ACCT 2020
EXCEL BUDGET PROBLEM
DESCRIPTION
To demonstrate your understanding of the master budget and all of the supporting budgets, use the data set
provided below to complete a comprehensive budget problem for WASATCH MANUFACTURING. Upload the
finished document to your SLCC ePortfolio. You must prepare the assignment in Excel using the template
provided. You must use formulas and link the budgets wherever possible, as indicated below in the grading
criteria.
SUBMISSION DETAILS
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Due date:
Upload the Excel file to your SLCC ePortfolio and send an email to your instructor with the web link to
your ePortfolio.
GRADING CRITERIA
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The formatting is consistent, professional, and easy to read. The budgets are in the correct order
(10%).
In every cell possible, formulas are used to compute the required answers (15%).
In every cell possible, data between budgets are linked. For example, if a change is made to January
sales revenue, all other budgets update automatically as a result of the new revenue figure (10%).
Each budget correctly computes the required data, including quarterly calculations (60%).
The Excel document was uploaded to the student’s SLCC ePortfolio (5%).
HELP WITH EXCEL
If you are unfamiliar with preparing budgets in Excel, below is a series of videos prepared by Paige Paulsen
that cover preparing each of the budgets.
Preparing budgets in Excel video series:
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Sales & cash collections budget: http://youtu.be/3yG7FzDnvgM
Production Budget: http://youtu.be/MhrasFoIun0
Direct Materials Budget: http://youtu.be/eZJdhpm_bvc
Cash Disbursements for Direct Materials: http://youtu.be/58rCJpE-fCo
Conversion Costs Budgets: http://youtu.be/3N4DknOlBWk
Operating Expenses Budget: http://youtu.be/j81CLBhSWYs
Cash Budget: http://youtu.be/IXM3paew5n0
Budgeted Manufacturing Cost per Unit: http://youtu.be/EaS_f1IsqgI
Budgeted Income Statement: http://youtu.be/95ffm5qPfsU
For better viewing quality in YouTube, please adjust the YouTube viewing settings to 720p.
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HELP WITH EPORTFOLIO
To receive full credit, this assignment needs to be uploaded into your SLCC ePortfolio. For assistance with
ePortfolios, please visit http://www.slcc.edu/gened/eportfolio/
DATA SET
Wasatch Manufacturing is preparing its master budget for the first quarter of the upcoming year. The
following data pertain to Wasatch Manufacturing’s operations:
Current Assets as of December 31 (prior year):
Cash
$6,000
Accounts Receivable, net
$55,000
Inventory
$13,000
Property, Plant & Equipment, Net
$80,000
Accounts Payable
$22,000
Capital Stock
$100,000
Retained Earnings
$32,000
A. Actual sales in December were $76,000. Selling price per unit is projected to remain stable at $9 per
unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted
to be as follows:
January
$80,100
February $89,100
March
$82,800
April
$85,500
May
$77,400
B. Sales are 25% cash and 75% credit. All credit sales are collected in the month following the sale.
C. Wasatch Manufacturing has a policy that states that each month’s ending inventory of finished goods
should be 15% of the following month’s sales (in units).
D. Of each month’s direct materials purchases, 30% are paid for in the month of purchase, while the
remainder is paid for in the month following purchase. Two pounds of direct materials is needed per
unit at $1.50 per pound. Ending inventory of direct materials should be 10% of next month’s
production needs.
E. Most of the labor at the manufacturing facility is indirect, but there is some direct labor incurred. Each
unit requires .03 direct labor hours. The direct labor wage rate is $13 per hour. All direct labor is paid
for in the month in which the work is performed.
F. Monthly manufacturing overhead costs are $6,500 for factory rent, $2,100 for other fixed
manufacturing expenses, and $1.40 per unit for variable manufacturing overhead. No depreciation is
included in these figures. All expenses are paid for in the month in which they are incurred.
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G. Computer equipment for the administrative offices will be purchased in the upcoming quarter. In
January, Wasatch Manufacturing will purchase equipment for $15,000 (cash), while February’s cash
expenditures will be $6,000, and March’s cash expenditure will be $4,000.
H. Operating expenses are budgeted to be $1.20 per unit sold plus fixed operating expenses of $1,400 per
month. All operating expenses are paid in the month in which they are incurred.
