^Essay

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^Total

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Part A

Budget Preparation

Data:

COMPANY NAME:

Car Fix Ltd.

YEAR:

2012

Months in Budget Period

1

October

2

November

Product Data:

Product Name

Car Parts

Standard Unit Selling Price

$225.00

Standard Cost Data per Unit of Product

Raw Materials

Name

Units

Unit Price

Cost

M1

3

$1.90

$5.70

M2

4

$2.80

$11.20

M3

2

$4.05

$8.10

$25.00

Direct Labour

Type

Hours

Rate per Hour

Manufacturing

3

$18.00

$54.00

Assembly

1.5

$12.00

$18.00

$72.00

Variable Overhead

Hours

Rate per Hour

2

$7.00

$14.00

Fixed Overhead

Budgeted

Normal

Total $

Output Units

per Month

per Month

$240,000

10,000

$24

Total Standard Cost

$135

Selling and Administration Costs

Variable per unit of Product

$3.75

Fixed - Total per Month

$70,000

Depreciation of Factory Machinery

Included as part of Fixed (Factory) Overhead

$40,000

Sales Budget:

Month

Budgeted Sales Units

1

October

9,700

2

November

10,600

3

December

11,000

4

January

9,200

Other Data

Cash collections from sales:

Percent of sales collected in month of sale

30.00%

Percent of sales collected in month after sale

67.00%

Percent of sales becoming bad debts

3.00%

Inventories:

Finished goods as a percent of next month's sales

30.00%

Raw materials as a Percent of next month's production

40.00%

Cash disbursements

Raw materials purchases:

Percent paid in the month of purchase

70.00%

Percent paid in the month after purchase

30.00%

All other production costs (Labour & Overhead)

Percent paid in month incurred

60.00%

Percent paid in the following month

40.00%

Fixed selling and administration Costs

All paid in the month incurred

Variable selling and administration Costs

Percent paid in the month incurred

0.00%

Percent paid in the following month

100.00%

Tax payable

Tax Rate

30.00%

Month Paid in

December

Balance Sheet as at the Beginning of the Budget Period

Balance Sheet Date

30th  September 2012

Assets:

Cash

$74,000

Accounts Receivable, Net

$880,000

Finished Goods Inventories:

Units

2,910

Unit Cost

$135.00

Amount

$392,850

Raw Materials Inventories:

Units

Value

M1

11,964

$22,732

M2

15,952

$44,666

M3

7,976

$32,303

$99,700

Plant and Equipment:

Cost

$2,460,000

Accumulated Depreciation

$940,000

Net

$1,520,000

$2,966,550

Equities:

Accounts Payable (Raw Materials)

$150,000

Taxes Payable

$140,000

Accrued Selling and Administration Costs

$30,000

Accrued Production Costs

$145,000

Paid Up Capital

$1,700,000

Retained Earnings

$801,550

$2,966,550

Required:

Prepare the following Budgets for the months of October and November only:

a)

Sales Budget

b)

Production Budget (in units only)

c)

Materials Cost Budget

d)

Wages Cost Budget

e)

Production Overheads Cost Incurred Budget

f)

Total Production Cost Incurred Budget

g)

Raw Materials Purchases Budget

h)

Marketing and Administration Cost Budget

i)

Cash Receipts Budget

j)

Cash Payments Budget

k)

Summary Cash Budget

l)

Budgeted Profit and Loss Statements (include a fixed overhead volume variance)

m)

Budgeted Balance Sheets