BUAD 264 - Managerial Accounting: Master Budget for Archie-Boy Corp.

This assignment presents a comprehensive master budget for Archie-Boy Dog Toy Corp., prepared for the quarter ending March 31st, 2020. The budget includes detailed calculations for the sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, selling and administrative budget, and cash budget. The solution meticulously outlines the expected cash collections, production units, material purchases, labor costs, and overhead expenses. Furthermore, it incorporates the schedule of cost of goods manufactured, the budgeted income statement, the budgeted retained earnings statement, and the budgeted balance sheet. The assignment demonstrates the preparation of these financial statements based on the provided sales data, inventory policies, and cost information, providing a complete overview of the company's financial performance and position during the budgeted period. All calculations are included, demonstrating the interrelation of the various budget components and their impact on the final financial statements.

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Buad 264 Managerial accounting

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Table of Contents
a).................................................................................................................................................3
b)................................................................................................................................................3
c).................................................................................................................................................3
d)................................................................................................................................................4
e).................................................................................................................................................4
f).................................................................................................................................................5
g)................................................................................................................................................5
h)................................................................................................................................................5
i).................................................................................................................................................6
j).................................................................................................................................................6
k)................................................................................................................................................6
l).................................................................................................................................................7
Reference....................................................................................................................................8
Appendix....................................................................................................................................9

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Budgeting is a process in which the plan for the business is made in respect of all the incomes
and expenses which will be occurring in the coming period. With the help of this, there will
be proper control which will be established and that will help in reducing the costs and
increasing the profitability of the business (De Azevedo et al., 2013). In the given case master
budget is prepared and all the calculation for that is provided below.
a)
The sales budget is the budget in which all the information about the sale units and its price is
shown to ascertain the total sale value of a given period (Ionescu and Bîgioi, 2016).
Sales budget
Particulars January Februar
y
March Total
Sales units 3150 3450 3320 9920
Selling price per unit 45 45 45 45
Total sales 141750 155250 149400 446400
Expected cash collection
Particulars January February March Total
November 20250.00 20250.00
December 77760.00 19440.00 97200.00
January 35437.50 85050.00 21262.50 141750.00
February 38812.50 93150.00 131963
March 37350.00 37350.00
Total 133448 143303 151763 428513
b)
The production which will be made in the business is ascertained with the help of the
production budget and in that, all the relevant data is taken into use.
Particulars Januar
y
Februa
ry
March Total Decemb
er
Sales units 3150 3450 3320 9920 2880
Add: closing stock 1035 996 1050 3081 945
Less: opening stock 945 1035 996 2976 864
Production units 3240 3411 3374 10025 2961
c)
Particulars Januar Februar March Total

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y y
Budgeted production units 3240 3411 3374 10025 2961
Material for one unit 6 6 6 6 6
Total material required 19440 20466 20244 60150 17766
Add: Closing inventory 13303 13159 13533 39995 12636
Less: opening inventory 12636 13303 13159 39098 11547.
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Material to be purchased 20107 20322 20618 61047 18854
Cost per ounce 1.8 1.8 1.8 1.8 1.8
Total purchase cost 36192 36579 37113 10988
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33937
Cash disbursement schedule
Particulars January Februar
y
March Total
December 20362 20362
January 14477 21715 36192
February 14632 21947 36579
March 14845 14845
Total 34839 36347 36793 107979
d)
d) Direct labour budget
Particulars January Februar
y
March Total
Production units 3240 3411 3374 10025
Labour hours required per unit 0.5 0.5 0.5 0.5
Total labour hours required 1620 1705.5 1687 5012.5
Labour cost per hour 18 18 18 18
Total labour cost 29160 30699 30366 90225
e)
e) Manufacturing overheads budget
Particulars January February March Total
Production units 3240 3411 3374 10025
Variable overheads per unit 3 3 3 3
Total variable cost 9720 10233 10122 30075
Fixed manufacturing overheads 25000 25000 25000 75000
Total manufacturing overheads 34720 35233 35122 105075
Less: Depreciation 2500 2500 2500 7500
Cash disbursement for manufacturing
overheads
32220 32733 32622 97575

