Budgets

Question 1

Sales budget

Answer 1

Budgeted sales (units)
x Selling price per unit ($)
= Total sales

Question 2

Production budget

Answer 2

Budgeted sales (units)
+ desired ending inventory
= Total needed
– beginning inventory
= Required production

Question 3

Direct labour budget

Answer 3

Production (units)
x Direct labour hours
= Labour hours required
Guaranteed labour hours
= Labour hours paid (higher of required or guaranteed)
x Wage rate ($)
= Total direct labour cost

Question 4

Manufacturing overhead budget

Answer 4

Production in units
x Variable MOH rate ($)
= Variable MOH cost
+ Fixed MOH cost
= Total MOH cost
– noncash costs
= Cash disbursements for MOH

Question 5

Finished goods budget

Answer 5

Production costs per unit:
Quantity x Cost for…
DM
DL
MOH
= Unit product cost

Budgeted F/G inventory:
Ending inventory (units)
x Unit product cost
= Ending F/G inventory

Question 6

Direct materials purchase budget

Answer 6

Production (units)
Materials per unit
= Production needs
+ desired ending inventory
= Total needed
– beginning inventory
= Materials to be purchased

Question 7

Cash budget

Answer 7

Cash balance, beginning
+ receipts
= Total cash available before financing
– disbursements
= Excess or deficiency of cash available over disbursements

Financing:
+ Borrowings (beginning)
– Repayments (ending)
– Interest
= Total financing
= Cash balance, end (add/subtract from excess or deficiency)

Question 8

Selling and admin expense budget

Answer 8

Budgeted sales
x Variable selling and admin rate
= Variable expense
+ Fixed selling and admin expense
= Total expense
– noncash expenses
= Cash disbursements for selling and admin