I. Preparing a Master BudgetACCT 2020 1st Edition Lecture 14Outline of Last Lecture I. Special Order SalesII. Constrained resourcesIII. Constrained Resource Increase?IV. Sell or continue to produce a component of joint product?Outline of Current LectureI. Preparing a Master BudgetCurrent LectureI. Preparing a Master Budget- Sales Budgeto Exercise 9-1, page 397 A wholesale distributer of leaf rakes that sells to other distributer like Lowes or Home Depot. They are placing orders in August. We are given the sales budget. Need to prepare an expected cash collections statementand total collections per month. 70% in first month, 20% in second month, 10% in third month, what are the outstanding sales? JULY AUG SEPT TOTALMay (430,000) 43,000 0 0 43,000(all Collected)June (540,000) 378,000 54,000 0 432,000(all Collected)July (600,000) 120,000 420,000 60,000 600,000(all Collected)These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best Used as a supplement to your own notes, not as a substitute.Aug (900,000) 0 180,000 630,000 810,000(90,000 Outstanding)Sept (500,000) 0 0 100,000 100,000(400,000 Outstanding)Totals 541,000 654,000 790,000 1,985,000(490,000 Outstanding) Highest month, since collecting money in 2nd month, they will have highest sales collected as the second month after highest sales. So highestsales in August and September is the highest in sales COLLECTED. Please remember to include the sales from PRIOR months to properly complete the budget properly - Production budget for manufacturing company OR merchandise budget for merchandising companyo Exercise 9-2, page 397 Prepare a budget for the number of units to be produced for each month and for the quarter in total. At the end of each month want to have 10% of units from the pervious month on hand. JULY AUG SEPT TOTALBudgeted Sales, Units 30,000 45,000 60,000 135,000Add: desired ending +4,500 +6,000 +5,000 +5,000 Inven=10%(prevmonth)Total Needs 34,500 51,000 65,000 140,000Less: beginning Inven. - 3,000 -4,500 -6,000 -3,000Required Production 31,500 46,500 59,000 137,000- Manufacturing budgetso Direct materials budget (including schedule of expected cash disbursements for materials); Exercise 9-3 on page 397 A1 A2 A3 A4 TOTALProduction Needs- Chips 180000 270000 450000 300000 1200000(60k x 3)Add Desired Inven-chips +54,000 COMPLETE TABLE AND CHECK VALUESTotal Needs – chips 234,000Less Begin Inven- Chips -36,000 Required Purchases-chips 198,000 Cost of Purchases – 2$/chip 396,000 612,000 840,000 576,000 2,424,000 o Direct labor budget A1 A2 A3 A4 TOTALUnits to Produce 5,000 4,400 4,500 4,900 18,800X DL Needed per Unit .4 .4 .4 .4 .4 DLH needed 2,000 hrs 1,760 hrs 1,800 hrs 1,960 hrs 7,520hrsX cost Per Hour $11 $11 $11 $11 $11 Total DL Cost $22,000 $19,360 $19,800 $21,560 $82,720 o Manufacturing overhead budget A1 A2 A3 A4 TOTALUnits to Produce 5,000 4,400 4,500 4,900 18,800X DL Needed per Unit .4 .4 .4 .4 .4 DLH needed 2,000 hrs 1,760 hrs 1,800 hrs 1,960 hrs 7,520hrsX cost Per Hour $11 $11 $11 $11 $11 Total DL Cost $22,000 $19,360 $19,800 $21,560 $82,720 Regular hours 1800 1800 1800 1800X regular Wages 19,800 19,800 19800 19800Overtime hours 200 hrs0 0Over time wages 3300 0 0 Then find the total DL cost. - Ending finished goods inventory budget- Selling and administrative budget- Cash budget- Budgeted income statement- Budget balance