Management Accounting 2104AFE Budgeting Assignment Solution

This document presents a comprehensive solution to a Management Accounting budgeting assignment. The solution includes a detailed master budget, encompassing sales, production, direct materials, direct labor, overhead, selling and administrative expenses, ending finished goods inventory, cost of goods sold, a budgeted income statement, and a cash budget. The assignment covers the months of January, February, March, and April, providing a complete financial overview. The budgets are meticulously calculated, showing the step-by-step process for each component, from sales forecasting to cash flow projections. The solution demonstrates the application of key accounting principles to create a complete financial plan, offering students a valuable resource for understanding and mastering budgeting techniques. The document is a complete solution to the assignment problem and is useful for students to understand the budgeting process.

Running Head: Management Accounting 0
Management Accounting
(Student Name)

Management Accounting 1
Table of Contents
A) Sales Budget...............................................................................................................................2
B) Production Budget......................................................................................................................2
C) Direct Material Purchase Budget................................................................................................2
D) Direct Labour Budget.................................................................................................................3
E) Overhead Budget........................................................................................................................3
F) Selling and Administrative Expense Budget...............................................................................4
G) Ending Finished Goods Inventory Budget.................................................................................4
H) Cost of Goods Sold.....................................................................................................................5
I) Budgeted Income Statement........................................................................................................5
J) Cash Budget.................................................................................................................................6

Management Accounting 2
A) Sales Budget
Particular January February March April Total
Units 40000 45000 65000 62000 150000
Selling Price
$
195.00
$
195.00
$
195.00
$
195.00 585
Sales
$
7,800,000.
00
$
8,775,000.0
0
$
12,675,000.
00
$
12,090,000
.00
2925000
0
B) Production Budget
Particular January February March April Total
Sales 40000 45000 65000 62000 150000
Desired Ending
Inventory 33750 48750 46500 45000 129000
Total Requirement 73750 93750 111500 107000 279000
Less: Beginning
Inventory 32000 33750 48750 46500 114500
Unit to be Produced 41750 60000 62750 60500 164500
C) Direct Material
Purchase Budget
For Metal
Particular January February March April Total
Unit to be produced 41750 60000 62750 60500 164500
Direct Materials 10 10 10 10 10
Production Need 417500 600000 627500 605000 1645000
Desired Ending
Inventory 300000 313750 302500 822500 916250
Total Need 717500 913750 930000 1427500 2561250
Less Beginning 208750 300000 313750 302500 822500

Management Accounting 3
Inventory
Direct Material to be
purchased 508750 613750 616250 1125000 1738750
Cost Per Unit $8 $8 $8 $8 $8
Total Cost
$4,070,00
0 $4,910,000 $4,930,000 $9,000,000
$13,910,
000
For Component
Particular January February March April Total
Unit to be produced 41750 60000 62750 60500 164500
Direct Materials
$
6.00
$
6.00
$
6.00
$
6.00
$
6.00
Production Need 250500 360000 376500 363000 987000
Desired Ending
Inventory 180000 188250 181500 493500 549750
Total Need 430500 548250 558000 856500 1536750
Less Beginning
Inventory 125250 180000 188250 181500 493500
Direct Material to be
purchased 305250 368250 369750 675000 1043250
Cost Per Unit $5 $5 $5 $5 $5
Total Cost
$1,526,25
0 $1,841,250 $1,848,750 $3,375,000
$5,216,2
50
D) Direct Labour
Budget
Particulars January February March Total
Unit to be Produced 41750 60000 62750 60500
Direct Labour Time/
Unit (Hours) 3 3 3 3
Total Hour Needed 125250 180000 188250 181500
Cost Per Hour 14.25 14.25 14.25 14.25
Total Cost 1784813 2565000 2682563 2586375
E) Overhead Budget
Particulars January February March Total

