Applied Managerial Accounting: Assignment 2 - Operating & Financial Budget

Instructor: Ryan Villard
If you have a College Accelerator membership and are seeking college credit for this course, you must pass the proctored final exam and complete the assignment below. You must submit your project before registering for the final. Below you will find instructions for submitting your project as well as information on how it will be graded.

Assignment Instructions

You have been hired as the new budget controller for Banderhouse Inc., a manufacturing firm that makes insulated pet houses from injected molded plastic. The firm has been in business for two years and currently makes one product, the Deluxe house. You are tasked with creating a master budget for the first quarter. It will consist of the operating budget and the financial budget with the following components:

  1. Sales budget
  2. Production budget
  3. Direct materials purchase budget
  4. Direct labor budget
  5. Overhead budget
  6. Selling and administrative expenses budget
  7. Ending finished goods inventory budget
  8. Cost of goods sold budget
  9. Budgeted income statement
  10. Cash budget

In a 400-800-word document, present your master budget to the company executives. It should include a title page with your name, company name, course name and submission date. All budgets should be in table format. An explanatory narrative should be included to describe computations made in each budget. Each narrative should be placed next to its corresponding budget table.

If you use any lessons as sources in your assignment, please cite them using APA format (including the lesson title and the instructor's name). If you're unsure about how to use APA format to cite your sources, please see the following lessons:

Pertinent Information

Unit selling price $235

Projected sales in units for the first quarter

Month Sales
January 50,000
February 60,000
March 70,000
April 70,000
May 70,000

Direct labor usage data:

Direct labor per unit direct labor per hour
3 hours $12.50 

Direct material usage data:

Direct Material Usage Per Unit Unit Cost
Plastic pellets 10 lbs $7
Insulation 5 lbs $3

Inventory policy requires that there are sufficient materials on hand at the beginning of the month to produce 50% of that months estimated sales. This was the case on January 1.

Monthly overhead data:

Fixed Cost Variable Cost
Power $1.00
Supplies .40
Maintenance 25,000 .50
Supervision 16,000
Depreciation 100,000
Taxes 15,000
Other 10,000 1.40

Monthly overhead is estimated using a flexible budget formula and is measured in direct labor hours.

Monthly selling and administrative data:

Fixed Cost Variable Cost
Salaries $20,000
Depreciation 10,000
Shipping 1.00
Other 10,000 .50

Monthly selling and administrative expenses are estimated using a flexible budget formula and are measured in units sold.

Finished goods inventory:

Month Units Unit Cost
January 1 40,000 $166

Desired ending inventory for each month is 80 percent of next month's sales.

All sales and purchases are for cash. The cash balance on January 1 was $500,000. Banderhouse Inc. requires a minimum month cash balance of $1000. If there is a cash shortage, money is borrowed at a rate of 10 percent and is repaid at the end of the quarter along with the interest due. Cash borrowed at the end of the quarter is repaid at the end of the following quarter. On January 1, there were no loans.

Grading Rubric

Your report will be grades on the following rubric:

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