Business Sim 3

Sales Budget

Budgeted sales in units

* Selling price per unit

Schedule of Cash Receipts from Sales

Total cash receipts

Production Budget

Units to be produced (units sold = units produced)

Direct Materials Budget

Budgeted production in units

* Direct materials cost per unit

Schedule of cash payments for direct materials

Total cash payments for DM

Direct Labor Budget

Budgeted production units

* Labor per unit in hours

= Total labor hours needed

* Labor rate

= Total direct labor cost.

Factory Overhead Budget

% of fixed FOH incurred by quarter

* Total fixed factory overhead

Manufacturing cost for 1 batch of cookies

Direct materials cost

+ Direct labor cost

+ Fixed factory overhead

Selling expense budget

% of fixed selling expenses incurred by quarter

* Total fixed selling expenses

General & Admin expense budget

% of fixed general & administrative exp incurred by quarter

* Total fixed G & A expenses

What is the formula for Total budgeted sales?

Budgeted sales in units

* Selling price per unit

What is the formula for Total cost of direct materials to be purchased?

Budgeted production in units

* Direct materials cost per unit

How is the break-even point in unit sales calculated?

Total fixed expenses / Contribution margin per unit.

How is the break-even point in sales dollars calculated?

Total fixed expenses / Contribution margin ratio.

How is the target profit in unit sales calculated?

(Total fixed expenses + Desired profit) / Contribution margin per unit.

How is the target profit in sales dollars calculated?

(Total fixed expenses + Desired profit) / Contribution margin ratio.

What is the formula for the margin of safety in dollars?

Actual sales dollars - Break-even sales dollars.

How is the margin of safety percentage calculated?

Margin of safety in dollars / Actual sales dollars.

How is the degree of operating leverage calculated?

Total contribution margin / Net income.

Estimated traditional format income statement

Sales

- Cost of goods sold

= Gross Profit

- Total selling expenses

- Total general and administrative expenses

= Net income

Estimated contribution format income statement

Sales

-Variable Expenses

=Contribution Margin

-Fixed Expenses

=Net income

Estimated statement of retained earnings

Beginning retained earnings

+ Net income

-Dividends

= Ending retained earnings

Estimated balance sheet

Assets = Liabilities + Equity

Estimated statement of cash flows

Operating activities

+ Investing activities

+ Financing activities

= Net increase in cash

-Beginning cash

= Ending cash

Cash Budget

Beginning cash balance

+ cash receipts from customer

+ owner contribution

= Total cash available

- Cash payments for:

Direct materials

Direct labor

Fixed factory overhead

Fixed selling expenses

Fixed general & administrative expenses

= Ending cash balance