Problem- Developing a Master Budget for a Manufacturing Organization
Jacobs Incorporated manufactures a product with a selling price of $50 per unit. Units and monthely cost data follow:
Variable:
Selling and administrative $ 4 per unit sold
Direct materials 10 per unit manufactured
Direct labor 10 per unit manufactured
Variable manufacturing overhead 5 per unit manufactured
Fixed:
Selling and administrative $15,000 per month
Manufacturing (including depreciation of $10,000) 30,000 per month
Jacobs pays all bills in the month incurred. All sales are on account with 50 percent collected the month of sale and the balance collected the following month. There are no sales discounts or bad debts.
Jacobs desires to maintain an ending finished goods inventory equal to 20 percent of the following month's sales and a raw materials inventory equal to 10 percent of the following month's production. January 1, 2014, inventories are in line with these policies.
Actual unit sales for December and budgeted unit sales for January, February, and March of 2014 are as follows:
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JACOBS INCORPORATED
Sales Budget
For the Months of January, February, and March 2014
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Month
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December
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January
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February
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March
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Sales-Units
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6,250
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5,000
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10,000
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8,000
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Sales Dollars
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$312,500
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$250,000
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$500,000
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$400,000
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Additional information:
• The January 1 beginning cash is projected as $5,000.
• For the purpose of operational budgeting, units in the January 1 inventory of finished goods are valued at variable manufacturing cost.
• Each unit of finished product requires one unit of raw materials.
• Jacobs intends to pay a cash dividend of $10,000 in January
Required
a. A production budget for January and February.
b. A purchases budget in units for January.
c. A manufacturing cost budget for January.
d. A cash budget for January.
e. A budgeted contribution income statement for January.
Attachment:- Excel_Sheet.xls