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Accounting

Comprehensive Budget Project

Comprehensive Budget Project

Budgeted Balance Sheet

Balance Sheet
December, 2025 November, 2025
Assets Assets
Cash 233604 Cash         9,435
Accounts Receivable  $ 168,000 Accounts Receivable   324,000
Less: Allowance for uncollectable        8,400       393,204 Less: Allowance for uncollectable    16,200     307,800
Inventories: Inventories:
  Direct Materials        4,950   Direct Materials      9,900
   Finished Goods      69,698         74,648    Finished Goods    52,454         62,354
Fixed Assets     870,000 Fixed Assets   870,000
Less: Accumulated depreciation     140,277       729,723 Less: Accumulated depreciation   136,335     733,665
Total Assets  $ 1,197,575 Total Assets   1,113,254
Liabilities and Owners’ Equity Liabilities and Owners’ Equity
Accounts Payable  $       9,946 Accounts Payable       15,600
Taxes Payable 10,800 Taxes Payable       10,800
Interest Payable           1,500 Interest Payable           750
Long-Term Debt       150,000 Long-Term Debt     150,000
Common Stock       300,000 Common Stock     300,000
Retained Earnings       725,329 Retained Earnings     636,104
Total Liabilities and Owners’ Equity  $ 1,197,575 Total Liabilities and Owners’ Equity   1,113,254

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Question 

Panther Graduation Supplies Company makes diploma covers in one style but in Regular and Deluxe materials. The Regular covers are made of faux leather, and the Deluxe covers are genuine.

Comprehensive Budget Project

Comprehensive Budget Project

Panther Graduation Supplies Company is preparing its budget for December 2025 and has estimated sales based on experience.

The following is information for December 2025:

Input Prices

Direct Materials

Faux leather Genuine                                     $5.25/yard

leather Satin lining                                          $7.50/yard

Direct Manufacturing Labor                            $1.50/yard

$15/direct manufacturing labor-hour

Input Quantities per Unit of Output (per diploma cover)

         Regular               Deluxe

Direct materials

Faux leather                                                     1.3 yards                                  0

Genuine leather                                                0                                              1.5 yards

Satin lining                                                       1 yard                                      1 yard

Direct Manufacturing labor-hours (DLH)           2 hours                                     3 hours

Setup hours per batch: 1 hour 2 hours

Inventory Information (Direct Materials) 

Faux Leather                 Genuine Leather                  Satin

Beginning inventory Target

ending inventory

 600 yards

300 yards

 800 yards

400 yards

 500 yards

250 yards
Cost of beginning inventory $3,150 $6,000 $750

Panther Graduation Supplies Company accounts for Direct Materials using the FIFO cost flow assumption.

Sales and Inventory Information (Finished Goods)

Regular                        Deluxe

Expected sales in units (diploma covers) 2,000 3,000
Selling price $60 $100
Target ending inventory (units) 300 600
Beginning inventory (units) 250 650

Beginning inventory (dollars)                          $10,757                       $41,697

Panther Graduation Supplies Company uses the FIFO cost flow assumption for finished goods inventory.

Diploma covers are made in batches of 50 units. Panther incurs manufacturing overhead costs, marketing and general administrative, and shipping costs. Besides materials and labour, manufacturing costs include setup, processing, and inspection costs. Panther ships 40 diploma covers per shipment. Panther uses activity-based costing and has classified all overhead expenses for December as follows:

Cost Type Denominator Activity Rate
Manufacturing Setup Setup (hours) $10/design (hour)
Processing Direct manufacturing labour hours (DLH) $1.50/DLH
Inspection The number of diplomas covers $1.50/cover
Non-Manufacturing
Marketing and General Admin. Sales revenue 10%
Shipping Number of shipments $15/shipment

Required:

  1. Prepare each of the following for December 2025:
    1. Revenues budget
    2. Production budget in units
    3. Direct material usage budget and direct material purchases budget in both units and dollars (round to dollars)
    4. Direct manufacturing labour cost budget.
    5. Manufacturing overhead cost budgets for setup, processing, and inspection activities
    6. Budgeted unit cost of ending finished goods inventory and ending inventories budget
    7. Cost of goods sold budget
    8. Marketing and general administration and shipping costs budget
  1. Panther’s balance sheet for November 30, 2025, is as follows:

Panther Graduation Supplies Company Balance Sheet

November 30, 2025

Assets
Cash

Accounts Receivable

$ 9,435

 $324,000 $9,435
Less: Allowance for uncollectable $16,200 $307,800

Inventories:

Direct Materials $9,990
Finished Goods

Fixed Assets

  

$870,000

 $52,454
Less: Accumulated depreciation $136,335 $733,665
Total Assets $1,113,254
Liabilities and Owners’ Equity Accounts Payable

Taxes Payable

 $15,600
Interest Payable $10,800
Long-Term Debt $7,500
Common Stock $150,000
Retained Earnings $300,000
Total Liabilities and Owners’ Equity $636,104
$1,113,254

Use the balance sheet and the following information to prepare a cash budget for Panther for December 2025 (Round to dollars)

  • All sales are on account; 60% are collected in the month of the deal, 38% are collected the following month, and 2% are never collected and written off as bad
  • All purchases of materials are on account. Panther pays for 80% of assets in the month of purchase and 20% in the following
  • All other costs are born in the month incurred, including the declaration and payment of a

$15,000 cash dividend in December 2025.

  • Panther makes monthly interest payments of 0.5% (6% per year) on a $150,000 long-term loan.
  • Panther plans to pay the $10,800 of taxes (owed as of November 30) in December. The income tax expense for December is
  • 30% of processing, setup, and inspection costs and 10% of marketing and general administration and shipping costs are
  1. Prepare a budgeted income statement and a budgeted balance sheet for Panther as of December 31,