Chapter 22 Master Budgets

Chapter 22 Master Budgets
Demonstration Problems © 2016 Pearson Education, Inc.

Budgeted Income Statement For the Year Ended December 31, 2017
Bolden Company prepared the following budgeted income statement for 2017: Bolden Company Budgeted Income Statement For the Year Ended December 31, 2017 Unit Sales 1,400 Sales Revenue ($700 per unit) $ 980,000 Cost of Goods Sold (55% of sales) 539,000 Gross Profit 441,000 Selling and Administrative Expenses (35% of sales) 343,000 Operating Income $ 98,000 Requirements Prepare a budgeted income statement with columns for 1,300 units, 1,400 units, and 1,600 units sold. How might managers use this type of budgeted income statement? How might spreadsheet software such as Excel assist in this type of analysis? © 2016 Pearson Education, Inc.

Requirement 1: Prepare a budgeted income statement with columns for 1,300 units, 1,400 units, and 1,600 units sold. Bolden Company Budgeted Income Statement For the Year Ended December 31, 2017 Unit Sales 1,300 1,400 1,600 © 2016 Pearson Education, Inc.

E22-32 Requirement 1: Prepare a budgeted income statement with columns for 1,300 units, 1,400 units, and 1,600 units sold. Bolden Company Budgeted Income Statement For the Year Ended December 31, 2017 Unit Sales 1,300 1,400 1,600 Sales Revenue $ 910,000 $ 980,000 $ 1,120,000 Budgeted Amount Per Unit × Units Sold = Total Budgeted Sales Revenue $700 1,300 $ 910,000 1,400 $ 980,000 1,600 $ 1,120,000 © 2016 Pearson Education, Inc.

E22-32 Requirement 1: Prepare a budgeted income statement with columns for 1,300 units, 1,400 units, and 1,600 units sold. Bolden Company Budgeted Income Statement For the Year Ended December 31, 2017 Unit Sales 1,300 1,400 1,600 Sales Revenue $ 910,000 $ 980,000 $ 1,120,000 Cost of Goods Sold 500,500 539,000 616,000 % of Total Budgeted Sales Revenue × Total Budgeted Sales Revenue = Total Budgeted Amount 55% $ 910,000 $ 500,500 $ 980,000 $ 539,000 $ 1,120,000 $ 616,000 © 2016 Pearson Education, Inc.

Requirement 1: Prepare a budgeted income statement with columns for 1,300 units, 1,400 units, and 1,600 units sold. Bolden Company Budgeted Income Statement For the Year Ended December 31, 2017 Unit Sales 1,300 1,400 1,600 Sales Revenue $ 910,000 $ 980,000 $ 1,120,000 Cost of Goods Sold 500,500 539,000 616,000 Gross Profit 409,500 441,000 504,000 © 2016 Pearson Education, Inc.

E22-32 Requirement 1: Prepare a budgeted income statement with columns for 1,300 units, 1,400 units, and 1,600 units sold. Bolden Company Budgeted Income Statement For the Year Ended December 31, 2017 Unit Sales 1,300 1,400 1,600 Sales Revenue $ 910,000 $ 980,000 $ 1,120,000 Cost of Goods Sold 500,500 539,000 616,000 Gross Profit 409,500 441,000 504,000 Selling and Administrative Expenses 318,500 343,000 392,000 % of Total Budgeted Sales Revenue × Total Budgeted Sales Revenue = Total Budgeted Amount 35% $ 910,000 $ 318,500 $ 980,000 $ 343,000 $ 1,120,000 $ 392,000 © 2016 Pearson Education, Inc.

Requirement 1: Prepare a budgeted income statement with columns for 1,300 units, 1,400 units, and 1,600 units sold. Bolden Company Budgeted Income Statement For the Year Ended December 31, 2017 Unit Sales 1,300 1,400 1,600 Sales Revenue $ 910,000 $ 980,000 $ 1,120,000 Cost of Goods Sold 500,500 539,000 616,000 Gross Profit 409,500 441,000 504,000 Selling and Administrative Expenses 318,500 343,000 392,000 Operating Income $ 91,000 $ 98,000 $ 112,000 © 2016 Pearson Education, Inc.

