Follow the instructions below to fill out the spreadsheets and complete the assignment.
| Integrated Accounting Principles | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACC 2430 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Master Budget Template | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sales Budget | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Quarter 2008 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| January | February | March | Quarter 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Budgeted Sales (Batches) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Budgeted Selling Price per Batch | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Budgeted Sales Revenue | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expected Cash Receipts: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| From January Sales | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| From February Sales | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| From March Sales | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Cash Collections | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Add: Desired Ending Inventory | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Batches required | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: Beginning Inventory | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Budgeted Production (Batches) |
| Direct Materials Budget – Flour/ | Sugar | |||||
| Expected Materials (Cups) per Batch | ||||||
| Total Expected Usage – Cups | ||||||
| Total Materials Required | ||||||
| Budgeted Purchases | ||||||
| Expected Cost per Cup | ||||||
| Total Cost | ||||||
| Cash Payments for Materials – January | ||||||
| Cash Payments for Materials – February | ||||||
| Cash Payments for Materials – March | ||||||
| Total Cash Payments | ||||||
| Direct Materials Budget – Eggs | ||||||
| Expected Materials (Eggs) per Batch | ||||||
| Total Expected Usage – Eggs | ||||||
| Expected Cost per Egg | ||||||
| Direct Materials Budget – | Butter | |||||
| Direct Materials Budget – Chocolate Chips | ||||||
| Total Cost All Materials |
& FOH Budget
| Direct Labor Budget | ||
| Direct Labor Time per Batch | ||
| Total Direct Labor Hours Required | ||
| Labor Rate per Hour | ||
| Budgeted Labor Cost | ||
| Cash Payments for Direct Labor | ||
| Factory Overhead | ||
| Variable Overhead Costs: | ||
| Utilities | ||
| Indirect Materials | ||
| Total Variable Costs | ||
| Fixed Overhead Costs | ||
| Maintenance | ||
| Depreciation | ||
| Insurance | ||
| Total Fixed Costs | ||
| Total Factory Overhead Costs | ||
| Cash Payments for Factory Overhead |
| Selling, General & Administrative Expense Budget | |
| Variable Selling Expenses: | |
| Sales Commissions | |
| Shipping Costs | |
| Fixed Selling, General & Admin Expenses | |
| Salary for Sales Employee | |
| Miscellaneous | |
| Total | Selling, General & Administrative Expenses |
| Cash Payments: | |
| Variable Selling, General & Admin Expenses | |
& Income Statement
| Cash Receipts from Sales | |
| Cash Payments For: | |
| Selling, General & Adminstration Expense | |
| Net Cash Flows from Operating Activities | |
| Add: Beginning Balance | |
| Ending Balance | |
| Projected Income Statement | |
| Budgeted Sales Revenue (—– Batches Sold) | |
| Cost of Goods Sold | |
| Beginning Finished Goods Inventory | |
| Add: Cost of Goods Manufactured: | |
| Direct Materials Used | |
| Cost of Goods Available for Sale (—— Batches Produced) | |
| Less: Ending Inventory (—– Batches Not Sold during the 1st Quarter)) | |
| Gross Margin | |
| Net Income |
| Zach Whetstone | ||||
| production volume (Batches) | 10,000 | 20,000 | 30,000 | 40,000 |
| direct materials | ||||
| direct labor | ||||
| factory overhead | ||||
| variable: | ||||
| indirect labor | ||||
| indirect materials | ||||
| utilities | ||||
| other | ||||
| fixed: | ||||
| supervisory salaries | ||||
| depreciation | ||||
| total manufacturing costs |
| Make cookies | Buy cookies |
| expected monthly requirements (Cookies) | |
| relevant costs: | |
| variable overhead | |
| cookie purchase cost | |
| excess manufacturing cost Incurred in production of electronic control panels as a result of lower-quality purchased cookies | |
| total relevant cost | |
| relevant costs per unit |
| Necessary Amounts |
| total variable production cost per batch |
| flour |
| 0.4 |
| eggs |
| chocolate chips |
Integrated Accounting Principles
ACC 2430 – spring 20
1
2
Master Budget & Decision Making Project (200 Points)
Due Date: MONDAY, march 26, 2012
submit via blackboard by 8am
submit in book report cover, a hard copy of blackboard submission in class on due date
late submission – 20 point deduction
Incomplete project (missing parts) – 20 point deduction
This assignment is a continuation of the Business Plan Assignment. Your grandmother reviewed your business plan and is convinced that there is an opportunity to launch a profitable cookie business instead of brownies on campus. However, your grandmother believes that you may be able to enhance the market demand and create a competitive advantage for your business if you were to make your inventory rather than buying cookies for resale. ll that the Master Budget Partted your business place
She believes that she has the perfect recipe to launch your business: her extra special Double Chocolate Chip Cookie. In order to make an informed decision regarding this change to your business plan, your grandmother wants an updated master budget for a possible manufacturing venture. Assume that you will launch your business on January 1, 2008, and your grandmother wants to see a master budget for the first quarter of operations (January-March 2008).
