managerial accounting for business professionals acc 330 unit 6 dr. doug letsch
DESCRIPTION
CLEAN UP Moving to Google Mail To see a funny bit on budgeting : night-live-snl-digital-short-business-meeting- with-rainn-wilsonTRANSCRIPT
Managerial Accounting for Business Professionals ACC 330
UNIT UNIT 66
Dr. Doug Letsch
• Clean Up
• Budgeting
• Problem P9-2B, Page 426-
427
• Questions
CLEAN UP
Moving to Google Mail
To see a funny bit on budgeting :http://www.hulu.com/watch/1495/saturday-night-live-snl-digital-short-business-meeting-with-rainn-wilson
BUDGETING
The method behind proper forecasting
BUDGETING - BENEFITSBUDGETING - BENEFITS
Plan ahead Provides measurable objectives Creates signal lights Provides direction to meet goals Enhances management’s awareness Motivates
What goes wrong with our budgets?
BUDGETING - TOOLSBUDGETING - TOOLS
Just Another Tool
BUDGETING – MASTER BUDGETBUDGETING – MASTER BUDGET
BUDGETING – AN EXAMPLE P9-2B, PAGE 426-427BUDGETING – AN EXAMPLE P9-2B, PAGE 426-427
Durham Inc, is preparing its annual budgets for the year ending 12.31.2012. Accounting assistants furnish the following data:
Product LN 35
Product LN 40
Sales budget:
Anticipated volume in units 400,000
240,000
Unit selling price $ 25
$ 35
Production budget:
Desired ending finished goods units 30,000
25,000
Beginning finished goods units 20,000
15,000
Direct materials budget:
Direct materials per unit (pounds) 2
3
Desired ending direct materials (pounds) 50,000
20,000
Beginning direct materials (pounds) 40,000
10,000
Cost per pound $ 2
$ 3
Direct labor budget:
Direct labor time per unit 0.50
0.75
Direct labor rate per hour $ 12
$ 12
Budgeted income statement:
Total unit cost $ 11
$ 20
Selling and administrative expense budget:
Selling expenses $ 750,000
$ 590,000
Administrative Expenses $ 420,000
$ 380,000
Income Tax Rate Tax rate 30%
Instructions: Prepare the following budgets for the year: Show data for each product. You do not need to prepare quarterly budgets.
a. Salesb. Productionc. Direct Materialsd. Direct Labore. Income Statement (Note: income taxes are NOT allocated to the products.
BUDGETING – AN EXAMPLE P9-2B, PAGE 426-427BUDGETING – AN EXAMPLE P9-2B, PAGE 426-427
DURHAM INC.Sales BudgetFor the Year Ending December 31, 2012
Product LN 35Product LN
40 Grand TotalSales budget: Anticipated volume in units
400,000
240,000
Unit selling price $ 25
$ 35
Total Sales $ 10,000,000
$ 8,400,000
$ 18,400,000
Question A:
BUDGETING – AN EXAMPLE P9-2B, PAGE 426-427BUDGETING – AN EXAMPLE P9-2B, PAGE 426-427
Question B:
Product LN
35Product LN
40 Total Units
Production Budget
Anticipated volume in units
400,000
240,000 Add: Desired Ending Finished Goods Inventory
30,000
25,000
Total Required
430,000
265,000
Less: Beg. Finished Goods Inventory
20,000 15,000
Required Production Units
410,000
250,000
660,000
BUDGETING – AN EXAMPLE P9-2B, PAGE 426-427BUDGETING – AN EXAMPLE P9-2B, PAGE 426-427
Question C:
Product LN
35Product LN
40 Total UnitsDirect Materials Budget Required Production Units (from production)
410,000
250,000
Direct materials per unit (given) 2
3
Total pounds needed for production 820,000
750,000
Add: Desired ending direct materials (given)
50,000
20,000
Total materials required 870,000
770,000
Less: Beginning direct materials (given) 40,000
10,000
Direct materials purchases 830,000
760,000
Cost per pound (given) $ 2
$ 3
Total cost of direct materials purchases $ 1,660,000
$ 2,280,000
$ 3,940,000
BUDGETING – AN EXAMPLE P9-2B, PAGE 426-427BUDGETING – AN EXAMPLE P9-2B, PAGE 426-427
Question D:
Product LN
35Product LN
40 Total UnitsDirect Labor Budget Required Production Units (from production)
410,000
250,000
Direct labor time (hours) per unit (given) 0.50
0.75
Total required direct labor hours 205,000
187,500
Direct labor cost per hour (given) $ 12.00
$ 12.00
Total Direct Labor Cost $ 2,460,000
$ 2,250,000
$ 4,710,000
BUDGETING – AN EXAMPLE P9-2B, PAGE 426-427BUDGETING – AN EXAMPLE P9-2B, PAGE 426-427
Determining the Total Unit Cost:
Product LN 35Product LN
40Total Unit Cost Computation
Direct Materials (pounds * unit cost) $ 4.00
$ 9.00
Direct Labor (hours * rate) $ 6.00
$ 9.00
Manufacturing Overhead (hours * cost) - plug $ 1.00
$ 2.00
Total Unit Cost (given) $ 11.00
$ 20.00
BUDGETING – AN EXAMPLE P9-2B, PAGE 426-427BUDGETING – AN EXAMPLE P9-2B, PAGE 426-427
Question E:
Product LN
35Product LN
40 Total UnitsSales (from sales budget) $
10,000,000 $
8,400,000 $
18,400,000 Cost of goods sold (400,000 & 240,000)
4,400,000
4,800,000 $
9,200,000 Gross profit $
5,600,000 $
3,600,000 $
9,200,000 Operating expenses Selling expenses
750,000
590,000
1,340,000 Administrative expenses
420,000
380,000
800,000 Total operating expenses $
1,170,000 $
970,000 $
2,140,000 Income before income taxes $
4,430,000 $
2,630,000 $
7,060,000 Income tax expense (given 30%) $
2,118,000 Net income $
4,942,000
Are there any
questions?
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