1. Assigned Exercises & Problems, Ch 13: Budgeting

2. 13-19: Estimate Sales Revenues
Market size and our share of market
Our forecast = share x (total forecasted market)
Market size last year?
30%(total market) = 45,000 units;
total market = 150,000 units
Market size next year = 110% x 150,000 units = 165,000 units
Company share = 25% x 165,000 units = 41,250 units
Sales revenue = 41,250 units x $11 per unit = $453,750

3. 13-19: Estimate Sales Revenues
Stated otherwise:
(25/30) x 110% x 45,000 = 41, 250 units
I.e., we receive 25/30 of what we would have received when the market increased 10%

4. 13-24: Estimate Production and Materials Requirements
Expected sales ,000 Add: Desired EI of FG ,000
Total needs ,000
Less: BI of FG… ,000
=Units to produce ,000
Our material needs will follow from this.

5. 13-24: Materials Requirements

6. 13-24: Alternate Viewpoint
Production:
BB + Production = Sales + EB
20,000 + P = 160, ,000
Production = 145,000 units
Materials Requirements:
BB + Purchases = Usage + EB
60,000 + P = (6 x 145,000) + (2 / 12) x 160,000 x 6 oz.
Purchases = 970,000 oz.

7. 13-26: Estimate Purchases And Cash Disbursements
Note: 10,000 in = $450,000;
60% x $450,000 = $270,000 was paid in March
40% x $450,000 = $180,000 will be paid in April

8. 13-29: Estimate Cash Collections
Current month, etc.

9. 13-39: Sensitivity Analysis

10. 13-39: Sensitivity Analysis
Ctrl ~ discloses formulas in Excel
Or:
= *MAX(0,B )

11. Pr. 13-44: Production Budget
CHANDER, INC.
Bag production cost data:
Direct materials per bag:
Chander, Inc.
Yards of cotton
1.000
Production Budget
Cost of cotton per yard $
Coming Year
Yards of canvas finish
0.200
Expected sales
270,000
units
Cost of canvas per yard $
Add: Desired ending inventory of finished goods
105,000
Direct labor per bag:
Total needs
375,000
Number of hours
0.500
Less: beginning inventory of finished goods
60,000
Cost per hour $
Units to be produced
315,000
Overhead per bag:
Indirect labor $
Estimate of costs:
Indirect materials $
Direct materials:
Power $
Cotton
$1,134,000
Equipment costs $
Canvas
630,000
Building occupancy $
Total direct materials
1,764,000
Total overhead per bag
Direct labor
$2,520,000
Overhead:
Additional Information:
$ 157,500
Normal annual production in units
300,000
$ ,250
Annual plant capacity in units
$ ,500
Percentage increase in cost of cotton
20%
$ 375,000
Expected sales in coming budget period
$ 240,000
Current finished goods inventory in units
Total overhead
$ 914,250
Targeted finished goods inventory in units
Total budgeted production costs
$5,198,250

12. 13-44: Production Budget Continued

13. 13-48: Comprehensive Budget Plan

14. 13-48: Budgeted material purchases
BI + Purchases - Used

15. 13-48: Budgeted Income Statement, May
See top of p. 524