Requirement 2: How might managers use this type of budgeted income statement? The budgeted income statement prepared in Requirement 1 is a flexible budget prepared for various levels of sales volume, whereas the original budgeted income statement prepared for only 1,400 units sales volume is a static budget. A flexible budget is useful for sensitivity or what-if analysis. Bolden may expect to sell 1,400 units, but a flexible budget income statement showing budgeted results for 1,300 units, 1,400 units, and 1,600 units allows Bolden’s managers to plan for various sales levels. © 2016 Pearson Education, Inc.

Requirement 3: How might spreadsheet software such as Excel assist in this type of analysis? Technology, such as Excel spreadsheet software, makes it more cost-effective for managers to conduct sensitivity or what-if analysis and prepare a company’s master budget. The master budget models a company’s planned activities, but actual results often differ from plans, so managers need to know how budgeted income and cash flows would change if key assumptions or a predicted amount in the master budget turned out to be incorrect. Within Excel, what-if budget questions are easily answered, making it cost-effective to perform more comprehensive sensitivity analyses. A budgeted income statement is one of the financial budgets in the master budget. If managers have a better understanding of how changes in sales volume and costs are likely to affect net income, they can react quickly if key assumptions underlying the master budget (such as sales price or sales volume) turn out to be wrong. © 2016 Pearson Education, Inc.

P22-39A The Huber Batting Company manufactures wood baseball bats. Huber’s two primary products are a youth bat, designed for children and young teens, and an adult bat, designed for high school and college-aged players. Huber sells the bats to sporting goods stores, and all sales are on account. The youth bat sells for $35; the adult bat sells for $65. Huber’s highest sales volume is in the first three months of the year as retailers prepare for the spring baseball season. Huber’s balance sheet for December 31, 2016, follows: © 2016 Pearson Education, Inc.

HUBER BATTING COMPANY Balance Sheet December 31, 2016
Assets Current Assets: Cash $ 15,000 Accounts Receivable 21,600 Raw Materials Inventory 12,000 Finished Goods Inventory 17,210 Total Current Assets $ 65,810 Property, Plant, and Equipment: Equipment 115,000 Less: Accumulated Depreciation (20,000) 95,000 Total Assets $ 160,810 Liabilities Current Liabilities: Accounts Payable $ 10,500 Stockholders' Equity Common Stock, no par $ 130,000 Retained Earnings 20,310 Total Stockholders’ Equity 150,310 Total Liabilities and Stockholders’ Equity © 2016 Pearson Education, Inc.

P22-39A Other data for Huber Batting Company for the first quarter of 2017: Budgeted sales are 1,300 youth bats and 3,100 adult bats. Finished Goods Inventory on December 31 consists of 650 youth bats at $17 each and 440 adult bats at $14 each. Desired ending Finished Goods Inventory is 100 youth bats and 550 adult bats; FIFO inventory costing method is used. Direct materials cost is $7 per youth bat and $9 per adult bat. Desired ending Raw Materials Inventory is $12,000 (indirect materials are insignificant and not considered for budgeting purposes). Each bat requires 0.5 hours of direct labor; direct labor costs average $15 per hour. Variable manufacturing overhead is $0.50 per bat. Fixed manufacturing overhead includes $600 per quarter in depreciation and $13,260 per quarter for other costs, such as insurance and property taxes. Fixed selling and administrative expenses include $14,000 per quarter for salaries; $3,000 per quarter for rent; $2,000 per quarter for insurance; and $300 per quarter for depreciation. Variable selling and administrative expenses include supplies at 3% of sales. © 2016 Pearson Education, Inc.

P22-39A Requirements Prepare Huber’s sales budget for the first quarter of 2017. Prepare Huber’s production budget for the first quarter of Prepare Huber’s direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. The overhead allocation base is direct labor hours. Prepare Huber’s cost of goods sold budget for the first quarter of 2017. Prepare Huber’s selling and administrative expense budget for the first quarter of 2017. © 2016 Pearson Education, Inc.

For the Quarter Ended March 31, 2017
P22-39A Requirement 1: Prepare Huber's sales budget for the first quarter of 2017. HUBER BATTING COMPANY Sales Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Bat Total © 2016 Pearson Education, Inc.

P22-39A Requirement 1: Prepare Huber's sales budget for the first quarter of 2017. HUBER BATTING COMPANY Sales Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Bat Total Budgeted bats to be sold 1,300 3,100 4,400 © 2016 Pearson Education, Inc.

