Reference no: EM133612209

Question: The dentures isn't an outdoor equipment manufacturer. They're currently manufacturing and selling outdoor tents. And you are the lead accounting for the company. You're CFO has assigned to the task of compiling and completing the budgets schedules for next year, 2022. Congratulations. Joe, a senior accountant in your department, comes to your office. Here's a copy of last year's balance sheet you requested to start the process. Great. Thanks. John, the CFO has compiled the projected sales for each quarter 2022, the first quarter of 2023. He's explained the route using thirty-two dollars per unit as the budgeted selling price. And uncollectible accounts are negligible and can be ignored in this budgeting process. The caps be able division has provided some guidance on how we pay our bills. Historically, our credit sales have been collected seventy-five percent in the quarter sales made and twenty-five percent are collected in the next quarter. We're gonna use those assumptions in this year's budget. 70% of each quarters purchases are paid for in the current quarter. The remaining is paid for in the subsequent quarter. Overhead, excluding depreciation, of course, is paid in the quarter incurred. All selling and administrative expenses, excluding depreciation, are paid in the quarter incurred. The board has provided some guidance on how our cash should be managed. We have a required minimum cash balance of $30 thousand at the end of each quarter. We assume any borrowings occur on the first day of the quarter.

To the extent possible, the company will repay principal and interests on the last day of the fourth-quarter. The company's lender imposes a simple 3% interest rate per quarter. Any borrowing we do, dividends of $15 thousand will be declared and paid in each quarter. The CFO and COO have provided some production and inventory assumptions. The company uses a lifo inventory flow method. Each quarter's ending inventory should equal 15% of next quarter's sales. Each unit of finished goods requires 3.5 yards of raw material. The costs $3 per yard. Each quarter's raw materials inventory should equal 10% of the next quarter's production needs. Estimated. Ending raw materials inventory on December 31st, 2022 is 5 thousand yards. Direct laborers are paid $18 per hour and paid in the current quarter there worked.

And finally, each unit of finished goods requires 0.25 hours to complete. The CFO, ng-controller have provided some overhead assumptions. The number of direct labor hours is used as the allocation basis for the budgeted planet-wide overhead rate. Quarterly fixed manufacturing overhead is $150 thousand, including 20 thousand in equipment depreciation. The budgeted variable factory overhead per direct labor hour is $3. The budgeted variable selling and administrative expense is a $1.25 per unit sold. And the fixed selling and administrative expenses per quarter include the following. Advertising for 25 thousand, executive salaries for 64 thousand, insurance for 12 thousand, property taxes for 8 thousand, and depreciation expense for $8 thousand. The CFO has tasked you with creating budgeting schedules, a quarterly sales budget, including guest schedule of expected cash collections, a quarterly production budget, a quarterly direct materials budget, including a schedule of expected cash disbursements for purchases of materials.

A quarterly direct labor budget, a quarterly manufacturing overhead budget, a quarterly ending finished goods inventory budget, a quarterly selling and administrative expense budget, and a quarterly cash budget. Once all of those are done, you need to create a budgeted income statement and a budgeted balance sheet as of December 31st, 2020 to the CFO has requested that you include an additional Excel file as an attachment to verify the correct formulas and calculations. Just the numbers input into a spreadsheet or not enough. He requires that the file be dynamic. If assumptions need to be changed. The CFO has requested that you prepare the schedules for the CEO and the CFO in a professional Word document. Include a separate Excel file with the formulas for the CFO to review.

The format should be an entire schedule on one page. Do not have it continued on the second page. Place a page break if needed. Use 12 font. Include a table of contents and executive summary. Include at least three sentences after each schedule describing how the numbers were calculated and how they flow from one schedule to the next to show how the budget was created.