1. Silver Company makes a product with peak sales in May of each year. Its sales budget for the second quarter is given below:
| April | May | June | Total | |
|---|---|---|---|---|
| Budgeted sales (all on account) | $ 410,000 | $ 610,000 | $ 210,000 | $ 1,230,000 |
The company estimates 25% of a month’s sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 15% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $340,000, and March sales totaled $370,000.
Required:
What is the accounts receivable balance on June 30th?
Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.
2.Down Under Products’ sales budget for the next four months is as follows:
| Unit Sales | |
|---|---|
| April | 86,000 |
| May | 90,000 |
| June | 126,000 |
| July | 98,000 |
The company wants its ending inventory levels to equal 10% of the following month’s unit sales. The inventory at the end of March was 8,600 units.
Required:
Prepare a production budget, by month and in total, for the second quarter.
3.Three grams of musk oil are required for each bottle of Mink Caress, a popular perfume made by a company in western Siberia. The cost of the musk oil is $1.90 per gram. Budgeted quarterly production of Mink Caress is given below for Year 2 and the first quarter of Year 3:
| Year 2 | Year 3 | ||||
|---|---|---|---|---|---|
| First | Second | Third | Fourth | First | |
| Budgeted production, in bottles | 68,000 | 98,000 | 158,000 | 108,000 | 78,000 |
The inventory of musk oil at the end of a quarter must equal 20% of the following quarter’s production needs. A total of 40,800 grams of musk oil will be on hand to start the first quarter of Year 2.
Required:
Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2.
4.The production manager of Rordan Corporation prepared the following quarterly production forecast for next year:
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
|---|---|---|---|---|
| Units to be produced | 12,000 | 9,000 | 7,200 | 11,300 |
Each unit requires 0.65 direct labor-hour, and direct laborers are paid $20.00 per hour.
Required:
1. Prepare a direct labor budget for next year.
Note: Round “Direct labor time per unit (hours)” answers to 2 decimal places.
5.Yuvwell Corporation’s direct labor budget for next year contained the following information:
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
|---|---|---|---|---|
| Budgeted direct labor-hours | 11,200 | 9,800 | 10,100 | 10,900 |
The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is $6.00 per direct labor-hour and its total fixed manufacturing overhead is $80,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation of $20,000 per quarter.
Required:
Prepare the company’s manufacturing overhead budget for next year.
Compute the company’s predetermined overhead rate (including both variable and fixed manufacturing overhead) for next year.
6.Weller Company’s budgeted unit sales for next year are provided below:
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
|---|---|---|---|---|
| Budgeted unit sales | 18,000 | 22,000 | 17,000 | 16,000 |
The company’s variable selling and administrative expense per unit is $1.70. Fixed selling and administrative expenses include advertising expenses of $11,000 per quarter, executive salaries of $38,000 per quarter, and depreciation of $17,000 per quarter. In addition, the company will make insurance payments of $4,000 in the first quarter and $4,000 in the third quarter. Finally, property taxes of $8,200 will be paid in the second quarter.
Required:
Prepare the company’s selling and administrative expense budget for next year.
Note: Round “Per Unit” answers to 2 decimal places.
7.Garden Depot is a retailer that provided the following budgeted cash flows for next year:
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
|---|---|---|---|---|
| Total cash receipts | $ 290,000 | $ 440,000 | $ 320,000 | $ 340,000 |
| Total cash disbursements | $ 337,000 | $ 307,000 | $ 297,000 | $ 317,000 |
The company’s beginning cash balance for next year will be $42,000. The company requires a minimum cash balance of $10,000 and may borrow money at the beginning of any quarter and may repay any part of its loans at the end of any quarter. Interest payments, based on a quarterly interest rate of 3%, are due on any principal at the time it is repaid. For simplicity, assume interest is not compounded.
Required:
Prepare the company’s cash budget for next year.
Note: Repayments, interest, and cash deficiencies should be indicated by a minus sign.
8.Gig Harbor Boating is the wholesale distributor of a recreational sailboat. Management provided the following data for budgeting purposes:
| Budgeted unit sales | 860 |
|---|---|
| Selling price per unit | $ 2,150 |
| Cost per unit | $ 1,625 |
| Variable selling and administrative expense (per unit) | $ 95 |
| Fixed selling and administrative expense (per year) | $ 335,000 |
| Interest expense for the year | $ 31,000 |
Required:
Prepare a budgeted income statement for the year.
9.Mecca Copy, a photocopying center located on University Avenue, provided the following data to prepare a budgeted balance sheet for next year:
| Ending Balances | |
|---|---|
| Cash | ?question mark |
| Accounts receivable | $ 9,300 |
| Supplies inventory | $ 3,000 |
| Equipment | $ 40,000 |
| Accumulated depreciation | $ 16,200 |
| Accounts payable | $ 3,000 |
| Common stock | $ 5,000 |
| Retained earnings | ?question mark |
The beginning balance of retained earnings was $29,000, budgeted net income is $19,000, and budgeted dividends are $5,600.