P22-39A Requirement 1: Prepare Huber's sales budget for the first quarter of 2017. HUBER BATTING COMPANY Sales Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Bat Total Budgeted bats to be sold 1,300 3,100 4,400 Sales price per bat × $35 × $65 © 2016 Pearson Education, Inc.

P22-39A Requirement 1: Prepare Huber's sales budget for the first quarter of 2017. HUBER BATTING COMPANY Sales Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Bat Total Budgeted bats to be sold 1,300 3,100 4,400 Sales price per bat × $35 × $65 Total sales $ 45,500 $ 201,500 $ 247,000 © 2016 Pearson Education, Inc.

P22-39A Requirement 2: Prepare Huber's production budget for the first quarter of 2017. HUBER BATTING COMPANY Production Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total © 2016 Pearson Education, Inc.

P22-39A Requirement 2: Prepare Huber's production budget for the first quarter of 2017. HUBER BATTING COMPANY Production Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be sold 1,300 3,100 4,400 © 2016 Pearson Education, Inc.

P22-39A Requirement 2: Prepare Huber's production budget for the first quarter of 2017. HUBER BATTING COMPANY Production Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be sold 1,300 3,100 4,400 Plus: Desired bats in ending inventory 100 550 650 © 2016 Pearson Education, Inc.

P22-39A Requirement 2: Prepare Huber's production budget for the first quarter of 2017. HUBER BATTING COMPANY Production Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be sold 1,300 3,100 4,400 Plus: Desired bats in ending inventory 100 550 650 Total bats needed 1,400 3,650 5,050 © 2016 Pearson Education, Inc.

P22-39A Requirement 2: Prepare Huber's production budget for the first quarter of 2017. HUBER BATTING COMPANY Production Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be sold 1,300 3,100 4,400 Plus: Desired bats in ending inventory 100 550 650 Total bats needed 1,400 3,650 5,050 Less: Bats in beginning inventory 440 1,090 © 2016 Pearson Education, Inc.

P22-39A Requirement 2: Prepare Huber's production budget for the first quarter of 2017. HUBER BATTING COMPANY Production Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be sold 1,300 3,100 4,400 Plus: Desired bats in ending inventory 100 550 650 Total bats needed 1,400 3,650 5,050 Less: Bats in beginning inventory 440 1,090 Budgeted bats to be produced 750 3,210 3,960 © 2016 Pearson Education, Inc.

Direct Materials Budget For the Quarter Ended March 31, 2017
P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Direct Materials Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Direct Materials Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Direct Materials Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Direct materials cost per bat × $7 × $9 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Direct Materials Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Direct materials cost per bat × $7 × $9 Direct materials needed for production $ 5,250 $ 28,890 $ 34,140 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Direct Materials Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Direct materials cost per bat × $7 × $9 Direct materials needed for production $ 5,250 $ 28,890 $ 34,140 Plus: Desired direct materials in ending inventory 12,000 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Direct Materials Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Direct materials cost per bat × $7 × $9 Direct materials needed for production $ 5,250 $ 28,890 $ 34,140 Plus: Desired direct materials in ending inventory 12,000 Total direct materials needed 46,140 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Direct Materials Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Direct materials cost per bat × $7 × $9 Direct materials needed for production $ 5,250 $ 28,890 $ 34,140 Plus: Desired direct materials in ending inventory 12,000 Total direct materials needed 46,140 Less: Direct materials in beginning inventory a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Direct Materials Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Direct materials cost per bat × $7 × $9 Direct materials needed for production $ 5,250 $ 28,890 $ 34,140 Plus: Desired direct materials in ending inventory 12,000 Total direct materials needed 46,140 Less: Direct materials in beginning inventory Budgeted purchases of direct materials a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Direct Labor Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Direct Labor Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Direct Labor Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Direct labor hours per bat × 0.5 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Direct Labor Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Direct labor hours per bat × 0.5 Direct labor hours needed for production 375 1,605 1,980 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Direct Labor Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Direct labor hours per bat × 0.5 Direct labor hours needed for production 375 1,605 1,980 Direct labor cost per hour × $15 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Direct Labor Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Direct labor hours per bat × 0.5 Direct labor hours needed for production 375 1,605 1,980 Direct labor cost per hour × $15 Budgeted direct labor cost $ 5,625 $ 24,075 $ 29,700 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

