Bodin Company budgets on an annual basis. The following beginning and ending inventory levels (in units)

1.

value:
8.33 points

areplannned for the year 20×1. One units of raw material are required to produce each unit of finished product.

	January 1		December 31
Raw material		45,000		46,000
Work in process		14,000		14,000
Finished goods		94,000		64,000

Required:

1.	If Bodin Company plans to sell 462,000 units during the year, compute the number of units the firm would have to manufacture during the year.

Required production

2.	If 508,000 finished units were to be manufactured by Bodin Company during the year, determine the amount of raw material to be purchased.

Raw-material purchases

2.

value:
8.33 points

Greener Grass Fertilizer Company plans to sell 230,000 units of finished product in July and anticipates a

growth rate in sales of 5 percent per month. The desired monthly ending inventory in units of finished

product is 80 percent of the next month’s estimated sales. There are 184,000 finished units in inventory on

June 30. Each unit of finished product requires 5 pounds of raw material at a cost of $1.95 per pound.

There are 880,000 pounds of raw material in inventory on June 30.

Required:

1.	Compute the company’s total required production in units of finished product for the entire three month period ending September 30. (Do not round intermediate calculations. Round your final answer to the nearest unit.)

Total required production

2.

Independent of your answer to part (1), assume the company plans to produce 680,000 units of

finished product in the three-month period ending September 30, and to have raw-material inventory

on hand at the end of the three-month period equal to 25 percent of the use in that period. Compute

the total estimated cost of raw-material purchases for the entire three-month period ending

September 30. (Omit the “$” sign in your response.)

Total estimated cost	$

3.

value:
8.33 points

The following information is from Binghamton Film Corporation’s financial records.

Month	Sales		Purchases
April	$	78,000	$	58,000
May		66,000		45,000
June		73,000		33,000
July		78,000		51,000

Collections from customers are normally 68 percent in the month of sale, 16 percent in the month

following the sale, and 14 percent in the second month following the sale. The balance is expected to

be uncollectible. All purchases are on account. Management takes full advantage of the 2 percent

discount allowed on purchases paid for by the tenth of the following month. Purchases for August are

budgeted at $62,000, and sales for August are forecasted at $68,000. Cash disbursements for expenses

are expected to be $16,000 for the month of August. The company’s cash balance on August 1 was $30,000.

Required:

1.	Prepare the expected cash collections schedule during August. (Omit the “$” & “%” signs in your response.)

BINGHAMTON FILM CORPORATION EXPECTED CASH COLLECTIONS AUGUST
Month	Sales	Percent	Expected collections
June	$	%	$
July		%
August		%

Total			$

2.	Prepare the expected cash disbursements schedule during August. (Omit the “$” sign in your response.)

BINGHAMTON FILM CORPORATION EXPECTED CASH DISBURSEMENTS AUGUST
July purchases to be paid in August	$


Net	$
Cash disbursements for expenses

Total	$

3.	Calculate the expected cash balance on August 31. (Omit the “$” sign in your response.)

	Expected cash balance	$
The following information applies to the questions displayed below.]

Spiffy Shades Corporation manufactures artistic frames for sunglasses. Talia Demarest, controller, is

responsible for preparing the company’s master budget. In compiling the budget data for 20×1,

Demarest has learned that new automated production equipment will be installed on March 1.

This will reduce the direct labor per frame from 2.0 hour to 1.75 hour.

Labor-related costs include pension contributions of $1.05 per hour, workers’ compensation insurance

of $.75 per hour, employee medical insurance of $3 per hour, and employer contributions to Social Security

equal to 6.00 percent of direct-labor wages. The cost of employee benefits paid by the company on its

employees is treated as a direct-labor cost. Spiffy Shades Corporation has a labor contract that calls for

a wage increase to $18.00 per hour on April 1, 20×1. Management expects to have 21,800 frames on hand

at December 31, 20×0, and has a policy of carrying an end-of-month inventory of 100 percent of the following

month’s sales plus 40 percent of the second following month’s sales.

These and other data compiled by Demarest are summarized in the following table.