Required:
Prepare the company’s budgeted balance sheet.
Note: Amounts to be deducted should be indicated by a minus sign.
10.Puget Sound Divers provides diving services, such as underwater ship repairs, to its clients. The company’s planning budget for May appears below:
| Puget Sound Divers Planning Budget For the Month Ended May 31 | |
| Budgeted diving-hours (q) | 350 |
|---|---|
| Revenue ($450.00q) | $ 157,500 |
| Expenses: | |
| Wages and salaries ($11,400 + $124.00q) | 54,800 |
| Supplies ($4.00q) | 1,400 |
| Equipment rental ($2,500 + $22.00q) | 10,200 |
| Insurance ($4,000) | 4,000 |
| Miscellaneous ($540 + $1.42q) | 1,037 |
| Total expense | 71,437 |
| Net operating income | $ 86,063 |
During May, the company’s actual activity was 340 diving-hours.
Required:
Prepare a flexible budget for May.
Note: Round your answers to the nearest whole dollar.
11.Quilcene Oysteria farms and sells oysters in the Pacific Northwest. The company harvested and sold 7,100 pounds of oysters in August. The company’s flexible budget for August appears below:
| Quilcene Oysteria | |
| Flexible Budget | |
| For the Month Ended August 31 | |
| Actual pounds (q) | 7,100 |
|---|---|
| Revenue ($4.20q) | $ 29,820 |
| Expenses: | |
| Packing supplies ($0.35q) | 2,485 |
| Oyster bed maintenance ($3,400) | 3,400 |
| Wages and salaries ($2,200 + $0.45q) | 5,395 |
| Shipping ($0.80q) | 5,680 |
| Utilities ($1,210) | 1,210 |
| Other ($410 + $0.01q) | 481 |
| Total expense | 18,651 |
| Net operating income | $ 11,169 |
The actual results for August appear below:
| Quilcene Oysteria | |
| Income Statement | |
| For the Month Ended August 31 | |
| Actual pounds | 7,100 |
|---|---|
| Revenue | $ 26,700 |
| Expenses: | |
| Packing supplies | 2,655 |
| Oyster bed maintenance | 3,260 |
| Wages and salaries | 5,805 |
| Shipping | 5,410 |
| Utilities | 1,020 |
| Other | 1,101 |
| Total expense | 19,251 |
| Net operating income | $ 7,449 |
Required:
Calculate the company’s revenue and spending variances for August.
Note: Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values.
12.Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management identified two cost drivers for budgeting purposes—the number of cruises and the number of passengers. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 83 passengers can be accommodated on the tour boat. Data concerning the company’s cost formulas appear below:
| Fixed Cost per Month | Cost per Cruise | Cost per Passenger | |
|---|---|---|---|
| Vessel operating costs | $ 6,600 | $ 474.00 | $ 3.20 |
| Advertising | $ 2,800 | ||
| Administrative costs | $ 5,500 | $ 32.00 | $ 1.50 |
| Insurance | $ 3,000 |
For example, vessel operating costs should be $6,600 per month plus $474.00 per cruise plus $3.20 per passenger. The company’s sales should average $28.00 per passenger. In July, the company provided 57 cruises for a total of 3,100 passengers.
Required:
Prepare the company’s flexible budget for July.
13.Bandar Industries manufactures sporting equipment. One of the company’s products is a football helmet that requires special plastic. During the quarter ending June 30, the company manufactured 3,100 helmets, using 1,736 kilograms of plastic. The plastic cost the company $13,194.
According to the standard cost card, each helmet should require 0.51 kilograms of plastic, at a cost of $8.00 per kilogram.
Required:
- What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,100 helmets?
- What is the standard materials cost allowed (SQ × SP) to make 3,100 helmets?
- What is the materials spending variance?
- What are the materials price variance and the materials quantity variance?
Note: For requirements 3 and 4, indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.
14.Erie Company manufactures a mobile fitness device called the Jogging Mate. The company’s labor standards for one Jogging Mate are as follows:
| Standard Hours | Standard Rate per Hour | Standard Cost |
|---|---|---|
| 24 minutes | $5.80 | $2.32 |
During August, 8,540 hours of direct labor time were needed to make 19,700 units of the Jogging Mate. The direct labor cost totaled $48,678 for the month.
Required:
- What is the standard labor-hours allowed (SH) to makes 19,700 Jogging Mates?
- What is the standard labor cost allowed (SH × SR) to make 19,700 Jogging Mates?
- What is the labor spending variance?
- What are the labor rate variance and the labor efficiency variance?
- The budgeted variable manufacturing overhead rate is $4.70 per direct labor-hour. During August, the company incurred $44,408 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month.
Note: For requirements 3 through 5, indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.
