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Bob?s Bottling 2014 Budgeting Problem




Question;Bob?s;Bottling is a juice bottler. Bob?s;produces bottled orange juice from fruit concentrate purchased from suppliers;in Florida, Arizona, and California. The;only ingredient in the juice is the concentrate provided by the supplier. The juice is processed, pasteurized, and;bottled for sale in 16 ounce plastic bottles that are provided by each supplier;with their own labels already attached.;Bob?s expects;sales volume to be 250,000 units in the first quarter, with 25,000 unit;increases in each succeeding quarter. Bob?s;believes that sales will continue to increase in this nature into the first;quarter of next year. Bob?s can sell each;bottle of orange juice for $2.50 per bottle.;Bob?s believes it;can meet future sales requirements by maintaining an ending inventory equal to 10%;of the next quarter's budgeted sales volume.;Bob?s Bottling;must use concentrate in Corder to make its juice. Bob?s has determined that it takes one gallon;of concentrate for every 5 bottles of finished product (1/5 of a gallon, or.20;of a gallon). Each supplier provides;Bob?s with a gallon of concentrate and the 5 plastic bottles needed for each;gallon at a total unit price of $2.00. Bob?s;requires 10% of next quarter?s raw material needs to be on hand at the end of;the budget period.;Bob?s Bottling;is highly automated. A worker can;process 100 bottles of orange juice in one hour (1/100). Bob?s factory worker costs per employee average;of $40 per hour.;Bob?s;has the following manufacturing overhead costs;Total variable overhead costs per;unit = $0.40, (40 cents).;Total fixed overhead costs per;quarter = $72,500 per quarter.;Bob?s has both variable and fixed expenses;in selling their juices consisting of;Variable;selling expenses are 5% of sales revenues;Fixed;Administrative Expenses = $10,000;Bob?s cash;sales make up 25% of Sales Revenues. The;other 75% of revenues are Sales on Credit.;?;80% of credit sales are collected in the quarter of the sale.;?;20% of credit sales are collected in the quarter following the sale.;?;20% Accounts Receivable carried forward to quarter 1 from last year?s;sales is $75,000.;Bob?s;cash payments are forecast to include the following;?;75% of Raw Materials are paid for in the quarter purchased.;?;25% of Raw Materials are paid for in the quarter following the purchase.;?;25% of Accounts Payable carried forward to quarter 1 from last year?s;purchases = $23,000.;?;Manufacturing overhead included $5, 000 Depreciation Expense per;quarter.;?;All other expenses are paid in cash during the quarter incurred.;?;Management plans to invest in new equipment in the first quarter that;has a total cost of $250,000. Bob?s will;pay 80% of the purchase price in cash during the first quarter, and then the;remaining 20% in the second quarter.;Bob?s;cash management includes the following;?;Cash on hand at the beginning of quarter 1 was $200,000. The minimum;cash balance must remain at or above $200,000.;?;Bob?s has an agreement with the bank allowing it to make short term;borrowing and repayments of cash in $5,000 increments. No interest is charged;if the loans are repaid by the end of the next quarter.;?;Bob did not have any outstanding loans at the beginning of the 1st;quarter.;Bob?s;had the following balances of note at the end of the year;?;Property Plant and Equipment (Net) = 750,000;?;Common Stock = $800,000;?;Note that this is a corporation, so the equity section of the balance;sheet should include common stock and retained earnings.;Prepare;the following budgets for the year broken into quarters.;?;Sales budget;?;Production budget;?;Raw Materials Purchases Budget;?;Direct Labor budget;?;Manufacturing Overhead budget;?;Budgeted Manufacturing Cost Per Unit;?;Cost of Goods Sold Budget;?;Selling and Administrative expense budget;?;Budgeted Income Statement;?;Budgeted Cash receipts;?;Budgeted Cash Payments;?;Cash Budget;?;Budgeted Balance Sheet for the end of the year;Additional Instructions;?;You must use Excel to do this project. All work must be in one Excel;File. Multiple excel tabs may be used if the student desires, but only one file;will be accepted.


Paper#37391 | Written in 18-Jul-2015

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