Manufacturing Overhead Budget For the Quarter Ended March 31, 2017
P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Manufacturing Overhead Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Manufacturing Overhead Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Manufacturing Overhead Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Variable overhead cost per bat × $ 0.50 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Manufacturing Overhead Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Variable overhead cost per bat × $ 0.50 Budgeted variable overhead $ 375 $ 1,605 $ 1,980 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Manufacturing Overhead Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Variable overhead cost per bat × $ 0.50 Budgeted variable overhead $ 375 $ 1,605 $ 1,980 Budgeted fixed overhead Depreciation 600 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Manufacturing Overhead Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Variable overhead cost per bat × $ 0.50 Budgeted variable overhead $ 375 $ 1,605 $ 1,980 Budgeted fixed overhead Depreciation 600 Other costs (insurance and property taxes) 13,260 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Manufacturing Overhead Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Variable overhead cost per bat × $ 0.50 Budgeted variable overhead $ 375 $ 1,605 $ 1,980 Budgeted fixed overhead Depreciation 600 Other costs (insurance and property taxes) 13,260 Total budgeted fixed overhead 13,860 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Manufacturing Overhead Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Variable overhead cost per bat × $ 0.50 Budgeted variable overhead $ 375 $ 1,605 $ 1,980 Budgeted fixed overhead Depreciation 600 Other costs (insurance and property taxes) 13,260 Total budgeted fixed overhead 13,860 Budgeted manufacturing overhead costs $ 15,840 a From the Production Budget in Requirement 2 © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Manufacturing Overhead Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Variable overhead cost per bat × $ 0.50 Budgeted variable overhead $ 375 $ 1,605 $ 1,980 Budgeted fixed overhead Depreciation 600 Other costs (insurance and property taxes) 13,260 Total budgeted fixed overhead 13,860 Budgeted manufacturing overhead costs $ 15,840 Direct labor hours b 375 1,605 1,980 a From the Production Budget in Requirement 2 b From the Direct Labor Budget © 2016 Pearson Education, Inc.

P22-39A Requirement 3: Prepare Huber's direct materials budget, direct labor budget, and manufacturing overhead budget for the first quarter of Round the predetermined overhead allocation rate to two decimal places. HUBER BATTING COMPANY Manufacturing Overhead Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Budgeted bats to be produced a 750 3,210 3,960 Variable overhead cost per bat × $ 0.50 Budgeted variable overhead $ 375 $ 1,605 $ 1,980 Budgeted fixed overhead Depreciation 600 Other costs (insurance and property taxes) 13,260 Total budgeted fixed overhead 13,860 Budgeted manufacturing overhead costs $ 15,840 Direct labor hours b 375 1,605 1,980 Predetermined overhead allocation rate ($15,840 / 1,980 DLHr) $ 8.00 a From the Production Budget in Requirement 2 b From the Direct Labor Budget © 2016 Pearson Education, Inc.

Cost of Goods Sold Budget For the Quarter Ended March 31, 2017
P22-39A Requirement 4: Prepare Huber's cost of goods sold budget for the first quarter of 2017. HUBER BATTING COMPANY Cost of Goods Sold Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total © 2016 Pearson Education, Inc.

P22-39A Requirement 4: Prepare Huber's cost of goods sold budget for the first quarter of 2017. HUBER BATTING COMPANY Cost of Goods Sold Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Beginning Inventory a $ 11,050 a Calculations (per given data): Bats in beginning inventory × Cost per bat = Cost of bats in Youth Bat 650 $17.00 $ 11,050 © 2016 Pearson Education, Inc.

P22-39A Requirement 4: Prepare Huber's cost of goods sold budget for the first quarter of 2017. HUBER BATTING COMPANY Cost of Goods Sold Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Beginning Inventory a $ 11,050 $ 6,160 a Calculations (per given data): Bats in beginning inventory × Cost per bat = Cost of bats in Youth Bat 650 $17.00 $ 11,050 Adult Bat 440 $14.00 $ 6,160 © 2016 Pearson Education, Inc.

P22-39A Requirement 4: Prepare Huber's cost of goods sold budget for the first quarter of 2017. HUBER BATTING COMPANY Cost of Goods Sold Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Beginning Inventory a $ 11,050 $ 6,160 $ 17,210 a Calculations (per given data): Bats in beginning inventory × Cost per bat = Cost of bats in Youth Bat 650 $17.00 $ 11,050 Adult Bat 440 $14.00 $ 6,160 © 2016 Pearson Education, Inc.

