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Principles of Managerial Accounting




ACCOUNTING FOR MANAGERS 6315;BUDGET PROJECT;Objective: To understand and apply the basic concepts of profit planning in MS Excel.;Due date: Check syllabus. Submission is via email.;Grading: This project is worth 65 points.;Required: You need to prepare a comprehensive 6-month budget in Excel, including supporting schedules and a report for the period January 1, 2014 to June 30, 2014 for Heron, Inc (a fictional company). Assume it is the beginning of the year. This project must include;1. Sales Forecast and Budget..........;2. Cash Receipts budget................;3. Purchase budget........................;4. Budgeted Inventory and Cost of Goods Sold;5. Cash Purchases Disbursements budget.....;6. Operating Expense budget......;7. Summary Cash budget............;8. Budgeted Income Statement.....;9. Budgeted Balance Sheet............;Notes and Hints;1. All 9 parts must be submitted before I grade the project.;2. The schedules/budgets must be prepared on Excel. The templates I have prepared must be used as is.;3. Part of this project is demonstrating proper use of Excel. You may input a ?hard coded number? into a pink cell or you can use a formula. All yellow cells must be formula based (no numbers included ? use appropriate cell referencing). A formula could be as simple as a reference to another cell in the worksheet. As a separate tab in Excel, you must include a copy of the formula version of the project or you will receive a 0 (zero). In MS Excel 2010, copy the worksheet as another tab and you just click on the Formulas tab at the top and then click on ?Show Formulas?.;4. I recommend constructing the formulas for one month and then copying the formulas over to the remaining months.;5. Rounding is encouraged and you may ignore interest and taxes.;6. The budget templates and this instruction sheet are located in Course Materials in Blackboard. Make sure you save the file to excel and then open the file through Excel (not Internet Explorer).;7. Check figures are also located on page 3.;INFORMATION FOR HERON, INC. BUDGET PROJECT;1. Heron, Inc. is a company that re-sells one product, a particularly comfortable lawn chair. An overseas contractor makes the product exclusively for Heron, so, Heron has no manufacturing-related costs.;2. As of November, 2013, each lawn chair costs Heron $4 per unit. Heron currently sells each chair for $10 per unit.;3. The estimated sales (in units) are as follows;Nov 2013 11,250;Dec 2013 11,600;Jan 2014 10,000;Feb 2014 12,400;Mar 2014 13,000;Apr 2014 16,600;May 2014 18,000;June 2014 22,000;July 2014 18,000;4. Per an existing contract, the cost of each chair is scheduled to increase by 5% on July 1, 2014. To offset this increase, the company plans to raise the sales price to $10.25 per unit beginning May 1, 2014. The sales forecast (i.e., estimated sales in units) takes this price increase into account.;5. Thirty percent of any month?s sales are for cash, and the remaining 70% are on credit. Thirty percent of the credit sales are collected in the month of sale, 50% are collected in the following month, and 16% are collected in the second month after the sale. The remaining receivables are deemed uncollectible. Bad debts are written off in the month the debt is deemed uncollectible (e.g. if the sale is made in January and is not collected by the end of March, it is written off in March.) No accrual for estimated bad debts is made in the month of sale.;6. The firm?s policy regarding inventory is to stock (i.e. have in ending inventory) 40% of the forecasted demand in units (i.e., estimated sales) for the next month.;7. Forty percent of the inventory purchases are paid for in the month of purchase and the remaining 60% are paid in the following month (i.e. all of the previous month?s Accounts Payable are paid off by the end of any month.);8. Equipment will be purchased in January requiring a cash payment of $55,000 due in January. Another payment of $30,000 is due in February. Also, dividends of $10,000 are to be paid in March.;9. Monthly operating expenses consist of the following (if these are cash expenses, they are paid when incurred);Salaries and Wages $3,500;Sales Commissions 7% of sales revenue;Rent $9,000;Other Variable Cash Expenses 6% of sales revenue;Supplies Expense: See note $2,000;Other: See note $48,000;Note: Other general and administrative overhead is expected to be $48,000 per month. Of this amount, $24,000 represents depreciation and other non-cash expenses. The company maintains on hand one month?s worth of supplies.;10. The company must maintain a minimum cash balance of $15,000. Borrowing can make up shortfalls. For simplicity, assume that the bank will only lend (and accept repayments) in $1,000 increments. Ignore interest on the loan in your calculations, but minimize the amount borrowed and pay off any loans as soon as possible.;11. Cash on hand as of December 31, 2013 was $15,000. In addition, there will be no notes payable as of this date.;12. See below the other Balance Sheet accounts with their balances as of December 31, 2013;? Supplies..............................................$ 2,000;? Property, Plant and Equipment........... 970,000;? Accumulated Depreciation................. 526,475;? Common Stock................................... 200,000;? Retained Earnings.............................. 322,811;13. Check Figures 2014;Cash Receipts Budget;Total Cash Receipts, January: $104,200;Total Cash Receipts, Jan ? June: $845,307;Uncollectible/bad debt exp, January: $3,150;Uncollectible/bad debt exp, Jan ? June: $20,958;Purchase Budget;Total Purchases, Jan ? June: $380,800;Cash Budget;Total Cash Disbursements, Jan ? June: $805,044;Ending Cash Balance, June: $55,263;Budgeted Income Statement;Operating Expenses, Total: $516,858;Net Income, Total: $45,142;Budgeted Balance Sheet;Total Assets: $606,913;Attachments Preview;6315 Heron Budget Project Instructions Version Fall 14-2.docx;ACCOUNTING FOR MANAGERS 6315;BUDGET PROJECT;Objective: To understand and apply the basic concepts of profit planning in MS Excel.;Due date: Check syllabus. Submission is via...;6315 Heron budget template STUDENT.xlsx;Principles of Managerial Accounting;Heron, Inc.;Budget Project...


Paper#20432 | Written in 18-Jul-2015

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