the end of each quarter, Optima plans to have 30% of the direct materials needed for next quarter's unit sales. Optima will end the year with the same amount of direct materials found in this year's beginning inventory.

Optima buys direct materials on account. Half of the purchases are paid for in the quarter of acquisition, and the remaining half are paid for in the following quarter. Wages and salaries are paid on the 15th and 30th of each month.

Fixed overhead totals $1 million each quarter. Of this total, $350,000 represents depreciation. All other fixed expenses are paid for in cash in the quarter incurred. The fixed overhead rate is computed by dividing the year's total fixed overhead by the year's budgeted production in units.

Variable overhead is budgeted at $6 per direct labor hour. All variable overhead expenses are paid for in the quarter incurred.

Fixed selling and administrative expenses total $250,000 per quarter, including $50,000 depreciation.

Variable selling and administrative expenses are budgeted at $10 per unit sold. All selling and administrative expenses are paid for in the quarter incurred.

The balance sheet as of December 31, 20X0, is as follows:

Assets
Cash   $ 250,000  
Direct materials inventory   5,256,000  
Accounts receivable   3,300,000  
Plant and equipment, net   33,500,000  
     Total assets   $42,306,000  
Liabilities and Stockholders’ Equity
Accounts payable   $ 7,248,000*  
Capital stock   27,000,000  
Retained earnings   8,058,000  
     Total liabilities and stockholders’ equity   $42,306,000  
* For purchase of direct materials only.

Optima will pay quarterly dividends of $300,000. At the end of the fourth quarter, $2 million of equipment will be purchased.

*PLEASE COMPLETE PER THE TEMPLATE PROVIDED (: 

Name
Schedule 1- Sales Budget
오2
Q1
Q3
Q4
Total
Units
Unit price
Total Sales
Schedule 2 - Production Budget
오2
오4
Q1
Q3
Total
Sales in UNITS
Plus: Desired finished goods ending inventory
Total needs
Less: Beginning finished goods inventory
Finished goods production needs
help_outline

Image Transcriptionclose

Name Schedule 1- Sales Budget 오2 Q1 Q3 Q4 Total Units Unit price Total Sales Schedule 2 - Production Budget 오2 오4 Q1 Q3 Total Sales in UNITS Plus: Desired finished goods ending inventory Total needs Less: Beginning finished goods inventory Finished goods production needs

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Schedule 3: Direct Materials Purchases Budget
Q1
Q2
Q3
Q4
Total
Production units
x Materials per unit
Production needs for direct materials
Plus: Desired ending inventory of direct materials
Total needs
Less: Beginning direct materials inventory
Purchases of direct materials
x Cost per unit
Direct materials purchases cost
Schedule 4: Direct labor Budget
Q1
Q2
Q3
Q4
Total
Production units
xLabor Hours per unit
Labor hours needed
x Cost per labor hour
Total direct labor cost
Schedule 5: Overhead Budget
Q1
Q2
Q3
Q4
Total
Budgeted hours
x Variable rate per hour
Budgeted variable overhead
Budgeted fixed overhead
Total Overhead
help_outline

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Schedule 3: Direct Materials Purchases Budget Q1 Q2 Q3 Q4 Total Production units x Materials per unit Production needs for direct materials Plus: Desired ending inventory of direct materials Total needs Less: Beginning direct materials inventory Purchases of direct materials x Cost per unit Direct materials purchases cost Schedule 4: Direct labor Budget Q1 Q2 Q3 Q4 Total Production units xLabor Hours per unit Labor hours needed x Cost per labor hour Total direct labor cost Schedule 5: Overhead Budget Q1 Q2 Q3 Q4 Total Budgeted hours x Variable rate per hour Budgeted variable overhead Budgeted fixed overhead Total Overhead

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Expert Answer

Step 1

Sales Budget : A Sales budget represents the quantity and the per unit sales price of the product or service. It depicts an estimated total revenue of the company for the future period.

D
E
Optima Company
Schedule 1: Sales Budget
аз
1
3 Particulars 01
Q4
Total
Q2
4
5 Units
=B5+C5+D5+E5
65000
70000
75000
90000
6 Unit Price 400
400
400
400
D5*D6| E5 E6
7 Total Sales B5*B6 | - C5 *C6
- 87+C7+D7+E7
8
в
c
Optima Company
Schedule 1: Sales Budget
03
1
2
3 Particulars 01
02
Total
Q4
4
5 Units
300000
65000
70000
75000
90000
6 Unit Price
400
400
400
400
7 Total Sales 26000000 28000000 30000000 36000000 120000000
8
NCn
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D E Optima Company Schedule 1: Sales Budget аз 1 3 Particulars 01 Q4 Total Q2 4 5 Units =B5+C5+D5+E5 65000 70000 75000 90000 6 Unit Price 400 400 400 400 D5*D6| E5 E6 7 Total Sales B5*B6 | - C5 *C6 - 87+C7+D7+E7 8 в c Optima Company Schedule 1: Sales Budget 03 1 2 3 Particulars 01 02 Total Q4 4 5 Units 300000 65000 70000 75000 90000 6 Unit Price 400 400 400 400 7 Total Sales 26000000 28000000 30000000 36000000 120000000 8 NCn

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Step 2

Production Budget depicts the number of units needed for production for a particular period.

