90.2K

Verified Solution

Link Copied!

thabks

Auto Parts Ltd. Auto Parts Ltd is a worldwide part manufacturing firm based in North America. After many years in the market, the Peterborough division, which produces one product called "Auto Parts # 857," reached a spike in the sales level. The Management wants to have a significant investment to expand the facility and increase production, but it is requesting the division prepare a budget for the third quarter of 2022. Sales Budget July August September Total 150 180 Units Price 5 $ Total Sales 750 $ $ $ 120 5 $ 600 $ 5 $ 900 $ 450 5 2,250 The actual sales from 2022 are May 52,000 units June 90,000 units The division manager projected the following sales: July 2022 105,000 units August 2022 225,000 units September 2022 122,000 units October 2022 157,000 units November 2022 162,000 units Commemora The selling price is $12 per unit 1. From previous experience, Management has determined that finished goods ending inventory equal to 25% of the next month's unit sales are required to fit the buyer's demands. The selling price is $12 per unit 1. From previous experience, Management has determined that finished goods ending inventory equal to 25% of the next month's unit sales are required to fit the buyer's demands. 2. Part # 857 requires one type of raw material: Plastic Each Auto Part # 857 requires 1.6 kilograms of Plastic at the cost of $1.75 per kilogram. The supplier of Plastic tends to be somewhat erratic, so Auto Parts Ltd finds it necessary to maintain an inventory balance equal to 20% of the material needed for the next month as a precaution against stock-outs. The direct material on June 30 is 42,400 Kg. 3. The beginning accounts payable will consist of $113,680. 4. Auto Parts Ltd pays for 60% of a month's purchases in the month of purchase and 40% in the following month. 5. The manufacturing overhead is based on direct labour hours. The workers receive an average of $15.00 per hour, including employee benefits. Each Auto Parts # 857 takes 12 minutes to complete. 6. Auto Parts Ltd allocates the manufacturing overhead based on direct labour hours; The variable manufacturing overhead is as follows: Maintenance $0.40; Utilities $0.60; Indirect Labor $0.60; Indirect materials $0.40 7. The Monthly Fixed manufacturing overhead costs are as follows: Janitorial $2,500 $1,750 Insurance $15,200 Depreciation $2,100 Property Taxes $44,800 Salaries prepaid on the first day of the first month of the quarter. $1,750 clation Property Taxes $15,200 $2,100 Salaries $44,800 Three months' property taxes are prepaid on the first day of the first month of the quarter. 8. Auto Parts Ltd allocates the selling and administration expenses based on unit sales; The variable selling and administration rate is $1.5 per unit of sales. 9. The Monthly Selling and administrative expenses are Salaries $62,100 Other fixed costs $4,600 Insurance $1,200 Depreciation $2,800 Advertising $12,000 10. Sales are on account (credit); 60% of the sales are collected during the month of sales and 40% the following month. This was the same collection pattern as in previous years. 6 rtising $12,000 10. Sales are on account (credit); 60% of the sales are collected during the month of sales and 40% the following month. This was the same collection pattern as in previous years. 11. The company wants to maintain at the end of each month a minimum bank balance of $1,000,000. In case the company has a deficiency of money or is not able to reach this minimum bank balance, the company can borrow from a line of credit at the rate of 12% per annum. All borrowing is considered to happen on the first day of the month, and repayments are on the last day of the month. All borrowings and repayments from the bank should be in multiples of $5,000. It pays interest monthly. The cash balance on June 30 is $184,000. 09 12. In August, $950,000 of new equipment to update operations will be purchased with cash. 13. Three months' insurance is prepaid on the first day of the first month of the quarter. In addition, at the end of each quarter, the company pays $250,000 in dividends. 