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f)
Particulars January Februar
y
March Total
Cost per unit
Direct material 10.8 10.8 10.8
Direct labour 9 9 9
Manufacturing overheads 10.7 10.3 10.4
Total cost per unit 31 30 30
Closing inventory 1035 996 1050 3081
Ending finished goods
inventory
31584 30009 31720 93313
g)
g) Selling and administrative
budget
Particulars January Februar
y
March Total
Variable expenses:
Sales units 3150 3450 3320 9920
Royalties per unit 1.5 1.5 1.5 1.5
Total variable cost 4725 5175 4980 14880
Fixed costs:
Wages and salaries 15000 15000 15000 45000
Utilities 3000 3000 3000 9000
Insurance 500 500 500 1500
Depreciation 1000 1000 1000 3000
Miscellaneous 5000 5000 5000 15000
Total fixed cost 24500 24500 24500 73500
Total selling and administrative
expense
29225 29675 29480 88380
Less: depreciation 1000 1000 1000 3000
Cash disbursement 28225 28675 28480 85380
h)
h) Cash budget
Particulars January February March Total
Opening balance 20000 20003 21678 61681
Cash collection: 133447.5 143303 151763 428513
Cash disbursement:
Material payments 34839.396 36347 36793 107979
Labour cost 29160 30699 30366 90225
Manufacturing overheads 32220 32733 32622 97575
Selling and administrative cost 28225 28675 28480 85380

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Dividend payment 5000 0 0 5000
Purchase of machine 17000 10000 27000
Total cash disbursements 146444 128454 138261 413159
Closing balance 7003 34852 35180 77035
Financing:
Borrowing 13000 0 0 13000
Repayments -13000 0 -13000
Interests -173 0 -173
Net cash from financing 13000 -13173 0 -173
Budgeted closing balance 20003 21678 35180 76861
i)
i) Schedule of cost of goods manufactured
Particulars January February March Total
Units produced 3240 3411 3374 10025
Cost of producing each unit 31 30 30
Total cost of goods produced 98872 102770.8 101927.2 303570
j)
j) Budgeted income statement
Particulars Amount
Sales 446400
Cost of goods sold:
Opening stock 28616
Cost of goods purchased 303570
Closing stock 31720 300466
Gross profit: 145934
Administration and selling
expenses
88380
Interest expense 173
Net profit 57381
k)
k) Budgeted retained earnings statement
Particulars Amount
Opening retained earnings 204449
Add: Net income 57381
Less: Dividends payable 5000
Closing retained earnings 256830

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l)
l) Budgeted balance sheet as at 31st March
2020
Particulars Amount
Assets:
Cash 35180.0
Accounts receivable 135337.50
Inventory-Raw material 24359
Inventory-Finished inventory 31720
PP&E 212000
Accumulated depreciation 54500 157500
Total Assets 384097
Liabilities and equity
Bank loan 0
Accounts payable 22267
Dividend payable 5000
Capital stock 100000
Retained earnings 256830
Total liabilities and equity 384097
All the budgets have been prepared and with that, the final income statement and balance
sheet have been framed. With that, the financial position and performance of the business are
ascertained (Cox, 2014). It can be seen that there are net profits that are made and that shows
that business will be benefiting from all the operations and there is an adequate amount of the
assets and cash which is maintained together with the retained earnings.

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Reference
Cox, P. (2014) Master budget project: Analysis of cash budget report. Strategic
Finance, 95(9), p.52.
De Azevedo, R.C., de Oliveira Lacerda, R.T., Ensslin, L., Jungles, A.E. and Ensslin, S.R.
(2013) Performance measurement to aid decision making in the budgeting process for
apartment-building construction: Case study using MCDA-C. Journal of Construction
Engineering and Management, 139(2), pp.225-235.
Ionescu, A.M. and Bîgioi, C.E. (2016) Performance management through budgets. Drafting
and launching the company’s sales budget. The Audit Financiar journal, 14(139), pp.789-
789.

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Appendix