Management Accounting 4
Budgeted Direct Hours 125250 180000 188250 181500
Variable Overhead
Rate ($1+$0.50+
$0.40+$0.50) 2.4 2.4 2.4 2.4
Budgeted Variable
Overhead 300600 432000 451800 435600
Budgeted Fixed
Overhead
(30000+16000+200000
+12000+80000) 338000 338000 338000 1014000
Total Overhead 638600 770000 789800 1449600
F) Selling and Administrative
Expense Budget
Particulars January February March Total
Planned Sales 40000 45000 65000 62000
Variable and
Administrative
Expense / Unit ($2+
$1+$0.60) 3.6 3.6 3.6 3.6
Total Variable Cost 144000 162000 234000 223200
Fixed Selling &
Administrative Exp
/Unit
Salaries
$
50,000.00
$
50,000.00
$
50,000.00
$
150,000.00
Depreciation
$
40,000.00
$
40,000.00
$
40,000.00
$
120,000.00
Others
$
20,000.00
$
20,000.00
$
20,000.00
$
60,000.00
Total Fixed Expenses
$
110,000.0
0
$
110,000.00
$
110,000.00
$
330,000.00
Total Selling &
Administrative Exp/
Unit (Cell 76 + Cell
81)
$
254,000.0
0
$
272,000.00
$
344,000.00
$
870,000.00
G) Ending Finished Goods
Inventory Budget

Management Accounting 5
Particulars Amount Amount
Unit Cost Computation
Direct Materials:
Metal (10 KG * $8)
$
80.00
Component (6 Units *
$5)
$
30.00
$
110.00
Direct Labour (3*
$14.25)
$
42.75
Overhead
Variable (3*2.40) 7.20
Fixed
(3*(1014000/181500)) 16.76
Total Unit Cost
$
176.71
Finished Goods
Inventory (Units *
Unit Costs
$
7,377,656
H) Cost of Goods Sold
Particular Amount Amount
Direct Material Used
Metal (1645000 * $8) 13160000
Component
(987000*5) 4935000 18095000
Direct Labour Used 2586375
Overheads 1449600
Budgeted
Manufacturing Costs 22130975
Add: Beginning
Finished Goods
(32000*166.06) 5331200
Cost of Goods Sold 27462175
Less: Ending Finished
Goods
$
7,377,656
Budgeted Cost of
Goods Sold
$
20,084,519
I) Budgeted Income

Management Accounting 6
Statement
Particular Amount
Sales
$
29,250,00
0.00
Less: Cost of Goods
Sold
$
20,084,51
8.70
Gross Margin
$
9,165,481.
30
Less: Selling &
Administrative
Expenses
$
870,000.0
0
Income Before Taxes
$
8,295,481.
30
J) Cash Budget
Particular January February March Total
Beginning Balance
$
400,000.0
0
$
50,000.00
$
50,000.00
$
500,000.00
Cash Receipts
$
7,800,000.
00
$
8,775,000.0
0
$
12,675,000.
00
$
29,250,000
.00
Cash Available
$
8,200,000.
00
$
8,825,000.0
0
$
12,725,000.
00
$
29,750,000
.00
$
-
Less Disbursements
$
-
Purchase
$
5,596,250.
00
$
6,751,250.0
0
$
6,778,750.0
0
$
19,126,250
.00
Direct Labour $
1,784,812.
$
2,565,000.0
$
2,682,562.5
$
7,032,375.

Management Accounting 7
50 0 0 00
Overhead
$
638,600.0
0
$
770,000.00
$
789,800.00
$
2,198,400.
00
Selling &
Administrative
$
254,000.0
0
$
272,000.00
$
344,000.00
$
870,000.00
Total
$
8,273,662.
50
$
10,358,250.
00
$
10,595,112.
50
$
29,227,025
.00
Ending Balance
$
(73,662.50
)
$
(1,533,250.
00)
$
2,129,887.5
0
$
522,975.00
Borrowed Repaid
$
123,662.5
0
$
1,584,486.6
3
$
1,708,149.1
3
$
3,416,298.
25
Interest Paid
$
-
$
1,236.63
$
13,205,291.
83
$
13,206,528
.46
Balance Before Tax
$
249,605.24
$
249,605.24
Tax Paid
$
-
$
- $62,401.31
$
62,401.31
Ending Balance
$
50,000.00
$
50,000.00
$
187,203.93
$
287,203.93