Acctg 211 1st Edition Lecture 19 Outline of Last Lecture I Managerial vs Financial Accounting II Definitions from the book III Flow of inventory IV Budgeting Outline of Current Lecture I Unit 9 Examples Current Lecture I Continuing from Unit 9 I Find Raw Materials used COGS and COGM a Raw Materials i Beginning RM 25 000 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 ii Plus RM Purchases 78 000 iii Minus RM Used 75 000 iv Equals Ending RM 28 000 b Work in Process WIP i Beginning WIP 50 000 ii Plus DM DL Mfg OVHD 75 000 82 000 15 000 1 9 000 13 000 4 000 iii Minus Cost of Goods Manufactured 213 000 iv Equals Ending WIP 35 000 c Finished Goods FG d Beginning FG e Plus COGM f Minus Cost of Goods Sold g Equals Ending FG II Sales Budgets a Sales Budget i January 740 000 ii February 770 000 18 000 213 000 206 000 25 000 b Sales Budget for March is 1 032 000 c Inventory Purchases and COGS Budget i COGS will be 65 of Current month sales 1 Jan 481 000 2 Feb 500 500 ii Desired Ending Inventory will be 10 000 50 of Next month COGS 1 Jan 260 250 2 Feb 345 400 iii Add desired ending inventory and COGS to get the total inventory required 1 Jan 741 250 2 Feb 845 900 iv To find purchases you need the beginning inventory which is last month s ending inventory 1 Jan 250 500 2 Feb 260 250 v Subtract beginning inventory from total inventory required to find purchases 1 Jan 490 750 2 Feb 585 650 d Cash Collections I Cash Budget Cash Payments Budget Example Variation on the previous cash budget Assume Grippers pays for 60 of inventory purchases in the month of purchase and 40 during the next month Estimate the cash payments for purchases of inventory in February Use the previously generated Inventory Purchases and COGS Budget II
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