H
M
Optima Company
Schedule 2: Production Budget
2
3 Particulars
Total
Q1
Q2
Q4
Q3
4
5 Sales in Units
Add: Required
Ending Finished
6 Goods
Total Production
7 Requirement
Less: Opening
8 Finished Goods
Finished Goods
9 Production
= 15+ J5+K5+L5
65000
70000
75000
90000
13000
- 16+ J6+ K6+ L6
15000
20000
10000
K5+K6
L5+L6
M5+M6
J5+ J6
15+16
= 18+18+ K8 + L8
- 16
-16
K6
K7 - K8
- L7-L8
-17 - 18
-M7 - M8
17-18
10
K
Optima Company
Schedule 2: Production Budget
2
Total
3 Particulars
Q2
Q3
Q1
Q4
4
5 Sales in Units
90000
300000
75000
70000
65000
Add: Required Ending
6 Finished Goods
Total Production
20000 10000 58000
13000 15000
95000 100000 358000
85000
78000
7 Requirement
Less: Opening Finished
O 13000
15000 20000 48000
8Goods
Finished Goods
72000
80000 310000
80000
9 Production
78000
10
m stin
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H M Optima Company Schedule 2: Production Budget 2 3 Particulars Total Q1 Q2 Q4 Q3 4 5 Sales in Units Add: Required Ending Finished 6 Goods Total Production 7 Requirement Less: Opening 8 Finished Goods Finished Goods 9 Production = 15+ J5+K5+L5 65000 70000 75000 90000 13000 - 16+ J6+ K6+ L6 15000 20000 10000 K5+K6 L5+L6 M5+M6 J5+ J6 15+16 = 18+18+ K8 + L8 - 16 -16 K6 K7 - K8 - L7-L8 -17 - 18 -M7 - M8 17-18 10 K Optima Company Schedule 2: Production Budget 2 Total 3 Particulars Q2 Q3 Q1 Q4 4 5 Sales in Units 90000 300000 75000 70000 65000 Add: Required Ending 6 Finished Goods Total Production 20000 10000 58000 13000 15000 95000 100000 358000 85000 78000 7 Requirement Less: Opening Finished O 13000 15000 20000 48000 8Goods Finished Goods 72000 80000 310000 80000 9 Production 78000 10 m stin

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Step 3

Direct Materials Purchas...

A
E
F
Optima Company
10
Schedule 3: Direct Material Purchase Budget
11
12 Particulars
Q3
Total
Q1
Q2
Q4
13
14 Production Units 19
15 Materials per Uni 3
Production
needs for Direct
16 Materials
Add: Required
17 Ending Materials C5*3*30%D5*3*30% | =E5*3*30% |65700
18 Total Needs
=K9
EL9
|-814*B15 C14*C15 -D14*D15 E14*E15 -B16+C16+D16
B17+C17+D17
-E16+E17=F16+F17
|-B16+B17| C16+C17| =D16+D17
Less: Opening
Material
19 Inventory
C17
65700
-B17
-D17
-819+C19+D19
20 Purchase needs B18-B19=C18-C19
=D18-D19
|-E18-E19 = F18- F19
21 Cost per Unit
Direct Material
22 Purchase Cost
80
80
80
80
B20*B21 C20*C21
D20*D21
E20*E21-B22+C22+D22
help_outline

Image Transcriptionclose

A E F Optima Company 10 Schedule 3: Direct Material Purchase Budget 11 12 Particulars Q3 Total Q1 Q2 Q4 13 14 Production Units 19 15 Materials per Uni 3 Production needs for Direct 16 Materials Add: Required 17 Ending Materials C5*3*30%D5*3*30% | =E5*3*30% |65700 18 Total Needs =K9 EL9 |-814*B15 C14*C15 -D14*D15 E14*E15 -B16+C16+D16 B17+C17+D17 -E16+E17=F16+F17 |-B16+B17| C16+C17| =D16+D17 Less: Opening Material 19 Inventory C17 65700 -B17 -D17 -819+C19+D19 20 Purchase needs B18-B19=C18-C19 =D18-D19 |-E18-E19 = F18- F19 21 Cost per Unit Direct Material 22 Purchase Cost 80 80 80 80 B20*B21 C20*C21 D20*D21 E20*E21-B22+C22+D22

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