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Slaggs, Inc., manufactures and sells snowboards. Slaggs manufactures a single model, the Pipex. In late 2017, Slaggs's management accountant gathered the following data to prepare budgets for January 2018: B (Click the icon to view the budgeted balances and additional information pertaining to the cash budget.) (Click the icon to view the additional variable and fixed manufacturing cost information.) (Click the icon to view the materials and labor requirements, the direct materials inventories, and additional inventory information.) (Click the icon to view the following selected January 2018 budgets: Revenue, Direct material purchases, Direct manufacturing labor cost, Variable manufacturing overhead and Ending inventory.) Read the requirements. Requirement 1. Prepare a cash budget for January 2018. Show supporting schedules for the calculation of collection of receivables and payments of accounts payable, and for disbursements for fixed manufacturing and nonmanufacturing overhead. Begin by preparing the supporting schedule for the calculation of collection of receivables. Schedule of Cash Collections From December 2017 sales From January 2018 sales Total collections Data Table - Budgeted balances at January 31, 2018 are as follows: Cash ? Accounts receivable ? ? $ 858,000 Inventory Property, plant, and equipment (net) Accounts payable Long-term liabilities Stockholders' equity ? 186,000 ? 18,000 Selected budgeted information for December 2017 follows: Cash balance, December 31, 2017 $ Budgeted sales Budgeted materials purchases 1,655,000 780,000 Customer invoices are payable within 30 days. From past experience, Slaggs's accountant projects 45% of invoices will be collected in the month invoiced, and 55% will be collected in the following month. Accounts payable relates only to the purchase of direct materials. Direct materials are purchased on credit with 30% of direct materials purchases paid during the month of the purchase, and 70% paid in the month following purchase. Fixed manufacturing overhead costs include $42,000 of depreciation costs and fixed nonmanufacturing overhead costs include $7,000 of depreciation costs. Direct manufacturing labor and the remaining manufacturing and nonmanufacturing overhead costs are paid monthly. All property, plant, and equipment acquired during January 2018 were purchased on credit and did not entail any outflow of cash. There were no borrowings or repayments with respect to long-term liabilities in January 2018. On December 15, 2017, Slaggs's board of directors voted to pay a $190,000 dividend to stockholders on January 31, 2018. - X More Info Variable manufacturing overhead is $18 per direct manufacturing labor-hour. There are also $60,000 in fixed manufacturing overhead costs budgeted for January 2018. Slaggs combines both variable and fixed manufacturing overhead into a single rate based on direct manufacturing labor-hours. Variable marketing costs are allocated at the rate of $330 per sales visit. The marketing plan calls for 42 sales visits during January 2018. Finally, there are $39,000 in fixed nonmanufacturing costs budgeted for January 2018. Data Table Materials and Labor Requirements Direct materials Wood Fiberglass 15 board feet (b.f.) per snowboard 13 yards per snowboard 3 hours per snowboard Direct manufacturing labor Slaggs' CEO expects to sell 3,700 snowboards during January 2018 at an estimated retail price of $960 per board. Further, the CEO expects 2018 beginning inventory of 500 snowboards and would like to end January 2018 with 800 snowboards in stock. Direct Materials Inventories Ending Inventory 1/31/2018 Beginning Inventory 1/1/2018 2,080 b.f. Wood 1,580 b.f. Fiberglass 1,080 yards 2,080 yards Other data include: 2017 Unit Price 2018 Unit Price Wood $ $ $ 36.00 per b.f. 12.00 per yard 32.00 per hour Fiberglass Direct manufacturing labor $ 38.00 per b.f. 13.00 per yard 33.00 per hour $ $ The inventoriable unit cost for ending finished-goods inventory on December 31, 2017, is $175.00. Assume Slaggs uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations. 1 x Reference - Revenue Budget For January 2018 Units Selling price Total revenues 3,700 $ 960 $ 3,552,000 Snowboards Direct Materials Purchases Budget For January 2018 Materials Wood Fiberglass Total 60,000 b.f. 52,000 yards Physical Units Budget To be used in production Add target ending inventory Total requirement 1,580 b.f. 2,080 yards 61,580 b.f. Deduct beginning inventory 2,080 b.f. 54,080 yards 1,080 yards 53,000 yards Purchases to be made 59,500 b.f. Cost Budget $ 2,261,000 $ 689,000 $ 2,950,000 Purchases Direct Manufacturing Labor Costs Budget Direct Manufacturing Labor Costs Budget For January 2018 Output Units DMLH Total Hourly Produced Hours Wage Rate 4,000 3 12,000 $ 33 per Unit Total Snowboards $ 396,000 Total labor hours X Variable manufacturing overhead rate Variable manufacturing overhead costs $ 216,000 12,000 18 = Ending Inventories Budget For January 2018 Quantity Cost per unit Total Direct materials Wood 1,580 $ 38 $ 60,040 Fiberglass 2,080 13 27,040 Finished goods Snowboard 800 $ 907 725,600 $ Total ending inventory 812,680 Requirements - X 1. 2. Prepare a cash budget for January 2018. Show supporting schedules for the calculation of collection of receivables and payments of accounts payable, and for disbursements for fixed manufacturing and nonmanufacturing overhead. Slaggs is interested in maintaining a minimum cash balance of $90,000 at the end of each month. Will Slaggs be in a position to pay the $190,000 dividend on January 31? Why do Slaggs's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget? Prepare a budgeted balance sheet for January 31, 2018 by calculating the January 31, 2018 balances in (a) cash (b) accounts receivable (c) inventory (d) accounts payable and (e) plugging in the balance for stockholders' equity. 3. 