Week 12 Budgeting formulas

Question 1

Production Budget

Answer 1

Production Budget =
Budgeted sales in units
+ Desired ending inventory in units
_______________________________
= Total units needed
- Beginning inventory in units
________________________________
= Units to be produced

Question 2

Direct materials purchases budget

Answer 2

Direct materials purchases budget =
Units to be produced
* Direct materials needed per unit
________________________________
= Production needs
+ Desired ending inventory of direct materials
________________________________
= Total direct materials needed
- Beginning inventory of direct materials
________________________________
= DM to be purchased (in pounds, yards, etc.)

Question 3

Direct labor budget

Answer 3

Direct labor budget =
Units to be produced
* DL hours needed per unit
_____________________________
= Total DL hours needed
* DL rate per hour
__________________________
= Budgeted DL cost

Question 4

Overhead budget

Answer 4

Overhead budget =
Units to be produced
* Variable overhead cost per unit
______________________________
= Variable overhead costs
+ Fixed overhead
____________________________
= Total manufacturing overhead costs
- Depreciation
_________________________________
= Cash paid for overhead

Question 5

S & A Expense Budget

Answer 5

S & A Expense Budget =
Budgeted unit sales
* Variable S & A cost per unit
_______________________________
= Variable S &A expense
+ Fixed S & A expense
__________________________
= Total S & A expense
- Depreciation
________________________
= Cash paid for S & A

Question 6

Cash budget

Answer 6

Cash budget =
Beginning cash balance
Add: Cash collections
_________________________
= Total available cash
Less: Cash payments
________________________
Excess / Deficiency
Add: Borrowings
Less: Repayments
_____________________
Ending Cash balance