ACC202 FINAL PROJECT

ACC202 FINAL PROJECT

Subject: Business    / Accounting
Question
You are a manager for Peyton Approved, a pet supplies manufacturer. This responsibility requires you to create b the results of operations to determine if changes need to be made to make the company more efficient.
You will be preparing a budget for the quarter July through September 2015. You are provided the following info
30, 2015, is:
Peyton Approved
Budgeted Balance Sheet
30-Jun-15
ASSETS
Cash
Accounts receivable
Raw materials inventory
Finished goods inventory
Total current assets
Equipment
Less accumulated depreciation
Total assets
LIABILITIES AND EQUITY
Accounts payable
Short-term notes payable
Taxes payable
Total current liabilities
Long-term note payable
Total liabilities
Common stock
Retained earnings
Total stockholders’ equity
Total liabilities and equity
All assumptions are new and apply to the July through September budget period. 1. Sales were 20,000 units in June 2015. Forecasted sales in units are as follows: July, 18,000; August, 22,000; Sep
product’s selling price is $18.00 per unit and its total product cost is $14.35 per unit.
2. The June 30 finished goods inventory is 16,800 units.
3. Going forward, company policy calls for a given month’s ending finished goods inventory to equal 70% of the n 4. The June 30 raw materials inventory is 4,600 units. The budgeted September 30 raw materials inventory is 1,98
Each finished unit requires 0.50 units of raw materials. Company policy calls for a given month’s ending raw mate
month’s materials requirements. 5. Each finished unit requires 0.50 hours of direct labor at a rate of $16 per hour.
6. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $1.35 per unit
is treated as fixed factory overhead.
7. Monthly general and administrative expenses include $12,000 administrative salaries and 0.9% monthly intere
8. Sales representatives’ commissions are 12% of sales and are paid in the month of the sales. The sales manager Specifically, the following critical elements must be addressed when creating an Operating Budget by completing
tab below.
Step 1: Prepare a Sales Budget
Complete the Sales Budget on the Budgets tab below by using the information found in the budgeted balance sh Consider assumption 1 when completing this critical element: Sales were 20,000 units in June 2015. Forecasted s
August, 22,000; September, 20,000; October, 24,000. The product’s selling price is $18.00 per unit and its total pr
You can find an example of a sales budget in Exhibit 22-5 on page 1324 of the textbook. Step 2: Prepare a Production Budget
Complete the Production Budget on the Budgets tab below by using the information found in the budgeted balan Consider assumption 1 while completing this critical element: Sales were 20,000 units in June 2015. Forecasted s
August, 22,000; September, 20,000; October, 24,000. The product’s selling price is $18.00 per unit and its total pr Consider assumption 2 while completing this critical element: The June 30 finished goods inventory is 16,800 uni
Consider assumption 3 while completing this critical element: Going forward, company policy calls for a given mo
70% of the next month’s expected unit sales.
You can find an example of a production budget in Exhibit 22-6 on page 1325 of the textbook. Step 3: Prepare a Manufacturing Budget
Complete the Manufacturing Budget on the Budgets tab below by using the information found in the budgeted b
budget consists of three parts: the Raw Materials Budget, the Direct Labor Budget, and the Factory Overhead Bu
Raw Material Budget Consider assumption 4 while completing this critical element: The June 30 raw materials inventory is 4,600 units
inventory is 1,980 units. Raw materials cost $7.75 per unit. Each finished unit requires 0.50 units of raw materials
ending raw materials inventory to equal 20% of the next month’s materials requirements. Consider units to be produced found in the production budget while completing this critical element.
Direct Labor Budget
Consider assumption 5 while completing this critical element: Each finished unit requires 0.50 hours of direct lab
Consider units to be produced found in the production budget while completing this critical element.
Factory Overhead Budget
Consider assumption 6 while completing this critical element: Overhead is allocated based on direct labor hours.
$1.35 per unit produced. Depreciation of $20,000 per month is treated as fixed factory overhead.
Consider units to be produced found in the production budget while completing this critical element. Step 4: Prepare a Selling Budget
Complete the Selling Expense Budget.
Consider assumption 8 while completing this critical element: 8. Sales representatives’ commissions are 12% of s
The sales manager’s monthly salary is $3,750 per month. Step 5: General and Administrative Expense Budget
Complete the General and Administrative Expense Budget.
Consider assumption 7 while completing this critical element: 7. Monthly general and administrative expenses in
0.9% monthly interest on the long-term note payable. The following critical elements must be addressed when performing the Budget Variance Analysis using the Budg
Worksheet can be found in the Assignment Guidelines and Rubrics folder. The actual quantity of material used was 31,000 with an actual cost of $7.75 per unit. The actual labor hours wer
Step 1: Complete A. Develop a variance analysis including a budget variance performance report and appropria
overhead.
Start with the Labor and Materials Variance tab.
Standard costs/quantities come from the raw materials budget and the labor budget. Use Exhibits 23-11 on page 1235 and 23-12 on page 1237 in the textbook as guides.
