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Garfield and George Foreman are contemplating becoming business partners of
an out-door grill company appropriately named, “Outdoor Chef Grill.” Garfield has been a customer
of George Foreman’s grills for years. George accepted his proposal to be a business partner, as he
elieves that Garfield’s name will
ing in a new demographic of shoppers. Garfield needs to obtain
funding for his capital contribution. Potential investors have asked for budgets and forecasts for
the revenue and expenses of the company. George is having the finance department create a
special monthly forecast budget for Roger as well as an annual forecast and budget. You, being one
of George’s employees, is asked to prepare the monthly budget for January 2021.
Budget Requirements: 100 points
REQUIREMENT! Using the information below, please prepare
1. Sales Budget including a schedule of expected cash collection.
2. Production Budget
3. Direct Materials budget including a schedule of expected cash disbursements.
4. Direct Labor Budget
5. MOH Budget including cash disbursements for overhead
6. S&A budget including cash disbursements for S&A
7. Budgeted Income Statement.
a. When calculating COGS please illustrate how you computed the COGs per unit.
. Must calculate a COST Per Unit for each product line.
8. Cash Budget
REQUIREMENT! The budgets are to be completed in Excel. Please use the Excel File uploaded on Canvas.
• Each Budget will appear in an individual worksheet with each Tab labeled with appropriate Budget’s
Name.
FOR BUDGETS 1-8: IF ROUNDING IS NECESSARY, PLEASE ROUND TO TWO DECIMALS.
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EXTRA CREDIT OPPORTUNITY up to 40 POINTS!
OPTIONAL! Complete all calculations WITHIN Excel using formulas.
• 5 points earned for each budget that contains a minimum of 5 formulas.
o The exception is the S&A Budget. Only 4 formulas are required.
!!!!Remember!!!!
The case is to be completed in teams of individually or in teams of 2. You will have 2 weeks to complete the project. You
may ask Sheila, other instructors, or tutors for help or clarification but collaborating with other students outside of your
group is not permitted. Any evidence of collaboration will result in a zero for the assignment and possible withdraw from the
class. The project will be worth 13% of your final grade.
Garfield Case Project XXXXXXXXXXpoints
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Selected information concerning sales and production for January 2021 is summarized as follows:
a. The sales budget must be divided up by product (Backyard and Master).
Estimated sales for January by sales te
itory:
Georgia:
Backyard XXXXXXXXXXunits at $775 per unit
Master XXXXXXXXXXunits at $1,550 per unit
South Carolina:
Backyard XXXXXXXXXXunits at $880 per unit
Master XXXXXXXXXXunits at $1,666 per unit
Louisiana:
Backyard XXXXXXXXXXunits at $855 per unit
Master XXXXXXXXXXunits at $1,777 per unit
Alabama:
Backyard XXXXXXXXXXunits @ $888 per unit
Master XXXXXXXXXX @ $1600 per unit
Estimated sales for Fe
uary for all te
itories:
Backyard Grills XXXXXXXXXXgrills
Master Grills 1,150 grills
Outdoor Chef Grill has a beginning accounts receivable balance of $1,550,000 in the month of January and
expects to collect 40% of that balance. In addition, their accounting department has estimated that 70%
of sales for the Master Grill will be paid in cash and 80% of the Backyard grill will be paid in cash.
. Inventory of Grills
Beginning Inventory of Grills:
Backyard XXXXXXXXXXunits
Master XXXXXXXXXXunits
Outdoor Chef Grill has established a new ending inventory policy to take effect the month of January.
From January and going forward, the ending inventory should be:
Ending Inventory:
Backyard XXXXXXXXXX% of Fe
uary’s sales
Master XXXXXXXXXX% of Fe
uary’s sales.
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c. Estimated direct material inventories at January 1:
Direct materials (available for the Master and Backyard Grill):
Grates XXXXXXXXXXunits
Stainless steel 1,800 lbs.
Burner subassemblies XXXXXXXXXXunits
Shelves XXXXXXXXXXunits
Desired inventories at January 30:
Direct materials (available for the Master and Backyard Grill):
Grates XXXXXXXXXXunits
Stainless steel 1,200 lbs.
Burner subassemblies XXXXXXXXXXunits
Shelves XXXXXXXXXXunits
d. Direct materials used in production:
Direct Materials required to produce one Backyard Chef Grill:
Grates XXXXXXXXXXunits per unit of product
Stainless steel XXXXXXXXXXlbs. per unit of product
Burner subassemblies XXXXXXXXXXunits per unit of product
Shelves XXXXXXXXXXunits per unit of product
Direct Materials required to produce one Master Chef grill:
Grates XXXXXXXXXXunits per unit of product
Stainless steel XXXXXXXXXXlbs. per unit of product
Burner subassemblies XXXXXXXXXXunits per unit of product
Shelves XXXXXXXXXXunits per unit of product
Anticipated purchase price for direct materials:
Grates $14 per unit
Stainless steel $7 per lb.
Burner subassemblies $115 per unit
Shelves $8 per unit
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Because of their excellent relationships with the vendors, they pay the following percentages when
placing their order:
Grates: 10%
Stainless Steel: 25%
Burner subassemblies 5%
Shelves 2%, if pay the entire balance within 35 days.
e. Direct labor requirements for one grill:
Backyard Chef:
Stamping Department XXXXXXXXXXhr. at $17 per hr.
Forming Department XXXXXXXXXXhr. at $14 per hr.
Assembly Department XXXXXXXXXXhrs. at $12 per hr.
Master Chef:
Stamping Department XXXXXXXXXXhr. at $17 per hr.
Forming Department XXXXXXXXXXhrs. at $14 per hr.
Assembly Department XXXXXXXXXXhrs. at $12 per hr.
f. Outdoor Chef Grill Company budgeted the following fixed costs for anticipated production in January. The
list below includes fixed MOH expenses and Fixed S&A expenses. Please categorize the fixed cost as MOH
or S&A (Period) prior to completing any calculations.
Advertising Expenses $24,000
Sales monthly salary (not commission) $7,500
Factory Insurance $2,000
Production Supervisor Salary $9,900
Executive officer salaries $25,000
Indirect Labor Salaries for Quality Control $2,800
Factory Depreciation $4,000
Corporate Office Building Depreciation $3,100
Hint. The sum of the FMOH costs above will appear in MOH Budget. The sum of the Fixed S&A (Period)
costs will appear in the S&A Budget.
Hint. For non-cash expenses, please divided the fixed non-cash expenses between Master and Backyard.
g. Total estimated VMOH expenses are $41,000 for the month of January. VMOH expenses are allocated to
the products based on a single PDOR rate using the allocation base, TOTAL DL HOURS.
Requirement: Please calculate a PDOR for the company using Total DL hours. Hint, you will only have one
PDOR for the company. There will NOT be two separate PDORs for the Backyard and Master product.
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Variable S&A expenses are allocated at rate of $3 per grill.
h. Other Information:
a. Income Tax Rate is 35%
. Minimum Cash Balance $500,000
c. Beginning Cash Balance $750,000