3. The company's business conditions are improving. One possible result is a sales volume of 18,000 units. The company president is confident that this volume is within the relevant range of existing capacity. How much would operating income increase over the budgeted amount of $159,000 if this level is reached without increasing capacity?
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- Budgeted income statement and balance sheet As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Mesa Publishing Co.: Factory output and sales for 20Y9 are expected to total 3,800 units of product, which are to be sold at 120 per unit. The quantities and costs of the inventories at December 31, 20Y9, are expected to remain unchanged from the balances at the beginning of the year. Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows: Balances of accounts receivable, prepaid expenses, and accounts payable at the end of the year are not expected to differ significantly from the beginning balances. Federal income tax of 35,000 on 20Y9 taxable income will be paid during 20Y9. Regular quarterly cash dividends of 0.20 per share are expected to be declared and paid in March, June, September, and December on 20,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for 22,000 cash in May. Instructions Prepare a budgeted income statement for 20Y9. Prepare a budgeted balance sheet as of December 31, 20Y9, with supporting calculations.Roman Inc. has the following totals from its operating budgets: Prepare a budgeted income statement for the year ended December 31, 2016, assuming that income from operations is taxed at a rate of 30%.Echo Amplifiers prepared the following sales budget for the first quarter of 2018: It also has this additional information related to its expenses: Prepare a sales and administrative expense budget for each month in the quarter ending March 31, 2018.
- Prepare a cost of goods sold budget for the Crest Hills Manufacturing Co. for the year ended December 31, 2016, from the following estimates. Inventories of production units: Direct materials purchased during the year, 854,000; beginning inventory of direct materials, 31,000; and ending inventory of direct materials, 26,000. Totals from other budgets included:CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2019 and 2020: Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: General and administrative salaries are approximately 27,000 a month. Lease payments under long-term leases are 9,000 a month. Depreciation charges are 36,000 a month. Miscellaneous expenses are 2,700 a month. Income tax payments of 63,000 are due in September and December. A progress payment of 180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be 132,000, and a minimum cash balance of 90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2019. b. Prepare monthly estimates of the required financing or excess fundsthat is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1/30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers sales are seasonal, and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the companys current and debt ratios would vary during the year if all financial requirements were met with short-term bank loans. Could changes in these ratios affect the firms ability to obtain bank credit? Explain.Required Information [The following information applies to the questions displayed below.] Phoenix Company's 2019 master budget Included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units. Sales Cost of goods sold Direct materials Direct labor Gross profit Selling expenses Machinery repairs (variable cost) Depreciation-Plant equipment (straight-line) Utilities ($45,000 is variable) Plant management salaries Packaging Shipping PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2019 Sales salary (fixed annual amount) General and administrative expenses Advertising expense Salaries Entertainment expense Income from operations Sales Variable costs Utilities PHOENIX COMPANY Flexible Budgets For Year Ended December 31, 2019 Flexible Budget Direct materials Direct labor Machinery repairs Depreciation-Plant equipment (straight-line) $ 960,000 240,000 Variable Amount per Unit 60,000 315,000 195,000 200,000 1,970,000 1,180,000…
- Phoenix Company’s 2019 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units. PHOENIX COMPANYFixed Budget ReportFor Year Ended December 31, 2019 Sales $ 3,000,000 Cost of goods sold Direct materials $ 975,000 Direct labor 225,000 Machinery repairs (variable cost) 60,000 Depreciation—Plant equipment (straight-line) 300,000 Utilities ($45,000 is variable) 195,000 Plant management salaries 200,000 1,955,000 Gross profit 1,045,000 Selling expenses Packaging 75,000 Shipping 105,000 Sales salary (fixed annual amount) 250,000 430,000 General and administrative expenses Advertising expense 125,000 Salaries 241,000 Entertainment expense 90,000 456,000 Income from operations $ 159,000 Problem 21-1A Part 4 4. An unfavorable change in…Phoenix Company’s 2019 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units. PHOENIX COMPANYFixed Budget ReportFor Year Ended December 31, 2019 Sales $ 3,000,000 Cost of goods sold Direct materials $ 975,000 Direct labor 225,000 Machinery repairs (variable cost) 60,000 Depreciation—Plant equipment (straight-line) 300,000 Utilities ($45,000 is variable) 195,000 Plant management salaries 200,000 1,955,000 Gross profit 1,045,000 Selling expenses Packaging 75,000 Shipping 105,000 Sales salary (fixed annual amount) 250,000 430,000 General and administrative expenses Advertising expense 125,000 Salaries 241,000 Entertainment expense 90,000 456,000 Income from operations $ 159,000 Required:1&2. Prepare flexible budgets for…Phoenix Company’s 2019 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units. PHOENIX COMPANYFixed Budget ReportFor Year Ended December 31, 2019 Sales $ 3,150,000 Cost of goods sold Direct materials $ 915,000 Direct labor 240,000 Machinery repairs (variable cost) 45,000 Depreciation—Plant equipment (straight-line) 315,000 Utilities ($60,000 is variable) 210,000 Plant management salaries 210,000 1,935,000 Gross profit 1,215,000 Selling expenses Packaging 75,000 Shipping 90,000 Sales salary (fixed annual amount) 235,000 400,000 General and administrative expenses Advertising expense 125,000 Salaries 230,000 Entertainment expense 85,000 440,000 Income from operations $ 375,000 3. The company’s business conditions are…
- Phoenix Company’s 2019 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units. PHOENIX COMPANYFixed Budget ReportFor Year Ended December 31, 2019 Sales $ 3,000,000 Cost of goods sold Direct materials $ 975,000 Direct labor 225,000 Machinery repairs (variable cost) 60,000 Depreciation—Plant equipment (straight-line) 300,000 Utilities ($45,000 is variable) 195,000 Plant management salaries 200,000 1,955,000 Gross profit 1,045,000 Selling expenses Packaging 75,000 Shipping 105,000 Sales salary (fixed annual amount) 250,000 430,000 General and administrative expenses Advertising expense 125,000 Salaries 241,000 Entertainment expense 90,000 456,000 Income from operations $ 159,000 Problem 21-1A Part 3 3. The company’s business…Phoenix Company’s 2019 master budget included the following fixed budget report. It is based on an expected production and sales volume of 15,000 units. PHOENIX COMPANYFixed Budget ReportFor Year Ended December 31, 2019 Sales $ 3,150,000 Cost of goods sold Direct materials $ 915,000 Direct labor 240,000 Machinery repairs (variable cost) 45,000 Depreciation—Plant equipment (straight-line) 315,000 Utilities ($60,000 is variable) 210,000 Plant management salaries 210,000 1,935,000 Gross profit 1,215,000 Selling expenses Packaging 75,000 Shipping 90,000 Sales salary (fixed annual amount) 235,000 400,000 General and administrative expenses Advertising expense 125,000 Salaries 230,000 Entertainment expense 85,000 440,000 Income from operations $ 375,000(B) The data collected from the sales budget for the first five months of 2020 is given for a particular product of Al Salam Corporation. As below. Months January February March April May Sales Budget (Units) 11,300 14,700 16,700 18,400 13,200 Consider the following information: Each product requires two types of materials in following quantities. Material X: 4 Units and Material Y: 5 Units. Materials equal to one half of the next month’s production are to be in hand at the end of each month. This requirement was met on January, 2010. Prepare a budget showing quantities of each type of materials to be produced each month for the first quarter of 2010.