Finance and Budget Final Exam- BFM2C
Finance and Budget Final Exam- BFM2C
Part I: Preparing Operating Budgets (25%)
Bobble, Inc.s principal product is a stainless-steel water bottle that carries a lifetime guarantee. Cost and production data for the water bottle follow.
Direct materials:
Stainless steel: 0.25 kilogram per bottle at $10.00 per kilogram
Clip for the handle: 1 per bottle at $0.15 each
Direct labor:
Stamping operation: $30 per labor hour; 3 minutes per bottle
Overhead:
Stamping operation: rate equals 75 percent of departments direct labor dollars.
In January, February, and March, Waterworks expects to produce 200,000, 225,000, and 150,000 bottles, respectively. The company has no beginning or ending balances of direct materials inventory or work in process inventory for the year.
Required
Using the Excel file joined (Part I), prepare monthly cost of goods manufactured information for the metal water bottle. Classify the costs as direct materials, direct labor, or overhead, and show your computations.
Part II: Preparing a Comprehensive Budget (75%)
Springs Company has been bottling and selling water since 1940. The companys current owner would like to know how a new product would affect the companys net income in the coming year.
Required
Calculate Ginnie Springs net income for the new product in the coming year by completing the operating budgets and budgeted income statement in the Excel file joined (Spreadsheets starting with P2). Assume that the selling price will remain constant.
Build Ginnie Springs cash budget using those elements:
Sales collection policy: 50% in the same quarter of sale and 50% in the quarter following the sale
Purchases payment: 50% in the same quarter of purchase and 50% in the quarter following the purchase
Accounts receivable remaining the balance sheet of the current year: $25000
Accounts payable remaining the balance sheet of the current year: $5000
All the other expenses are paid in cash
Cash balance at the beginning: $20000
Capital expenditures: $ 20000 (10000 paid in Q1, 5000 in Q2 and 5000 in Q3)
No depreciation.