I.
Depreciation on the building and equipment for the general and administrative offices is budgeted to
be $5,200 for the entire quarter, which includes depreciation on new acquisitions.
J. Wasatch Manufacturing has a policy that the ending cash balance in each month must be at least
$4,400. It has a line of credit with a local bank. The company can borrow in increments of $1,000 at the
beginning of each month, up to a total outstanding loan balance of $100,000. The interest rate on
these loans is 1.5% per month simple interest (not compounded). The company would pay down on
the line of credit balance in increments of $1,000 if it has excess funds at the end of the quarter. The
company would also pay the accumulated interest at the end of the quarter on the funds borrowed
during the quarter.
K. The company’s income tax rate is projected to be 28% of operating income less interest expense. The
company pays $10,800 cash at the end of February in estimated taxes.
SPECIFIC REQUIREMENTS
1. Prepare a schedule of cash collections for January, February, and March, and for the quarter in total.
To assist with the cash collections budget, first prepare a sales budget (Hint: Unit Sales = Sales in
Dollars / Selling Price per Unit).
December
Sales Budget
January
February
March
April
Unit Sales
Price per Unit
Sales Revenue
Cash Collections Budget
January February
Cash sales
Credit sales
Total cash collections
March
Quarter
May
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2. Prepare a production budget.
Production Budget
January February
March
Quarter
Unit sales
Plus: Desired ending inventory
Total needed
Less: Beginning inventory
Units to produce
3. Prepare a direct materials budget.
Direct Materials Budget
January February
March
Quarter
Units to be produced
Multiply by: Quantity of DM needed
per unit (lbs.)
Quantity of DM needed for production (lbs.)
Plus: Desired ending inventory of DM (lbs.)
Total quantity of DM needed (lbs.)
Less: Beginning inventory of DM (lbs.)
Quantity of DM to purchase (lbs.)
Multiply by: Cost per pound
Total cost of DM purchases
4. Prepare a cash payments budget for the direct material purchases from Requirement 3.
Cash Payments for Direct Material Purchases Budget
January
February
March
25% of Current Month DM Purchases
75% of Current Month DM Purchases
Total Cash Payments DM Purchases
Quarter
5. Prepare a cash payments budget for direct labor.
Cash Payments for Direct Labor Budget
January
February
Units Produced
Multiply by: Hours per unit
Direct Labor Hours
Multiply by: Direct Labor Rate per Hour
Direct Labor Cost
March
Quarter
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6. Prepare a cash payments budget for manufacturing overhead costs.
Cash Payments for Manufacturing Overhead Budget
January
February
March
Variable Manufacturing Overhead Costs
Rent (fixed)
Other Manufacturing Overhead (fixed)
Cash Payments for Manufacturing Overhead
Quarter
7. Prepare a cash payments budget for operating expenses.
Cash Payments for Operating Expenses Budget
January
February
March
Variable Operating Expenses
Fixed Operating Expenses
Cash Payments for Operating Expenses
Quarter
8. Prepare a combined cash budget.
Combined Cash Budget
January
February
Cash Balance, beginning
Plus: Cash Collections
Total Cash Available
Less Cash Payments:
DM Purchases
Direct Labor
Manufacturing Overhead costs
Operating expenses
Tax payment
Equipment purchases
Total Cash Payments
Ending Cash before financing
Financing:
Borrowings
Repayments
Interest payments
Cash Balance, ending
March
Quarter
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9. Calculate the budgeted manufacturing cost per unit (assume that fixed manufacturing overhead is
budgeted to be $0.60 per unit for the year.)
Budgeted Manufacturing Cost per Unit
Direct materials cost per unit
Direct labor cost per unit
Variable manufacturing costs per unit
Fixed manufacturing overhead per unit
Cost of manufacturing each unit
10. Prepare a budgeted income statement for the quarter ending March 31 (Hint: Cost of Goods Sold =
Budgeted Manufacturing Cost per Unit X Number of Units Sold).
Budgeted Income Statement
For the Quarter Ended March 31
Sales Revenue
Less: Cost of goods sold
Gross Profit
Less: Operating expenses
Less: Depreciation expense
Operating income
Less: interest expense
Less: income tax expense
Net Income