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Discuss depreciation for manufacturing overhead

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Reference no: EM131811671

Bill Thomas, Bates & Hill's controller, has received all the budgets prepared by the various operating units and is ready to compile the pro-forma financial statements for the first quarter. The company's balance sheet of December 31 is as follows:

Cash
 $ 37,200
Accounts Receivable (net)
 36,270
Finished Goods Inventory
 30,380
Raw Materials Inventory
 4,687
Property, Plant & Equipment
 186,000
Accumulated Depreciation
 (46,500 )
         Total Assets $248,037
Accounts Payable
 $ 11,160
Income Tax Payable
 46,661
Common Stock
 62,000
Retained Earnings
 128,216
         Total Liabilities & Owners Equity
 $248,037


Quarter
Budgeted revenue
 $874,200
Selling and administrative expense 165,168
Interest expense 2,096
Cash 19,081
Cost of Goods Sold 622,089
Accounts receivable 84,630
Direct materials 3,447
Finished goods  36,589
Acounts payable 20,584
Notes payable 25,420

Additional Information:

? Bates & Hill plans to declare and pay dividends totaling $30,380 in January.
? Bates & Hill plans to purchase and pay cash for a piece of land in February at a cost of $44,640.
? Bates & Hill plans to purchase equipment in March at a cost of $37,200.
? Depreciation for manufacturing overhead $18,600 per month and for selling and administrative $6,200 per month.

The company expects a 19% income tax rate, and all quarterly taxes are paid in the first month of the following quarter.

Reference no: EM131811671

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