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8/4/2019 Cours Project B
1/21
Marina MorganFantastic, Inc
Historical Information
Sales in Gallons
Year Super Stupendous
2001 411,000 none2002 412,000 none
2003 405,000 186,2502004 430,000 223,500
2005 420,000 268,200
Projected Selling Price for 2006 per gallon
Super Stupendous
$10.30 $15.45
Inventory and material information
Beginning Inventory
Desired
Ending
Inventory
Cans 56,550 cans 61,700 cans
PigmentSuper 63,300 lbs 70,000Stp'dous 49,700 53,750 lbs
Finished Good InvSuper 31,700 gal 35,000 galStp'dous 24,850 gal 27,000 gal
2005 PricesCans $0.40
Super pigment $2.75 per poundStupendous pigment $3.75 per pound
Expected 2006 prices:Cans $0.02 increase over 2005 pricesSuper pigment $0.14 increase over 2005 prices
Stupendous pigment $0.19 increase over 2005 prices
Usage Standards
Marina Morgan
8/4/2019 Cours Project B
2/21
Super 2 pounds per gallon
Stupendous 2 pounds per gallon
Direct Labor and machine hour information information
2005 labor rate - both departments $8.25 per hour
Expected 2006 rate increase $0.25 Per hour rate increase over 2005
Production standards and informationSuper Stp'dous
Machine hours/gallon 0.12 hours 0.12 hours
Labor hours per machine hr. 1.25 hours 1.25 hours2005 machines available 26 20Annual capacity per machine 15,000 gal 15,000 gal
Machine hours per machine 1,800 hours 1,800 hoursMaximum annual hours per employee 2,000 hours 2,000 hours
Employees per supervisor 8 8
Overhead information
2005 information
Variable FixedIndirect materials $0.20 per gal
Indirect labor rate-annual $50,000 per supervisorEmployee fringe benefits 20% of wagesHealth benefits per employee $1,500 per employee
Utilities $0.40 per MhrMaintenance $0.20 per Mhr $10,000 annually*
Insurance $50,000 annually*Property taxes $10,000 annually*Supplies $5,000 annually*
Depreciation - mfg $250,000 annually**
* These items are allocated to dpts based upon production levels in gallons**The 2005 alloction ws $141,300 for Super and $108,700 to Stupendous
It is expected that the following changes will occur in 2006:
Variable Fixed
Marina Morgan
8/4/2019 Cours Project B
3/21
Indirect materials no change
Indirect labor rate-annual 2.50% increase per employeeEmployee fringe benefits no changeHealth benefits per employee $200 increase per employee
Utilities no changeMaintenance $0.05 inc.per Mhr $500 annual increase*
Insurance $500 annual increase*Property taxes 8% annual increase*
Supplies $200 annual increase*Depreciation - mfg 2005 equip no changeDepreciation- new purchases Five year life**
* These items are allocated to dpts based upon production levels in gallons
**The 2005 alloction ws $141,300 for Super and $108,700 to Stupendour
2005 depreciation Super Stupendous
$141,300 $108,700
Cash Increase DebtPurchases for each new piece of equipment $5,000 $25,000
Selling department information
2005 information
Variable Fixed
Commissions $0.35 per can
Salaries $15,000 per representativeFringe benefits 20% commissions 20% salaries
Health benefits $1,500 per representative
Advertising $10
per 100 cans
sold
Meals&entertainment $50 per week per representativeDepreciation $7,500
It is expected that the following changes will occur in 2006:
Variable Fixed
Commissions no change
Marina Morgan
8/4/2019 Cours Project B
4/21
Salaries No change
Fringe benefits no change no change salariesHealth benefits $200 increase per representative
Advertising $12
per 100 canssold
Meals&entertainment $60 per week per representative
Depreciation no change
It is expected number of sales reps Employees during 2006 10
Administrative Department Information
2005 information
Variable Fixed
Salaries $250,000 annualFringe benefits 20% wages
Health benefits $1,500 per employeeProfessional fees $20,000 annually
Office supplies $0.03 per gal soldTelephone $0.02 per gal sold
Depreciation $6,000 annually
It is expected that the following changes will occur in 2006:
Variable Fixed
Salaries 3% annual increaseFringe benefits no change
Health benefits $200 increase per employeeProfessional fees $1,500 annual increase
Office supplies $0.01 inc per gal soldTelephone $0.0025 inc per gal sold
Depreciation no change
It is expected number of admin. Employees during 2006 9
It is expected that interest rates will be 7.50%
2005 Balance sheet
Cash 150,000
Marina Morgan
8/4/2019 Cours Project B
5/21
8/4/2019 Cours Project B
6/21
Fantastic, Inc.