	January		February		March		April		May
Direct-labor hours per unit		2.0		2.0		1.75		1.75		1.75
Wage per direct-labor hour	$	16.00	$	16.00	$	16.00	$	18.00	$	18.00
Estimated unit sales		15,000		17,000		13,000		14,000		14,000
Sales price per unit	$	70.00	$	67.50	$	67.50	$	67.50	$	67.50
Manufacturing overhead:
Shipping and handling
(per unit sold)	$	3.00	$	3.00	$	3.00	$	3.00	$	3.00
Purchasing, material handling,
and inspection
(per unit produced)	$	4.00	$	4.00	$	4.00	$	4.00	$	4.00
Other manufacturing overhead
(per direct-labor hour)	$	4.00	$	4.00	$	4.00	$	4.00	$	4.00

1.

Prepare a production budget and a direct-labor budget for Spiffy Shades Corporation by month and for the

first quarter of 20×1. (Round your intermediate calculations and final answers to the nearest whole

dollar amount. Input all amounts as positive values. Omit the “$” sign in your response.)

4.

value:
8.33 points

Required:

SPIFFY SHADES CORPORATION BUDGET FOR PRODUCTION AND DIRECT LABOR FOR THE FIRST QUARTER OF 20×1
	Month

	January	February	March	Quarter
Sales (units)
: Ending inventory

Total needs
: Beginning inventory

Units to be produced
Direct-labor hours per unit	×	×	×

Total hours of direct labor time needed

Direct-labor costs:
Wages	$	$	$	$
Pension contributions
Workers’ compensation insurance
Employee medical insurance
Employer’s social security

Total direct-labor cost	$	$	$	$

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references
5.

value:
8.33 points

3.	Prepare a manufacturing overhead budget for each month and for the first quarter. (Omit the “$” sign in your response.)

SPIFFY SHADES CORPORATION MANUFACTURING OVERHEAD BUDGET FOR THE FIRST QUARTER OF 20×1
		Month

	January	February	March	Quarter
Shipping and handling	$	$	$	$
Purchasing, material handling
and inspection
Other overhead

Total manufacturing overhead	$	$	$	$

references

[The following information applies to the questions displayed below.]

“We really need to get this new material-handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short-term loan down at MetroBank.” This statement by Beth Davies-Lowry, president of Intercoastal Electronics Company, concluded a meeting she had called with the firm’s top management. Intercoastal is a small, rapidly growing wholesaler of consumer electronic products. The firm’s main product lines are small kitchen appliances and power tools. Marcia Wilcox, Intercoastal’s General Manager of Marketing, has recently completed a sales forecast. She believes the company’s sales during the first quarter of 20×1 will increase by 10 percent each month over the previous month’s sales. Then Wilcox expects sales to remain constant for several months. Intercoastal’s projected balance sheet as of December 31, 20×0, is as follows:


Cash	$	45,000
Accounts receivable		360,000
Marketable securities		15,000
Inventory		192,500
Buildings and equipment (net of accumulated depreciation)		600,000

Total assets	$	1,212,500

Accounts payable	$	220,500
Bond interest payable		13,750
Property taxes payable		6,000
Bonds payable (10%; due in 20×6)		330,000
Common stock		500,000
Retained earnings		142,250

Total liabilities and stockholders’ equity	$	1,212,500

Jack Hanson, the assistant controller, is now preparing a monthly budget for the first quarter of 20×1. In the process, the following information has been accumulated:

1.	Projected sales for December of 20×0 are $500,000. Credit sales typically are 80 percent of total sales. Intercoastal’s credit experience indicates that 10 percent of the credit sales are collected during the month of sale, and the remainder are collected during the following month.
2.	Intercoastal’s cost of goods sold generally runs at 70 percent of sales. Inventory is purchased on account, and 40 percent of each month’s purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to half of the next month’s projected cost of goods sold.
3.	Hanson has estimated that Intercoastal’s other monthly expenses will be as follows:


Sales salaries	$	35,000
Advertising and promotion		16,000
Administrative salaries		35,000
Depreciation		30,000
Interest on bonds		2,750
Property taxes		1,500

In addition, sales commissions run at the rate of 1 percent of sales.