P22-39A Requirement 4: Prepare Huber's cost of goods sold budget for the first quarter of 2017. Calculations: Bats sold in 1st quarter of 2017 – Bats in beginning inventory = Bats produced and sold in 1st quarter of 2017 © 2016 Pearson Education, Inc.

P22-39A Requirement 4: Prepare Huber's cost of goods sold budget for the first quarter of 2017. Calculations: Bats sold in 1st quarter of 2017 – Bats in beginning inventory = Bats produced and sold in 1st quarter of 2017 Youth Bat 1,300 650 © 2016 Pearson Education, Inc.

P22-39A Requirement 4: Prepare Huber's cost of goods sold budget for the first quarter of 2017. Calculations: Bats sold in 1st quarter of 2017 – Bats in beginning inventory = Bats produced and sold in 1st quarter of 2017 Youth Bat 1,300 650 Adult Bat 3,100 440 2,660 © 2016 Pearson Education, Inc.

P22-39A Requirement 4: Prepare Huber's cost of goods sold budget for the first quarter of 2017. Calculations: Bats sold in 1st quarter of 2017 – Bats in beginning inventory = Bats produced and sold in 1st quarter of 2017 Youth Bat 1,300 650 Adult Bat 3,100 440 2,660 Youth Bat Adult Direct materials cost per bat $ 7.00 $ 9.00 © 2016 Pearson Education, Inc.

P22-39A Requirement 4: Prepare Huber's cost of goods sold budget for the first quarter of 2017. Calculations: Bats sold in 1st quarter of 2017 – Bats in beginning inventory = Bats produced and sold in 1st quarter of 2017 Youth Bat 1,300 650 Adult Bat 3,100 440 2,660 Youth Bat Adult Direct materials cost per bat $ 7.00 $ 9.00 Direct labor cost per bat (0.5 DLHr per bat × $15 per DLHr) 7.50 © 2016 Pearson Education, Inc.

P22-39A Requirement 4: Prepare Huber's cost of goods sold budget for the first quarter of 2017. Calculations: Bats sold in 1st quarter of 2017 – Bats in beginning inventory = Bats produced and sold in 1st quarter of 2017 Youth Bat 1,300 650 Adult Bat 3,100 440 2,660 Youth Bat Adult Direct materials cost per bat $ 7.00 $ 9.00 Direct labor cost per bat (0.5 DLHr per bat × $15 per DLHr) 7.50 Manufacturing overhead cost per bat (0.5 DLHr per bat × $8.00 predetermined overhead allocation rate per DLHr) 4.00 © 2016 Pearson Education, Inc.

P22-39A Requirement 4: Prepare Huber's cost of goods sold budget for the first quarter of 2017. Calculations: Bats sold in 1st quarter of 2017 – Bats in beginning inventory = Bats produced and sold in 1st quarter of 2017 Youth Bat 1,300 650 Adult Bat 3,100 440 2,660 Youth Bat Adult Direct materials cost per bat $ 7.00 $ 9.00 Direct labor cost per bat (0.5 DLHr per bat × $15 per DLHr) 7.50 Manufacturing overhead cost per bat (0.5 DLHr per bat × $8.00 predetermined overhead allocation rate per DLHr) 4.00 Total projected manufacturing cost per bat $ 18.50 $ 20.50 © 2016 Pearson Education, Inc.

P22-39A Requirement 4: Prepare Huber's cost of goods sold budget for the first quarter of 2017. HUBER BATTING COMPANY Cost of Goods Sold Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Beginning Inventory a $ 11,050 $ 6,160 $ 17,210 Bats produced and sold in 1st quarter of 2017 b 12,025 b Calculations: Bats produced and sold in 1st quarter of 2017 × Manufacturing cost per bat = Cost of bats produced and sold in Youth Bat 650 $18.50 $ 12,025 © 2016 Pearson Education, Inc.

P22-39A Requirement 4: Prepare Huber's cost of goods sold budget for the first quarter of 2017. HUBER BATTING COMPANY Cost of Goods Sold Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Beginning Inventory a $ 11,050 $ 6,160 $ 17,210 Bats produced and sold in 1st quarter of 2017 b 12,025 54,530 b Calculations: Bats produced and sold in 1st quarter of 2017 × Manufacturing cost per bat = Cost of bats produced and sold in Youth Bat 650 $18.50 $ 12,025 Adult Bat 2,660 $20.50 $ 54,530 © 2016 Pearson Education, Inc.

