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Question - Relevant data from Picta Company's operating budgets are presented below. The company's financial year ends on 30 June.
Quarter 1
Quarter 2
Sales
$248,470
$251,539
Direct material purchases
120,295
128,832
Direct labor
76,553
74,289
Manufacturing overhead
26,000
24,400
Selling and administration expenses
33,500
Depreciation included in selling and administration expenses
2,000
2,500
Collection from customers
230,524
220,116
Cash payments for purchases
114,345
18,346
Additional data: Equipment was sold in July for $8,000 and $4,500 in November. Dividends of $5,500 were paid in August. The beginning cash balance was $80,395 and a required minimum cash balance per quarter is $60,000.
The company has a 15% open line of credit for $70 000 with their bank.
Required -
a) Use this information to prepare a cash budget for the first two quarters of the year.
b) Briefly comment on Picta Company's expected cashflow position in the first two quarters of the year.
Explain the budgeting process and its importance to a business, identifying the components of different budgets, forecast estimates for inclusion in the budgets.
Prepare a retained earnings statement for the year and Prepare a stockholders' equity section of given case.
Prepare a master budget for the three-month period.
Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.
Evaluate the Predetermined Overhead Rate
Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.
Complete the schedule to compute the pool rates for the different activities.
Prepare Company financial statements
This individual assignment is based on the TerraCycle Inc.
Discuss the ethical issues
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A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.
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