Acctg 211 1st Edition Lecture 19Outline of Last Lecture I. Managerial vs. Financial AccountingII. Definitions from the bookIII. Flow of inventoryIV. Budgeting Outline of Current LectureI. Unit 9 ExamplesCurrent LectureI. Continuing from Unit 9I. Find Raw Materials used, COGS, and COGMa. Raw Materialsi. Beginning RM $25,000These 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 $78,000iii. Minus: RM Used $(75,000)iv. Equals: Ending RM $28,000b. Work in Process (WIP)i. Beginning WIP $50,000ii. Plus: DM + DL + Mfg OVHD $75,000 + $82,000 + $15,000 +1. $9,000 + $13,000 + $4,000iii. Minus: Cost of Goods Manufactured $(213,000)iv. Equals: Ending WIP $35,000c. Finished Goods (FG)d. Beginning FG $18,000e. Plus: COGM $213,000f. Minus: Cost of Goods Sold $(206,000)g. Equals: Ending FG $25,000II. Sales Budgetsa. Sales Budgeti. January: $740,000ii. February: $770,000b. Sales Budget for March is $1,032,000c. Inventory, Purchases and COGS Budget i. COGS will be 65% of Current month sales1. Jan: 481,0002. Feb: $500,500ii. Desired Ending Inventory will be $10,000 + 50% of Next month COGS1. Jan: 260,2502. Feb: 345,400iii. Add desired ending inventory and COGS to get the total inventory required1. Jan: 741,2502. Feb: 845,900iv. To find purchases you need the beginning inventory which is last month’s ending inventory 1. Jan: 250,5002. Feb: 260,250v. Subtract beginning inventory from total inventory required to find purchases1. Jan: 490,7502. Feb: 585,650d. Cash CollectionsI. Cash BudgetCash Payments Budget Example – Variation on the previous cash budgetAssume 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
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