Chapter 20: Problem Set B

It seems you're working on various manufacturing and merchandising budget problems from a textbook. I'll break down each problem with some guidance and steps to help you through the process. Problem 20-1B: Manufacturing Budgets You need to prepare several budgets: production, direct materials, direct labor, and factory overhead. 1. Production Budget: o Formula: Units to produce = Budgeted sales + Desired ending inventory − Beginning inventory o Budgeted sales: 250,000 bats o Beginning inventory: 8,000 bats o Desired ending inventory: 6,000 bats Units to produce = 250,000 + 6,000 − 8,000 = 248,000 units 2. Direct Materials Budget: o Each bat requires 3 pounds of aluminum alloy. o Budgeted bats to be produced: 248,000 units o Aluminum needed for production: 248,000 bats × 3 pounds = 744,000 pounds o Add desired ending inventory of aluminum: 12,000 pounds o Subtract beginning inventory of aluminum: 15,000 pounds Total aluminum to purchase = 744,000 + 12,000 − 15,000 = 741,000 pounds o Cost of aluminum: $4 per pound Total cost = 741,000 pounds × $4 = $2,964,000 3. Direct Labor Budget: o Each bat requires 0.5 direct labor hours. o Direct labor rate: $18 per hour o Total direct labor hours: 248,000 bats × 0.5 hours = 124,000 hours Direct labor cost = 124,000 hours × $18 = $2,232,000 4. Factory Overhead Budget: o Variable overhead rate: $12 per direct labor hour o Fixed overhead: $1,776,000 o Total variable overhead: 124,000 hours × $12 = $1,488,000 Total factory overhead = $1,488,000 + $1,776,000 = $3,264,000 Problem 20-2B: Cash Budget and Schedule of Cash Payments You need to prepare a cash receipts schedule and a cash budget for July, August, and September. 1. Schedule of Cash Receipts: o Sales are 20% cash and 80% credit. Credit sales are collected in the month following the sale. o Cash receipts = 20% of current month's sales + 80% of previous month's credit sales. 2. Cash Budget: o Start with the beginning cash balance. o Add cash receipts and subtract expenses (including loan payments, salaries, rent, etc.). o Ensure that if the preliminary cash balance drops below the minimum required ($12,900), a loan is obtained. Problem 20-3B: Budgeted Income Statements Prepare budgeted income statements for July, August, and September under the proposed plan. 1. Sales Revenue: o Selling price: $115 per unit o Budgeted sales for July, August, and September are 11,000, 12,100, and 13,310 units. Example for July: Sales revenue = 11,000 × $115 = $1,265,000 2. Cost of Goods Sold: o Production cost per unit: $60 COGS = 11,000 × $60 = $660,000 3. Gross Profit: Gross profit = Sales revenue − COGS 4. Operating Expenses: o Sales commission: 10% of sales o Advertising: $250,000 Example for July: Sales commission = 10% × $1,265,000 = $126,500 Total operating expenses = $126,500 + $250,000 = $376,500 5. Net Income: Net income = Gross profit − Operating expenses Problem 20-4B: Master Budget Preparation This problem requires you to prepare a master budget for Nabar Manufacturing for July, August, and September, which includes: 1. Sales Budget o Based on projected unit sales and selling price. 2. Production Budget o Based on sales and inventory policy. 3. Direct Materials Budget o Calculate raw material needs based on production levels and desired ending inventory. 4. Direct Labor Budget o Direct labor hours based on production. 5. Factory Overhead Budget o Variable overhead + fixed overhead (depreciation). 6. Selling and Administrative Expenses o Includes commissions, salaries, and other admin costs. 7. Cash Budget o Track cash inflows and outflows, including loans and interest. If you need help with any specific part of these problems or further details on how to structure them in Excel, feel free to ask!