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This 2 page Class Notes was uploaded by Marisol Feil II on Thursday October 29, 2015. The Class Notes belongs to ACC323 at Wright State University taught by DavidBukovinsky in Fall. Since its upload, it has received 22 views. For similar materials see /class/231102/acc323-wright-state-university in Accounting at Wright State University.
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Date Created: 10/29/15
ACC 323 Chapter 15 Handout 1 Anchor Company has the following information available to prepare their master budget for 2007 Estimated sales in lpound boxes of their powdered cleaner for January through April are as follows January 12000 February 17000 March 22000 April 16000 Each pound of cleaner sells for 5 Anchor s policy is to have an ending inventory of finished product equal to 5 of the following month s forecasted sales Anchor expects to have 600 pounds of cleaner in inventory on January 1 2007 Prepare monthly production budgets for the rst quarter of 2007 Each pound of cleaner requires 11 pounds of material and 1 box The material costs 60 per pound and boxes cost 15 each Anchor s policy is to have an ending inventory of raw materials equal to 10 of the following month s production needs and an ending inventory of 500 boxes On January 1 2007 Anchor expects to have 1300 pounds of material and 400 boxes in inventory Prepare monthly purchases budgets for material and boxes for the rst quarter of 2007 Each box of cleaner requires 3 minutes of direct labor time at a cost of 8 per hour Prepare monthly labor budgets for the rst quarter of 2007 Variable overhead is applied to production based on direct labor cost The variable overhead rate is 70 per direct labor dollar Estimated fixed overhead for the year is composed of the following items Indirect labor 36000 Insurance 4000 Property taxes 12000 Depreciation 8000 Fixed overhead is incurred evenly throughout the year Fixed overhead is allocated at a rate of 30 per box of cleaner based on estimated total xed overhead of 60000 and estimated total annual production of 200000 boxes Prepare monthly overhead budgets for the rst quarter of 2007 70 of sales are usually collected from customers in the month of the sale and 30 in the month following the sale Accounts receivable are expected to be 15000 at January 1 2007 40 of the purchases of materials and boxes are paid in the month of purchase and 60 in the following month Accounts payable are expected to be 4500 at January 1 2007 Prepare monthly cash collections from customers and cash disbursements for purchases budgets for the rst quarter of 2007 Monthly selling and administrative costs include salaries 4000 rent 2000 utilities 1000 and depreciation 1500 Labor overhead selling and administrative costs are paid in full in the month incurred Anchor currently has a 12 10000 note payable outstanding Interest is paid monthly The note must be repaid at the end of March Anchor will pay a quarterly dividend of 2000 on March 3 A tax refund of 1200 is expected in February New equipment costing 6000 will be purchased in January Anchor requires a minimum cash balance of 3000 at the end of each month Borrowings must be made in 100 increments and will have a 12 interest rate with interest payments beginning the month after the borrowing occurs Excess cash can be invested at 9 Investments will begin to pay interest in the month after the investment is made Investments must be made in 100 increments Anchor expects to begin the year with a 3000 cash balance and no investments Prepare monthly cash budgets for the rst quarter of 2007 Prepare an income statement for the quarter