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
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:
- Prepare each of the following for December 2025:
- Revenues budget
- Production budget in units
- Direct material usage budget and direct material purchases budget in both units and dollars (round to dollars)
- Direct manufacturing labour cost budget.
- Manufacturing overhead cost budgets for setup, processing, and inspection activities
- Budgeted unit cost of ending finished goods inventory and ending inventories budget
- Cost of goods sold budget
- Marketing and general administration and shipping costs budget
- 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
- Prepare a budgeted income statement and a budgeted balance sheet for Panther as of December 31,