Sales Volume Projection
Sales in Gallons
Year Super
2001 411,000 Stupendous2002 412,000 none2003 405,000 none2004 430,000 186,2502005 420,000 223,500
268,200
Super Paint Volume Projection using Exponential Smoothing
Year
Actual Sales
in Gallons Weight
Weighted
Sales
a es
Volume
Projection
for 2006
2001 411,000 1 411,0002002 412,000 2 824,0002003 405,000 3 1,215,0002004 430,000 4 1,720,0002005 420,000 5 2,100,000
Totals 6,270,000 418,000
15 6270000Stependous Paint Volume Projection using Growth Function
Known x's Known y'sYear Stupendous
2003 186,250 New x2004 223,500 Year2005 268,200 2006
Projection of Stupendous 2006 sales volume
321,840
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7/21
Fantastic Inc.
Sales Budget
For the Year Ended December 31, 2006
Super Paint
Stupendous
Paint Total
Projected Sales Volume 418,000 321,840 739,840
Selling Price $10.30 $15.45
Projected Sales $4,305,400 $4,972,428 $9,277,828
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Fantastic Inc.
Production Budget
For the Year Ended December 31, 2006
Super Paint
Stupendous
Paint Total
Projected Sales Volume 418,000 321,840 739,840Desired Ending Inventory 35,000 27,000 62,000
Units Needed 453,000 348,840 801,840Beginning Inventory 31,700 24,850 56,550
Projected Production 421,300 323,990 745,290
8/4/2019 Cours Project B
9/21
Fantastic Inc.
Direct Materials Budget
For the Year Ended December 31, 2006
Super Paint
Stupendous
Paint Total
Cans (Units)
Projected Production-gallons xxxxxxxxxxx xxxxxxxxxxx 745,290 Cans 25,914.00Desired ending inventory xxxxxxxxxxx xxxxxxxxxxx 61,700 Super Pigment 202,300.00Stupendous 211,775.00
Units needed xxxxxxxxxxx xxxxxxxxxxx 806,990 Total 439,989.00Beginning inventory(gal) xxxxxxxxxxx xxxxxxxxxxx 56,550
Purchases needed xxxxxxxxxxx xxxxxxxxxxx 750,440Cost per unit xxxxxxxxxxx xxxxxxxxxxx $0.42
Cost of can purchases xxxxxxxxxxx xxxxxxxxxxx $315,185
Pigments (pounds)Projected Production-gallons 421,300 323,990Pounds per gallon 2 2
Pound needed for production 842,600 647,980
Desired ending inventory 70,000 53,750
Pounds needed 912,600 701,730Beginning inventory 63,300 49,700
Purchases needed in pounds 849,300 652,030Cost per pound $2.89 $3.94
Cost of pigments $2,454,477 $2,568,998 $5,023,475
xxxxxxxxx xxxxxxxxx $5,338,660
8/4/2019 Cours Project B
10/21
Fantastic Inc.
Direct Labor Budget
For the Year Ended December 31, 2006
Super Paint
Stupendous
Paint TotalProjected employees needed
Projected production 421,300 323,990
Machine hours needed per gallon 0.12 0.12
Machine hours needed 50,556 38,879
Labor hours per machine hours 1.25 1.25
Labor hours needed 63,195 48,599 Please use ROUND function here
Maximum hours per employee 2,000 2,000
Projected employees needed 32 25 57 Watch for rounding here!!
Please be sure this is a whole number
Projected Labor costs Remember to round up!
Labor hours needed (from above) 63,195 48,599 Suggestion - use ROUNDUP function.
Predicted labor rate $8.50 $8.50
Labor dollars needed 537,158 413,092 950,250 This is the total wage figure for cash pa
Direct labor fringe benefits 107,432 82,618 190,050 This is an "other expense"
Direct labor health benefit 54,400 42,500 96,900 This is an "other expense"
Total Direct labor costs $698,989 $538,210 $1,237,199
8/4/2019 Cours Project B
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Fantastic Inc.
Manufacturing Overhead Budget
For the Year Ended December 31, 2006
Super Paint
Stupendous
Paint Total
Number of supervisorsDirect labor employees needed 32 25Direct labor employees/supervisor 8 8
Supervisors needed 4 4 8 Watch for whole number here!
Use round up functionManufacturing OverheadVariable overhead
Indirect materials $84,260 $64,798 $149,058Utilitities 20,222 15,552 35,774Variable maintenance 12,639 9,720 22,359
Total variable overhead 117,121 90,069 207,191
Fixed OverheadSupervisor salaries 205,000 205,000 410,000Supervisor fringe benefits 41,000 41,000 82,000Supervisor health insurance 6,800 6,800 13,600Fixed maintenance 5,952 4,548 10,500Insurance 28,625 21,875 50,500Property taxes 6,122 4,678 10,800Supplies 2,947 2,253 5,200Depreciation - manufacturing 159,300 120,700 280,000 Remember to depreciation old and new e
Total fixed overhead 455,746 406,854 862,600
Total manufacturing overhead $572,867 $496,923 $1,069,791
8/4/2019 Cours Project B
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nt
8/4/2019 Cours Project B
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Fantastic Inc.