P22-39A Requirement 4: Prepare Huber's cost of goods sold budget for the first quarter of 2017. HUBER BATTING COMPANY Cost of Goods Sold Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Beginning Inventory a $ 11,050 $ 6,160 $ 17,210 Bats produced and sold in 1st quarter of 2017 b 12,025 54,530 66,555 b Calculations: Bats produced and sold in 1st quarter of 2017 × Manufacturing cost per bat = Cost of bats produced and sold in Youth Bat 650 $18.50 $ 12,025 Adult Bat 2,660 $20.50 $ 54,530 © 2016 Pearson Education, Inc.

P22-39A Requirement 4: Prepare Huber's cost of goods sold budget for the first quarter of 2017. HUBER BATTING COMPANY Cost of Goods Sold Budget For the Quarter Ended March 31, 2017 Youth Bat Adult Total Beginning Inventory a $ 11,050 $ 6,160 $ 17,210 Bats produced and sold in 1st quarter of 2017 b 12,025 54,530 66,555 Total budgeted cost of goods sold $ 23,075 $ 60,690 $ 83,765 b Calculations: Bats produced and sold in 1st quarter of 2017 × Manufacturing cost per bat = Cost of bats produced and sold in Youth Bat 650 $18.50 $ 12,025 Adult Bat 2,660 $20.50 $ 54,530 © 2016 Pearson Education, Inc.

P22-39A HUBER BATTING COMPANY
Requirement 4: Prepare Huber's selling and administrative expense budget for the first quarter of 2017. HUBER BATTING COMPANY Selling and Administrative Expense Budget For the Quarter Ended March 31, 2017 © 2016 Pearson Education, Inc.

Requirement 4: Prepare Huber's selling and administrative expense budget for the first quarter of 2017. HUBER BATTING COMPANY Selling and Administrative Expense Budget For the Quarter Ended March 31, 2017 Salaries Expense $ 14,000 © 2016 Pearson Education, Inc.

Requirement 4: Prepare Huber's selling and administrative expense budget for the first quarter of 2017. HUBER BATTING COMPANY Selling and Administrative Expense Budget For the Quarter Ended March 31, 2017 Salaries Expense $ 14,000 Rent Expense 3,000 © 2016 Pearson Education, Inc.

Requirement 4: Prepare Huber's selling and administrative expense budget for the first quarter of 2017. HUBER BATTING COMPANY Selling and Administrative Expense Budget For the Quarter Ended March 31, 2017 Salaries Expense $ 14,000 Rent Expense 3,000 Insurance Expense 2,000 © 2016 Pearson Education, Inc.

Requirement 4: Prepare Huber's selling and administrative expense budget for the first quarter of 2017. HUBER BATTING COMPANY Selling and Administrative Expense Budget For the Quarter Ended March 31, 2017 Salaries Expense $ 14,000 Rent Expense 3,000 Insurance Expense 2,000 Depreciation Expense 300 © 2016 Pearson Education, Inc.

Requirement 4: Prepare Huber's selling and administrative expense budget for the first quarter of 2017. HUBER BATTING COMPANY Selling and Administrative Expense Budget For the Quarter Ended March 31, 2017 Salaries Expense $ 14,000 Rent Expense 3,000 Insurance Expense 2,000 Depreciation Expense 300 Supplies Expense a 7,410 a 3% × $247,000 total sales b = $7,410 Supplies Expense b From the Sales Budget in Requirement 1 © 2016 Pearson Education, Inc.

Requirement 4: Prepare Huber's selling and administrative expense budget for the first quarter of 2017. HUBER BATTING COMPANY Selling and Administrative Expense Budget For the Quarter Ended March 31, 2017 Salaries Expense $ 14,000 Rent Expense 3,000 Insurance Expense 2,000 Depreciation Expense 300 Supplies Expense a 7,410 Total budgeted selling and administrative expense $ 26,710 a 3% × $247,000 total sales b = $7,410 Supplies Expense b From the Sales Budget in Requirement 1 © 2016 Pearson Education, Inc.

Chapter 22 Master Budgets

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Chapter 22 Master Budgets

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