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REQUIRED: Prepare the Cash Budget and Budgeted Income Statement. NOTE: NEED ASAP! Thank you

REQUIRED: Prepare the Cash Budget and Budgeted Income Statement. NOTE: NEED ASAP! Thank you

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 15E: Palmgren Company produces consumer products. The sales budget for four months of the year is...
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REQUIRED: Prepare the Cash Budget and Budgeted Income Statement. NOTE: NEED ASAP! Thank you
CASE ANALYSIS and REPORTING Pen Pen DeSaraPen Company is preparing budgets for the quarter ending June 30. Budgeted sales for the next five months are: April May June July August 20,000 units 50,000 units 30,000 units 25,000 units 15,000 units ADDITIONAL INFORMATION: 1. The selling price is 10 per unit. 2. All sales are on account. 3. Royal's collection pattern is: 70% collected in the month of sale, 25% collected in the month following sale, 5% uncollectible. 4. The March 31 accounts receivable balance of Php30,000 will be collected in full. 5. The management wants ending inventory to be equal to 20% of the following month's budgeted sales in units. On March 31, 4,000 units were on hand. 7. Five pounds of material are required per unit of product. Management wants materials on hand at the end of each month equal to 10% of the following month's production. On March 31, 13,000 pounds of material are on hand. Material cost is 0.40 per pound. 8. Each unit of product requires 0.05 hours (3 minutes) of direct labor. The Company has a "no layoff" policy so all employees will be paid for 40 hours of work each week. In exchange for the "no layoff" policy, workers agree to a wage rate of 10 per hour regardless of the hours worked (no overtime pay). For the next three months, the direct labor workforce will be paid for a minimum of 1,500 hours per month. 9. Manufacturing overhead is applied to units of product on the basis of direct labor hours. The variable manufacturing overhead rate is 20 per direct labor hour. Fixed manufacturing overhead is 50,000 per month and includes 20,000 of noncash costs (primarily depreciation of plant assets). 10. Selling and administrative expenses budget is divided into variable and fixed components. The variable selling and administrative expenses are 0.50 per unit sold. Fixed selling and administrative expenses are 70,000 per month. The fixed selling and administrative expenses include $10,000 in costs primarily depreciation - that are not cash outflows of the current month. Additional Information to the case: 1. Maintains a 12% open line of credit for 100,000. If it borrows, it repays loans on the last day of the month if there is enough cash. 2. Maintains a minimum cash balance of 40,000. 3. Pays a cash dividend of 52,000 in April 4. Purchases 143,700 of equipment in May and 48,300 in June (both purchases paid in cash) 5. Has an April 1 cash balance of 35,000 REQUIRED: Prepare the Cash Budget and Budgeted Income Statement.
Transcribed Image Text:CASE ANALYSIS and REPORTING Pen Pen DeSaraPen Company is preparing budgets for the quarter ending June 30. Budgeted sales for the next five months are: April May June July August 20,000 units 50,000 units 30,000 units 25,000 units 15,000 units ADDITIONAL INFORMATION: 1. The selling price is 10 per unit. 2. All sales are on account. 3. Royal's collection pattern is: 70% collected in the month of sale, 25% collected in the month following sale, 5% uncollectible. 4. The March 31 accounts receivable balance of Php30,000 will be collected in full. 5. The management wants ending inventory to be equal to 20% of the following month's budgeted sales in units. On March 31, 4,000 units were on hand. 7. Five pounds of material are required per unit of product. Management wants materials on hand at the end of each month equal to 10% of the following month's production. On March 31, 13,000 pounds of material are on hand. Material cost is 0.40 per pound. 8. Each unit of product requires 0.05 hours (3 minutes) of direct labor. The Company has a "no layoff" policy so all employees will be paid for 40 hours of work each week. In exchange for the "no layoff" policy, workers agree to a wage rate of 10 per hour regardless of the hours worked (no overtime pay). For the next three months, the direct labor workforce will be paid for a minimum of 1,500 hours per month. 9. Manufacturing overhead is applied to units of product on the basis of direct labor hours. The variable manufacturing overhead rate is 20 per direct labor hour. Fixed manufacturing overhead is 50,000 per month and includes 20,000 of noncash costs (primarily depreciation of plant assets). 10. Selling and administrative expenses budget is divided into variable and fixed components. The variable selling and administrative expenses are 0.50 per unit sold. Fixed selling and administrative expenses are 70,000 per month. The fixed selling and administrative expenses include $10,000 in costs primarily depreciation - that are not cash outflows of the current month. Additional Information to the case: 1. Maintains a 12% open line of credit for 100,000. If it borrows, it repays loans on the last day of the month if there is enough cash. 2. Maintains a minimum cash balance of 40,000. 3. Pays a cash dividend of 52,000 in April 4. Purchases 143,700 of equipment in May and 48,300 in June (both purchases paid in cash) 5. Has an April 1 cash balance of 35,000 REQUIRED: Prepare the Cash Budget and Budgeted Income Statement.
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