14.The company has a Common stock beginning balance is $150,840. The Retained Earnings Beginning Balance $600,507. "repare the following Schedules (in this order) a) Prepare the Manufacturing Overhead Budget for the third quarter (Illustration 10.12) b) Prepare the Unit cost (Illustration 10.14) c) Prepare the Selling and Administrative Expenses Budget for the third quarter (Illustration 10.13) d) Prepare the Cash Budget for the third quarter (Illustration 10.19) Prepare the income statement (illustration 10.15) e) f) Prepare the statement of financial position (Illustration 10.21) HAYES COMPANY Manufacturing Overhead Budget For the Year Ending December 31, 2020 Quarter 3 Indirect materials ($1,00/hour) $ 6,200 $ 7.200 $ 8,200 Indirect labour ($1.40/hour) 8,680 10.080 11.480 Utilities ($0.40/hour) 2,480 2.880 3.280 Maintenance (50.20/hour) 1.240 1.440 1.640 Total variable costs 18,600 21,600 24.600 20,000 20,000 20,000 Supervisory salaries Depreciation 3.800 1.800 3.800 Property taxes and insurance 9,0000 9,000 Maintenance 5.700 5.700 5.700 Total fixed costs 38,500) 38.500) 38.500 18 Total manufacturing overhead $57.100 S60L (IH) $63.100 Direct labour hours Illustration 10-11) 6,200 8.200 20 Manufacturing overhead rate per direct Inbour hour (S246,400) 30, Pastat 1 -21 6 Variable costs 9 12 Fixed costs Him HE 0006 ** $ 9,200 12.880 3.680 1.840 27,600 20.000 3.800 9.000 5.700 38,500 $66.100 9.200 TE $ 30,800 43.120 12.320 6,160 80,000 15,200 36,000 22,800 154,000 $246,400 30,800 S8 Cost element Direct materials Direct labour Manufacturing overhead Total unit cost Unit cost Cost of One Rightride Illustration 10-9 10-11 10-12 Quantity 2 kg 2 hours 2 hours Unit Cost $ 4.00 $10.00 $ 8.00 Total $ 8.00 20.00 16.00 $44.00 B HAYES COMPANY Selling and Administrative Expenses Budget For the Year Ending December 31, 2020 Quarter 1 3,000 3.500 4,000 4.500 $10.500 $12,000 $13.500 $ 9,000 3,000 3,500 12,000 14,000 4,000 4,500 16,000 18,000 5.000 5,000 5.000 5,000 15,000 15.000 15.000 15,000 7.500 7.500 7.500 7.500 1.000 1,000 1.000 1,000 1.500 1.500 1.500 1.500 30,000 30,000 30,0XX0 30,000 $42.000 $44.000 5-46,000 $48,000 Selling and administrative expenses budget 6 Budgeted sales in units (Illustration 10.3) 7 Variable expenses 8 Sales commissions ($3 per unit) Freight-out ($1 per unit) 10 Total variable expenses 11 Fixed expenses Advertising Sales salaries Office salaries Depreciation Property taxes and insurance Total fixed expenses Total selling and 18 administrative expenses E F 15,000 15,000 20,000 60,000 30,000 4,000 6.000 120,000 $180,000 + D HAYES COMPANY Cash Budget For the Year Ending December 31, 2020 Quarter Assumption 3 $ 38,000 $25.50 $ 15.000 $ 19,400 Total $ 38.000 198.00 852,000 168.000 2,000 170.00X 208.000 228.000 0 198.00) 228.000 258,000 258,000 0 2.000 854,000 243.000 277,400 892,000 23.201 27.200 31.200 35,200 116,800 62.00 53.300 41.000 72.000 82.000 56.300 59.300 92.000 308,000 62.300 47,000 231.200 176.000 43.00 45.000 10.00 300 0 0 10.00 3,000 12.000 3.000 220.500 182 507 211.50 239.500 854,000 25.500 12000 22.500 37.900 38.000 NO 3,000 0 0 3.100 0 3.10 $ 37.900 $ 25,500 15,000 $19.400 $ 37.900 6 Beginning cash balance Add: Receipts 8 Collections from customers 9 Sales of investment securities 10 Total receipts 11 Total available cash 12 Less: Disbursements 13 Direct materials 14 Direct labour 15 Manufacturing overhead 16 Selling and administrative expenses 17 Purchase of truck 18 Income tax expense 19 Total disbursements Excess of available cash over disbursements 21 Financing 22 Borrowings 23 Repayments 24 Ending cash balance 26 $57.100-$3,800 depreciation 27 $42,000-$1,000 depreciation 16 8 $1.000 depreciation Sales (Illustration 10.3) Cost of goods sold (15,000 $44) Gross profit Selling and administrative expenses (Illustration 10.13) Income from operations Interest expense Income before income taxes Income tax expense Net income Income Statement Hayes Company Budgeted Income Statement Year Ending December 31, 2020 Budgeted income statement $900,000 660.000 240,000 180,000 60,000 100 59.900 12,000 $ 47.900

Answer & Explanation Solved by verified expert

See Answer