After completing the Labor and Materials Variance tab, transfer variances to the Budget Variance Report tab. Congratulations! You have completed the workbook portion of Final Project Part I. To complete the remainder of the Budge
use the Final Project Part I Budget Variance Report Template. The Budget Variance Report Template can be found in the Ass ets, make pricing decisions, and analyze ation. The budgeted balance sheet on June $42,000
259,900
35,650
241,080
578,630
$720,000
240,000 480,000
$1,058,630 $63,400
24,000
10,000
97,400
300,000
397,400
$600,000
61,230
661,230
$1,058,630 mber, 20,000; October, 24,000. The
month’s expected unit sales. units. Raw materials cost $7.75 per unit.
s inventory to equal 20% of the next oduced. Depreciation of $20,000 per month on the long-term note payable.
monthly salary is $3,750 per month. e budget templates found on the "Budgets"
above. s in units are as follows: July, 18,000;
uct cost is $14.35 per unit. sheet above. s in units are as follows: July, 18,000;
uct cost is $14.35 per unit. h’s ending finished goods inventory to equal nce sheet above. The manufacturing
t. e budgeted September 30 raw materials
ompany policy calls for a given month’s at a rate of $16 per hour. e predetermined variable overhead rate is s and are paid in the month of the sales. de $12,000 administrative salaries and Variance Worksheet. The Budget Variance 3,000 with an actual rate per hour of $15.
variances for materials, labor, and ariance Analysis portion of Final Project Part I,
ment Guidelines and Rubrics folder. Sales Budget
Peyton Approved
Sales Budgets
July, August, and September 2015
Budgeted Units Jul-15
Aug-15
Sep-15 18,000
22,000
20,000 Total for the first quarter 60,000 Production Budget Peyton Ap
Production
July, August, and S
Next month’s budgeted sales
Percentage of inventory to future
sales
Budgeted ending inventory
Add budgeted sales
Required units to be produced
Deduct beginning inventory
(Previous month ending inventory)
Units to be produced Manufacturing Budget – contains raw materials budget, direct labor budg
Peyton Approved
Raw Materials Budge
July, August, and Septemb
July Production budget (units) 16,600 Materials requirement per unit 0.5 Materials needed for production 8,300 Add budgeted ending inventory 2,060 Total materials requirements (units) 10,360 Deduct beginning inventory
(previous month ending inventory) 4,600 Materials to be purchased 5,760 Material price per unit 7.75 Total cost of direct material
purchases $44,640 Peyton Approved
Direct Labor Budget
July, August, and Septemb
July Budgeted production (units) Labor requirements per unit (hours)
Total labor hours needed
Labor rate (per hour)
Labor dollars 16,600 0.5
8,300
16.00
$132,800 Peyton Approved
Factory Overhead Bud
July, August, and Septemb July Budgeted production (units) 8,300 Variable factory overhead rate 1.35 Budgeted variable overhead 11,205 Fixed overhead 20,000 Budgeted total overhead $31,205 Selling Expense Budget
Peyton Approved
Selling Expense Budget
July, August, and September 2015
July Budgeted sales
Sales commission
percent
Sales commissions
expense
Sales salaries
Total selling expenses $324,000 August $396,000 12% 12% 38,880 47,520 3,750 3,750 $42,630 $51,270 General and Administrative Expense Budget
Peyton Approved
General and Administrative Expense Budget
July, August, and September 2015
July Salaries
Interest on long-term
note
Total expenses August $12,000 $12,000 2,700 2,700 $14,700 $14,700 ed
s
ember 2015
Budgeted
Unit Price 18.00
18.00
18.00
$18.00 Budgeted
Total Dollars $324,000
$396,000
$360,000
$1,080,000 Peyton Approved
Production Budget
July, August, and September 2015
July August Sept. Total 22,000 20,000 24,000 66,000 70% 70% 70% 70% 15,400 14,000 16,800 46,200 18,000 22,000 20,000 60,000 33,400 36,000 36,800 106,200 16,800 15,400 14,000 46,200 16,600 20,600 22,800 60,000 ls budget, direct labor budget, and factory overhead budget
Peyton Approved
Raw Materials Budget
July, August, and September 2015
August Sept. Total 20,600 22,800 60,000 0.5 0.5 0.5 10,300 11,400 30,000 2,280 1,980 6,320 12,580 13,380 36,320 2,060 2,280 8,940 10,520 11,100 27,380 7.75 ### 7.75 $81,530 $86,025 $212,195 Peyton Approved
Direct Labor Budget
July, August, and September 2015
August Sept. Total 20,600 22,800 60,000 0.5 0.5 0.5 10,300 11,400 30,000 16.00 ### 16.00 $164,800 $182,400 $480,000 Peyton Approved
Factory Overhead Budget
July, August, and September 2015 August Sept. 10,300 11,400 ### 1.35 13,905 $15,390 20,000 20,000 $33,905 $35,390 pproved
nse Budget
September 2015
Sept. Total $360,000 1,080,000 12% 12% 43,200 $129,600 3,750 11,250 $46,950 $140,850 ed
Expense Budget
ember 2015
Sept. Total $12,000 $36,000 2,700 8,100 $14,700 $44,100 Total 30,000
1.35
40,500
60,000
100,500 Total