You are a manager for Peyton Approved, a pet supplies manufacturer. This responsibility requires you to create budgets, make operations to determine...

You are a manager for Peyton Approved, a pet supplies manufacturer. This responsibility requires you to create budgets, make operations to determine if changes need to be made to make the company more efficient. You will be preparing a budget for the quarter July through September 2015. You are provided the following information. The Peyton Approved Budgeted Balance Sheet 30-Jun-15 ASSETS Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment Less accumulated depreciation Total assets LIABILITIES AND EQUITY Accounts payable Short-term notes payable Taxes payable Total current liabilities Long-term note payable Total liabilities Common stock Retained earnings Total stockholders’ equity Total liabilities and equity All assumptions are new and apply to the July through September budget period. 1. Sales were 20,000 units in June 2015. Forecasted sales in units are as follows: July, 18,000; August, 22,000; September, 20,00 is $18.00 per unit and its total product cost is $14.35 per unit. 2. The June 30 finished goods inventory is 16,800 units. 3. Going forward, company policy calls for a given month’s ending finished goods inventory to equal 70% of the next month’s e 4. The June 30 raw materials inventory is 4,600 units. The budgeted September 30 raw materials inventory is 1,980 units. Raw unit requires 0.50 units of raw materials. Company policy calls for a given month’s ending raw materials inventory to equal 20% 5. Each finished unit requires 0.50 hours of direct labor at a rate of $16 per hour. 6. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $1.35 per unit produced. De fixed factory overhead. 7. Monthly general and administrative expenses include $12,000 administrative salaries and 0.9% monthly interest on the long 8. Sales representatives’ commissions are 12% of sales and are paid in the month of the sales. The sales manager’s monthly sal Specifically, the following critical elements must be addressed when creating an Operating Budget by completing the budget te Step 1: Prepare a Sales Budget Complete the Sales Budget on the Budgets tab below by using the information found in the budgeted balance sheet above. Consider assumption 1 when completing this critical element: Sales were 20,000 units in June 2015. Forecasted sales in units a September, 20,000; October, 24,000. The product’s selling price is $18.00 per unit and its total product cost is $14.35 per unit. You can find an example of a sales budget in Exhibit 22-5 on page 1324 of the textbook. Step 2: Prepare a Production Budget Complete the Production Budget on the Budgets tab below by using the information found in the budgeted balance sheet abo Consider assumption 1 while completing this critical element: Sales were 20,000 units in June 2015. Forecasted sales in units a September, 20,000; October, 24,000. The product’s selling price is $18.00 per unit and its total product cost is $14.35 per unit. Consider assumption 2 while completing this critical element: The June 30 finished goods inventory is 16,800 units. Consider assumption 3 while completing this critical element: Going forward, company policy calls for a given month’s ending fi next month’s expected unit sales. You can find an example of a production budget in Exhibit 22-6 on page 1325 of the textbook. Step 3: Prepare a Manufacturing Budget Complete the Manufacturing Budget on the Budgets tab below by using the information found in the budgeted balance sheet three parts: the Raw Materials Budget, the Direct Labor Budget, and the Factory Overhead Budget. Raw Material Budget Consider assumption 4 while completing this critical element: The June 30 raw materials inventory is 4,600 units. The budgeted 1,980 units. Raw materials cost $7.75 per unit. Each finished unit requires 0.50 units of raw materials. Company policy calls for inventory to equal 20% of the next month’s materials requirements. Consider units to be produced found in the production budget while completing this critical element. Direct Labor Budget Consider assumption 5 while completing this critical element: Each finished unit requires 0.50 hours of direct labor at a rate of Consider units to be produced found in the production budget while completing this critical element. Factory Overhead Budget Consider assumption 6 while completing this critical element: Overhead is allocated based on direct labor hours. The predeter produced. Depreciation of $20,000 per month is treated as fixed factory overhead. Consider units to be produced found in the production budget while completing this critical element. Step 4: Prepare a Selling Budget Complete the Selling Expense Budget. Consider assumption 8 while completing this critical element: 8. Sales representatives’ commissions are 12% of sales and are p manager’s monthly salary is $3,750 per month. Step 5: General and Administrative Expense Budget Complete the General and Administrative Expense Budget. Consider assumption 7 while completing this critical element: 7. Monthly general and administrative expenses include $12,000 interest on the long-term note payable. The following critical elements must be addressed when performing the Budget Variance Analysis using the Budget Variance W can be found in the Assignment Guidelines and Rubrics folder. The actual quantity of material used was 31,000 with an actual cost of $7.75 per unit. The actual labor hours were 33,000 with Step 1: Complete A. Develop a variance analysis including a budget variance performance report and appropriate variances f Start with the Labor and Materials Variance tab. Standard costs/quantities come from the raw materials budget and the labor budget. Use Exhibits 23-11 on page 1235 and 23-12 on page 1237 in the textbook as guides. After completing the Labor and Materials Variance tab, transfer variances to the Budget Variance Report tab. Congratulations! You have completed the workbook portion of Final Project Part I. To complete the remainder of the Budget Va use the Final Project Part I Budget Variance Report Template. The Budget Variance Report Template can be found in the Assign pricing decisions, and analyze the results of budgeted balance sheet on June 30, 2015, is: $42,000 259,900 35,650 241,080 578,630 $720,000 240,000 480,000 $1,058,630 $63,400 24,000 10,000 97,400 300,000 397,400 $600,000 61,230 661,230 $1,058,630 00; October, 24,000. The product’s selling price xpected unit sales. materials cost $7.75 per unit. Each finished % of the next month’s materials requirements. preciation of $20,000 per month is treated as -term note payable. ary is $3,750 per month. mplates found on the "Budgets" tab below. re as follows: July, 18,000; August, 22,000; ve. re as follows: July, 18,000; August, 22,000; finished goods inventory to equal 70% of the above. The manufacturing budget consists of d September 30 raw materials inventory is a given month’s ending raw materials $16 per hour. mined variable overhead rate is $1.35 per unit aid in the month of the sales. The sales administrative salaries and 0.9% monthly Worksheet. The Budget Variance Worksheet an actual rate per hour of $15. or materials, labor, and overhead. ariance Analysis portion of Final Project Part I, ment Guidelines and Rubrics folder. Sales Budget Peyton Approved Sales Budgets July, August, and September 2015 Budgeted Unit Price Budgeted Units Jul-15 Aug-15 Sep-15 Total for the first quarter 18,000 22,000 20,000 60,000 18.00 18.00 18.00 18 Production Budget Peyton Appro Production Bu July, August, and Sep July Next month’s budgeted sales Percentage of inventory to future sales Budgeted ending inventory Add budgeted sales Required units to be produced Deduct beginning inventory (Previous month ending inventory) Units to be produced Manufacturing Budget - contains raw materials budget, direct labor budget, Peyton Approved Raw Materials Budget July, August, and September 2 July Production budget (units) Materials requirement per unit Materials needed for production Add budgeted ending inventory Total materials requirements (units) Deduct beginning inventory (previous month ending inventory) Materials to be purchased Material price per unit Total cost of direct material purchases Peyton Approved Direct Labor Budget July, August, and September 2 July Budgeted production (units) Labor requirements per unit (hours) Total labor hours needed Labor rate (per hour) Labor dollars Peyton Approved Factory Overhead Budget July, August, and September 2 July Budgeted production (units) Variable factory overhead rate Budgeted variable overhead Fixed overhead Budgeted total overhead Selling Expense Budget Peyton Approved Selling Expense Budget July, August, and September 2015