Assessment 4 Part 2: Comprehensive Budget Plan

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Assessment 4 Part 2

Assessment 4 Part 2: Comprehensive Budget Plan
Assessment 4 Part 2: Comprehensive Budget Plan
Assessment 4 Part 2: Comprehensive Budget Plan
Scenario:
United Mobile Corporation appeared to be experiencing a good year. Sales in the first quarter were one-third ahead of last year, and the sales department predicted that this rate would continue throughout the entire year. The controller asked Megan Casey, a summer accounting intern, to prepare a draft forecast for the year and to analyze the differences from last year’s results. She based the forecast on actual results obtained in the first quarter plus the expected costs of production to be completed in the remainder of the year. She worked with various department heads (production, sales, and so on) to get the necessary information. The results of these efforts follow:
UNITED MOBILE CORPORATION Expected Account Balances for December 31, Year 2
Cash $      5,280
Accounts receivable     352,000
Inventory (January 1, year 2)     211,200
Plant and equipment     572,000
Accumulated depreciation $   180,400
Accounts payable      198,000
Notes payable (due within one year)      220,000
Accrued payables      102,300
Common stock      308,000
Retained earnings      476,080
Sales revenue   2,640,000
Other income        39,600
Manufacturing costs
Materials     937,200
Direct labor     959,200
Variable overhead     572,000
Depreciation       22,000
Other fixed overhead       34,100
Marketing
Commissions       88,000
Salaries       70,400
Promotion and advertising     198,000
Administrative
Salaries       70,400
Travel       11,000
Office costs       39,600
Income taxes          —
Dividends       22,000
$4,164,380 $ 4,164,380.00
UNITED MOBILE CORPORATION Statement of Income and Retained EarningsFor the Budget Year Ended December 31, Year 1
Revenues
Sales revenue $1,980,000
Other income        66,000 $1,860,000
Expenses
Cost of goods sold
Materials $   580,800
Direct labor      594,000
Variable overhead      356,400
Fixed overhead        52,800
$1,584,000
Beginning inventory      211,200
$1,795,200
Ending inventory      211,200 $1,584,000
Selling
Salaries $     59,400
Commissions        66,000
Promotion and advertising      138,600 264,000
General and administrative
Salaries $     61,600
Travel          8,800
Office costs        35,200    105,600
Income taxes       36,960
1,990,560
Operating profit       55,440
Beginning retained earnings     442,640
Subtotal $  498,080
Less dividends       22,000
Ending retained earnings $  476,080
REQUIRED
Prepared a budgeted income statement and balance sheet.

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