Question

1. Cash Budget

Daybook Inc. collects 30% of its sales on account in the month of the sale and 70% in the month following the sale. If sales on account are budgeted to be $105,000 for September and $116,000 for October, what are the budgeted cash receipts from sales on account for October?
$

2.

Production Budget

Daybook Inc. projected sales of 400,000 personal journals for 20Y6. The estimated January 1, 20Y6, inventory is 20,000 units, and the desired December 31, 20Y6, inventory is 23,500 units.

What is the budgeted production (in units) for 20Y6?
units

3.

Direct Materials Purchases Budget

Daybook Inc. budgeted production of 403,500 personal journals in 20Y6. Paper is required to produce a journal. Assume six square yards of paper are required for each journal. The estimated January 1, 20Y6, paper inventory is 40,400 square yards. The desired December 31, 20Y6, paper inventory is 38,900 square yards.

If paper costs $0.40 per square yard, determine the direct materials purchases budget for 20Y6.
$

4.

Direct Labor Cost Budget

Daybook Inc. budgeted production of 403,500 personal journals in 20Y6. Each journal requires assembly. Assume that eight minutes are required to assemble each journal.

If assembly labor costs $13.00 per hour, determine the direct labor cost budget for 20Y6. Round your interim calculations to nearest cent, if required.
$

5.

Cost of Goods Sold Budget

Daybook Inc. budgeted production of 403,500 personal journals in 20Y6. Paper is required to produce a journal. Assume six square yards of paper are required for each journal. The estimated January 1, 20Y6, paper inventory is 40,400 square yards. The desired December 31, 20Y6, paper inventory is 38,900 square yards. Paper costs $0.40 per square yard.

Each journal requires assembly. Assume that eight minutes are required to assemble each journal. Assembly labor costs $13.00 per hour.

Prepare a cost of goods sold budget for Daybook Inc. using the information above. Assume the estimated inventories on January 1, 20Y6, for finished goods and work in process were $28,000 and $16,500, respectively. Also assume the desired inventories on December 31, 20Y6, for finished goods and work in process were $30,000 and $14,300, respectively. Factory overhead was budgeted at $214,600. Round your interim calculations to nearest cent, if required.

DAYBOOK INC.
Cost of Goods Sold Budget
For the Year Ending December 31, 20Y6
Finished goods inventory, January 1, 20Y6			$
		$
Direct materials:
	$
	$
Cost of direct materials placed in production	$
Total work in process during period		$
			$
			$

Answer 1

Requirement 1:-

The budgeted cash receipts for the month of October is calculated as follows:-

70% of sale from the month of September = 70% * $105,000 = $73,500

30% of sale from the month of October = 30% * $116,000 = $34,800

Cash collections during the month of October = $108,300

Requirement 2:-

Production Budget = Projected sales + Desired Ending inventory - Opening Inventory

Production Budget = 400,000 + 23,500 - 20,000

Units to be produced = 403,500 units

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