Capital Expenditures Budget
For the Year Ended December 31, 2006
Super Paint
Stupendous
Paint Total
Machine hours needed 50,556 38,879Machine hours per machine 1,800 1,800
Number of machine needed* 29 22 51 Remember to round up to a whole machine!!Machines Jan 1, 2006 26 20
Machine purchases needed($30,000 per machine) 3 2Cost per machine $30,000 $30,000 $30,000
Total cost of desired purchases $90,000 $60,000 $150,000
Cash outlay for purchases $15,000 $10,000 $25,000Increase in debt for purchases $75,000 $50,000 $125,000
* Remember to round up! For example:If you calculation determines that you will need 30.1 machines, you will have to purchase 31 machines.
8/4/2019 Cours Project B
14/21
Fantastic Inc.
Budgeted Cost of Goods Manufactured
For the Year Ended December 31, 2006
Direct MaterialsBeginning Direct Materials Inventory $383,037 Remember to look at the Beginning Balance SheetMaterial Purchases 5,338,660
Direct materials available for use 5,721,697Ending Direct Materials Inventory 439,989
Total Raw Materials Used 5,281,708
Direct Labor 1,237,199Overhead 1,069,791
Cost of Goods Manufactured. $7,588,698
Units costs for products
Super Stupendous Total
Cost of materials per unit $6.20 $8.30 Remember the cost of the cans
Unit cost for Direct labor 1.66 1.66Unit Cost for overhead 1.36 1.53
Total unit cost for 2006 production 9.22 11.50Units in finished goods inventory 35,000 27,000
Value of finished goods inventory $322,661 $310,500 $633,161 Use this figure on the ending balance s
8/4/2019 Cours Project B
15/21
Fantastic Inc.
Selling Department Budget
For the Year Ended December 31, 2006
Fixed Variable Total
Commissions $258,944 $258,944Salaries $150,000 150,000Selling fringe benefits 30,000 51,789 81,789Selling health benefits 17,000 17,000Advertising 88,781 88,781Meals & Entertainment 31,200 31,200Depreciation 7,500 7,500
Totals $235,700 $399,514 $635,000
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Fantastic Inc.
Administrative Budget
For the Year Ended December 31, 2006
Fixed Variable Total
Salaries $257,500 $257,500Administrative fringe benefits 51,500 51,500Administrative health benefits 15,300 15,300Professional fees 21,500 21,500Office supplies $29,594 29,594Telephone 12,947 12,947Depreciation 6,000 6,000
Total administative costs $351,800 $42,541 $394,341
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Fantastic Inc.
Budgeted Income Statement (Absorption)
For the Year Ended December 31, 2006
Sales $9,277,828
Cost of Sales
Beginning finished goods inventory $551,835 Remember to look at the beginning balance sheetCost of goods manufactured 7,588,698
Good available for sale 8,140,533Ending inventory 633,161 Remember to look at COGMfg statement
Cost of goods sold 7,507,372
Gross margin 1,770,456
Selling expenses 635,000Administrative expenses 394,341
Total selling and admin. Expenses 1,029,340
Operating Income 741,116Interest expense 93,750
Income before tax 647,366Income tax (40% rate) 258,946
Net income $388,419
8/4/2019 Cours Project B
18/21
Fantastic Inc.
Cash Budget
For the Year Ended December 31, 2006
Increase in
Cash
Decrease in
Cash Total
Cash receipts $9,138,388Cash payments for materials $5,276,788Wages and commissions paid 2,224,663
Other expenses paid 820,765Interest paid on long-term debt 93,750Income taxes paid 258,946Cash paid for new fixed assets 25,000
Long-term debt repayment 255,000Dividend paid 200,000
Total increases and decreases 9,138,388 9,154,912 -16,524Prior year cash xxxxxxxxxx xxxxxxxxxx 150,000
Cash balance December 31, 2006 xxxxxxxxxx xxxxxxxxxx $133,476 Use this balance on the balance sheet
8/4/2019 Cours Project B
19/21
Fantastic Inc.
Balance Sheet
December 31, 2006
AssetsCash $133,476
Accounts receivable 966,440Inventory - raw materials 439,989 Remember to look at the COGMfgInventory - finished goods 633,161 Remember to look at the COGMfgPlant and equipment 1,925,000Less accumulated depreciation (895,000)
Total Assets $3,203,066
LiabilitiesAccounts payable $444,888Accrued wages 93,416 Be sure NOT to include employee benefitsAccrued other 67,880 Do not include non-cash expenses but remember employeeLong-term debt 995,000
Total liabilities $1,601,184
Stockholders' equityCommon stock 400,000Additional paid-in capital 495,000Retained earnings 707,095
Total stockholders' equity 1,602,095
Total liabilities and stockholders' equity $3,203,280
8/4/2019 Cours Project B
20/21
8/4/2019 Cours Project B
21/21
rease.