4. Slaggs, Inc., manufactures and sells snowboards. Slaggs manufactures a single model, the Pipex. In late 2017, Slaggs's management accountant gathered the following data to prepare budgets for January 2018: B (Click the icon to view the budgeted balances and additional information pertaining to the cash budget.) (Click the icon to view the additional variable and fixed manufacturing cost information.) (Click the icon to view the materials and labor requirements, the direct materials inventories, and additional inventory information.) (Click the icon to view the following selected January 2018 budgets: Revenue, Direct material purchases, Direct manufacturing labor cost, Variable manufacturing overhead and Ending inventory.) Read the requirements. Requirement 1. Prepare a cash budget for January 2018. Show supporting schedules for the calculation of collection of receivables and payments of accounts payable, and for disbursements for fixed manufacturing and nonmanufacturing overhead. Begin by preparing the supporting schedule for the calculation of collection of receivables. Schedule of Cash Collections From December 2017 sales From January 2018 sales Total collections Data Table - Budgeted balances at January 31, 2018 are as follows: Cash ? Accounts receivable ? ? $ 858,000 Inventory Property, plant, and equipment (net) Accounts payable Long-term liabilities Stockholders' equity ? 186,000 ? 18,000 Selected budgeted information for December 2017 follows: Cash balance, December 31, 2017 $ Budgeted sales Budgeted materials purchases 1,655,000 780,000 Customer invoices are payable within 30 days. From past experience, Slaggs's accountant projects 45% of invoices will be collected in the month invoiced, and 55% will be collected in the following month. Accounts payable relates only to the purchase of direct materials. Direct materials are purchased on credit with 30% of direct materials purchases paid during the month of the purchase, and 70% paid in the month following purchase. Fixed manufacturing overhead costs include $42,000 of depreciation costs and fixed nonmanufacturing overhead costs include $7,000 of depreciation costs. Direct manufacturing labor and the remaining manufacturing and nonmanufacturing overhead costs are paid monthly. All property, plant, and equipment acquired during January 2018 were purchased on credit and did not entail any outflow of cash. There were no borrowings or repayments with respect to long-term liabilities in January 2018. On December 15, 2017, Slaggs's board of directors voted to pay a $190,000 dividend to stockholders on January 31, 2018. - X More Info Variable manufacturing overhead is $18 per direct manufacturing labor-hour. There are also $60,000 in fixed manufacturing overhead costs budgeted for January 2018. Slaggs combines both variable and fixed manufacturing overhead into a single rate based on direct manufacturing labor-hours. Variable marketing costs are allocated at the rate of $330 per sales visit. The marketing plan calls for 42 sales visits during January 2018. Finally, there are $39,000 in fixed nonmanufacturing costs budgeted for January 2018. Data Table Materials and Labor Requirements Direct materials Wood Fiberglass 15 board feet (b.f.) per snowboard 13 yards per snowboard 3 hours per snowboard Direct manufacturing labor Slaggs' CEO expects to sell 3,700 snowboards during January 2018 at an estimated retail price of $960 per board. Further, the CEO expects 2018 beginning inventory of 500 snowboards and would like to end January 2018 with 800 snowboards in stock. Direct Materials Inventories Ending Inventory 1/31/2018 Beginning Inventory 1/1/2018 2,080 b.f. Wood 1,580 b.f. Fiberglass 1,080 yards 2,080 yards Other data include: 2017 Unit Price 2018 Unit Price Wood $ $ $ 36.00 per b.f. 12.00 per yard 32.00 per hour Fiberglass Direct manufacturing labor $ 38.00 per b.f. 13.00 per yard 33.00 per hour $ $ The inventoriable unit cost for ending finished-goods inventory on December 31, 2017, is $175.00. Assume Slaggs uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations. 1 x Reference - Revenue Budget For January 2018 Units Selling price Total revenues 3,700 $ 960 $ 3,552,000 Snowboards Direct Materials Purchases Budget For January 2018 Materials Wood Fiberglass Total 60,000 b.f. 52,000 yards Physical Units Budget To be used in production Add target ending inventory Total requirement 1,580 b.f. 2,080 yards 61,580 b.f. Deduct beginning inventory 2,080 b.f. 54,080 yards 1,080 yards 53,000 yards Purchases to be made 59,500 b.f. Cost Budget $ 2,261,000 $ 689,000 $ 2,950,000 Purchases Direct Manufacturing Labor Costs Budget Direct Manufacturing Labor Costs Budget For January 2018 Output Units DMLH Total Hourly Produced Hours Wage Rate 4,000 3 12,000 $ 33 per Unit Total Snowboards $ 396,000 Total labor hours X Variable manufacturing overhead rate Variable manufacturing overhead costs $ 216,000 12,000 18 = Ending Inventories Budget For January 2018 Quantity Cost per unit Total Direct materials Wood 1,580 $ 38 $ 60,040 Fiberglass 2,080 13 27,040 Finished goods Snowboard 800 $ 907 725,600 $ Total ending inventory 812,680 Requirements - X 1. 2. Prepare a cash budget for January 2018. Show supporting schedules for the calculation of collection of receivables and payments of accounts payable, and for disbursements for fixed manufacturing and nonmanufacturing overhead. Slaggs is interested in maintaining a minimum cash balance of $90,000 at the end of each month. Will Slaggs be in a position to pay the $190,000 dividend on January 31? Why do Slaggs's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget? Prepare a budgeted balance sheet for January 31, 2018 by calculating the January 31, 2018 balances in (a) cash (b) accounts receivable (c) inventory (d) accounts payable and (e) plugging in the balance for stockholders' equity. 3. 4

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