Master Budget Preparation
(Master budget preparation) Sopchoppy Company manufactures a red industrial dye. The company is preparing its 2000 master budget and has presented you with the following information.
1. The December 31, 1999, balance sheet for the company is shown below.
SOPCHOPPY COMPANY
Balance Sheet
December 31, 1999
Assets Liabilities and Stockholders’ Equity
Cash $ 5,080 Notes Payable $ 25,000
Accounts Receivable 26,500 Accounts Payable 2,148
Raw Materials Inventory 800 Dividends Payable 10,000
Finished Goods Inventory 2,104 Total Liabilities $ 37,148
Prepaid Insurance 1,200 Common Stock $100,000
Building $300,000 Paid-in Capital 50,000
Accumulated Depreciation (20,000) 280,000 Retained Earnings 128,536 278,536 Total Liabilities and
Total Assets $315,684 Stockholders’ Equity $315,684
2. The Accounts Receivable balance at 12/31/99 represents the remaining balances of November and December credit sales. Sales were $70,000 and $65,000, respectively,
3. Estimated sales in gallons of dye for January through May 2000 are shown below.
January 8,000
February 10,000
March 15,000
April 12,000
May 11,000
Each gallon of dye sells for $12.
4. The collection pattern for accounts receivable is as follows: 70 percent in the month of sale; 20 percent in the first month after the sale; 10 percent in the second month after the sale. Sopchoppy expects no bad debts and no customers are given cash discounts.
5. Each gallon of dye has the following standard quantities and costs for direct materials and direct labor:
1.2 gallons of direct material (some evaporation occurs during processing) @ $0.80 per gallon $0.96
1/2 hour of direct labor @ $6 per hour 3.00
Variable overhead is applied to the product on a machine-hour basis. It takes 5 hours of
1. The December 31, 1999, balance sheet for the company is shown below.
SOPCHOPPY COMPANY
Balance Sheet
December 31, 1999
Assets Liabilities and Stockholders’ Equity
Cash $ 5,080 Notes Payable $ 25,000
Accounts Receivable 26,500 Accounts Payable 2,148
Raw Materials Inventory 800 Dividends Payable 10,000
Finished Goods Inventory 2,104 Total Liabilities $ 37,148
Prepaid Insurance 1,200 Common Stock $100,000
Building $300,000 Paid-in Capital 50,000
Accumulated Depreciation (20,000) 280,000 Retained Earnings 128,536 278,536 Total Liabilities and
Total Assets $315,684 Stockholders’ Equity $315,684
2. The Accounts Receivable balance at 12/31/99 represents the remaining balances of November and December credit sales. Sales were $70,000 and $65,000, respectively,
3. Estimated sales in gallons of dye for January through May 2000 are shown below.
January 8,000
February 10,000
March 15,000
April 12,000
May 11,000
Each gallon of dye sells for $12.
4. The collection pattern for accounts receivable is as follows: 70 percent in the month of sale; 20 percent in the first month after the sale; 10 percent in the second month after the sale. Sopchoppy expects no bad debts and no customers are given cash discounts.
5. Each gallon of dye has the following standard quantities and costs for direct materials and direct labor:
1.2 gallons of direct material (some evaporation occurs during processing) @ $0.80 per gallon $0.96
1/2 hour of direct labor @ $6 per hour 3.00
Variable overhead is applied to the product on a machine-hour basis. It takes 5 hours of