Based on conversations with your grandmother and your own independent research you have compiled the following information:
a) The sales price for the cookies will be 350% of the total variable production costs per batch (Note: 1 Batch = 6 Dozen Cookies).
b) The sales projections for the first quarter are equal to:
January: The first four digits of your identification number = the number of batches expected
to be sold in January.
February: Assume 15% growth in sales over January.
March: Assume 15% growth in sales over February.
April: Assume 15% growth in sales over March.
May: Assume 15% growth in sales over April.
c) When your grandmother makes her Double Chocolate Chip Cookies, she makes a batch of six dozen cookies. The ingredients for one batch (i.e., six dozen) of the Double Chocolate Chip Cookies are:
1 ½ cup of sugar
2 cups of flour
2 eggs
1 cup of butter
2 cups of chocolate chips
d) The cost of raw materials are as follows:
Flour/sugar (per cup)
$0.20
Eggs (per egg)
$0.10
Butter (per cup)
$2.50
Chocolate Chips (per cup)
$2.00
e) In order to manufacture cookies for your company, you will need to hire employees who would earn $12 per hour. Each batch of cookies (i.e., six dozen cookies) would require 1 ½ hours of labor.
f) Variable factory overhead will be incurred for utilities and indirect materials as follows:
Utilities (per batch):
$0.25
Indirect materials (per batch):
$0.60
g) Fixed factory overhead will be incurred for maintenance, depreciation, and insurance as follows:
Maintenance (per month):
$1,000
Depreciation (per month):
$1,500
Insurance (per month):
$2,500
h) In addition to hiring an employee to make the cookies, it will also be necessary to hire a salesperson to handle promotion and sales. This person will be paid a fixed salary and a commission. The variable selling, general & administrative expenses are estimated as follows:
Sales Commissions for the sales employee (per batch):
$0.25
Shipping Costs (per batch):
$1.40
i) Fixed Selling, General, & Administrative Expenses will be incurred as follows:
Salary for sales employee (per month):
$6,000
Depreciation (per month):
$ 400
Miscellaneous fixed costs (per month):
$1,600
j) The estimates for collections and payments for sales and costs are as follows:
· Seventy-five percent of total sales are expected to be cash sales, the remaining 25% of sales will be credit sales. Credit sales are expected to be collected the month following the sale.
· All raw materials will be purchased on credit. The company will pay for 30% of the raw materials in the month of the purchase; the remaining 70% of the raw materials will be paid in the month following the purchase.
· All of the direct labor will be paid in the month the work is performed.
· All variable factory overhead will be paid in the month incurred.
· All fixed factory overhead (except depreciation) will be paid in the month after the cost is incurred.
· Variable selling, general and administrative expenses will be paid the month after the cost is incurred.
· All fixed selling, general, and administrative expenses (except depreciation) will be paid in the month the cost is incurred.
k) You determine that in order to produce a sufficient level of “slack” in the production process you need to maintain the following ending inventory amounts:
The desired ending inventory: 25% of next month’s production needs (in batches).
The desired ending inventory of each raw material: 15% of next month’s needs.
l) Assume that your grandmother will invest $50,000 cash to start the business in January 2008. This amount will be the beginning balance in cash for the first quarter.
Required:
1) Calculate the following amounts: (25 Points)
· The total variable production costs per batch.
· The selling price per batch.
· The total variable costs (production & selling, general & administrative expenses) per batch.
· The contribution margin per batch.
· The breakeven point for the quarter in batches and dollars.
2) Prepare the following budgets for the first quarter of operations (January-March 2008).
Prepare your budgets using the templates provided on Blackboard. Use your
name for the
company name in the budgets. (120 Points)
· Sales Budget
· Production Budget
· Direct Materials Budget
· Direct Labor Budget
· Factory Overhead Budget
· Selling, General & Administrative Expense Budget
· Cash Budget
· Projected Income Statement for the Quarter
3) In order to make an informed decision regarding launching a manufacturing venture, your grandmother wants to see estimates for the cost over the range of production possibilities for the first quarter. Prepare a flexible cost budget for the estimated production costs for the following range of batches produced for the first quarter: 10,000 batches, 20,000 batches, 30,000 batches, 40,000 batches. Follow the format on page 380 of your textbook for the flexible cost budget. (25 Points)
4) In your research, you locate a dough maker that would be willing to custom make your grandmother’s recipe for $30.50 per batch. The dough would be delivered frozen, and then would be cut and baked at your location. If you choose to buy the dough, the following costs would be affected.
· There would be no purchases of raw materials.
· Direct Labor Costs would be 30% of the amount from your direct labor budget.
· Variable Factory Overhead costs would be 40% of the amount from your Factory Overhead Budget.
· There would be no Fixed Manufacturing Overhead costs if you bought the dough.
· Variable and Fixed Selling, General & Administrative costs would be unaffected.
a) Should you make or buy the dough for the Double Chocolate Chips Cookies? (Present your analysis using the format in Exhibit 14-8 on page 488 in your textbook. Base your analysis on the total batches you estimate you will produce in the first quarter of operations.)
b) At what level of production would you be indifferent between making and buying the cookie dough?
(30 Points)
THE TEMPLATES FOR THIS PROJECT CAN BE FOUND ON BLACKBOARD
PAGE
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