4.	Intercoastal’s president, Davies-Lowry, has indicated that the firm should invest $125,000 in an automated inventory-handling system to control the movement of inventory in the firm’s warehouse just after the new year begins. These equipment purchases will be financed primarily from the firm’s cash and marketable securities. However, Davies-Lowry believes that Intercoastal needs to keep a minimum cash balance of $25,000. If necessary, the remainder of the equipment purchases will be financed using short-term credit from a local bank. The minimum period for such a loan is three months. Hanson believes short-term interest rates will be 10 percent per year at the time of the equipment purchases. If a loan is necessary, Davies-Lowry has decided it should be paid off by the end of the first quarter if possible.
5.	Intercoastal’s board of directors has indicated an intention to declare and pay dividends of $50,000 on the last day of each quarter.
6.	The interest on any short-term borrowing will be paid when the loan is repaid. Interest on Intercoastal’s bonds is paid semiannually on January 31 and July 31 for the preceding six-month period.
7.	Property taxes are paid semiannually on February 28 and August 31 for the preceding six-month period.

references

6.

value:
8.33 points

Required:

Prepare Intercoastal Electronics Company’s master budget for the first quarter of 20×1 by completing the following schedules and statements.

1.	Sales budget (Round your answers to the nearest dollar amount. Omit the “$” sign in your response):

	20×0	20×1

	December	January	February	March	1st Quarter
Total sales	$	$	$	$	$
Cash sales
Sales on account

references

7.

value:
8.33 points

2.	Cash receipts budget (Omit the “$” sign in your response):

	20×1

	January	February	March	1st Quarter
Cash sales	$	$	$	$
Cash collections from credit sales made during current month
Cash collections from credit sales made during preceding month

Total cash receipts	$	$	$	$

references

8.

value:
8.33 points

3.	Purchases budget (Omit the “$” sign in your response):

	20×0	20×1

	December	January	February	March	1st Quarter
Budgeted cost of goods sold	$	$	$	$	$
Add: Desired ending inventory

Total goods needed	$	$	$	$	$
Less: Expected beginning inventory

Purchases	$	$	$	$	$

references9.

value:
8.33 points

4.	Cash disbursements budget (Round your answers to the nearest dollar amount. Leave no cells blank – be certain to enter “0″ wherever required. Omit the “$” sign in your response):

	20×1

	January	February	March	First Quarter
Inventory purchases:
Cash payments for purchases during the current month	$	$	$	$
Cash payments for purchases during the preceding month

Total cash payments for inventory purchases	$	$	$	$

Other expenses:
Sales salaries	$	$	$	$
Advertising and promotion
Administrative salaries
Interest on bonds
Property taxes
Sales commissions

Total cash payments for other expenses	$	$	$	$

Total cash disbursements	$	$	$	$

references
10.

value:
8.33 points

5.	Analysis of short-term financing needs (Negative amounts should be entered with a minus sign in front of them. Omit the “$” sign in your response):


Projected cash balance as of December 31, 20×0	$
Less: Minimum cash balance

Cash available for equipment purchases	$
Projected proceeds from sale of marketable securities

Cash available	$
Less: Cost of investment in equipment

Required short-term borrowing	$

references
11.

value:
8.33 points

6.	Summary cash budget (Round your answers to the nearest dollar amount. Leave no cells blank – be certain to enter “0″ wherever required. Amounts to be deducted should be indicated with minus sign. Omit the “$” sign in your response):

	20×1
	January	February	March	First Quarter
Cash receipts [from part 2]	$	$	$	$
Cash disbursements [from part 4]

Change in cash balance during period due to operations	$	$	$	$
Sale of marketable securities (1/2/x1)
Proceeds from bank loan (1/2/x1)
Purchase of equipment	$
Repayment of bank loan (3/31/x1)
Interest on bank loan*
Payment of dividends

Change in cash balance during first quarter				$
Cash balance, 1/1/x1

Cash balance, 3/31/x1				$

references
12.

value:
8.37 points

7.	Prepare Intercoastal Electronics’ budgeted income statement for the first quarter of 20×1. (Ignore income taxes.) (Input all amounts as positive values. Round your answers to the nearest dollar amount. Omit the “$” sign in your response.)

INTERCOASTAL ELECTRONICS COMPANY BUDGETED INCOME STATEMENT FOR THE FIRST QUARTER OF 20×1
		$
:

		$
Selling and administrative expenses:
	$








Total selling and administrative expenses

		$

references

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Bodin Company budgets on an annual basis. The following beginning and ending inventory levels (in units)

Apathy today verses 1964

By completing this Summative Assignment, you will demonstrate your abilities with the following objectives: