BE20-3

Goody Company estimates that unit sales will be 10,000 in quarter 1; 12,000 in quarter 2; 14,000 in quarter 3; and 18,000 in quarter 4. Management desires to have an ending finished goods inventory equal to 20% of the next quarter's expected unit sales. Complete the production budget by quarters for the first 6 months of 2010.

GOODY COMPANYProduction Budget

For the Six Months Ending June 30, 2010Quarter Six

1 2 Months

Add:

Total required units

Less:

Required production units

ABE20-6

For Justus Inc. variable manufacturing overhead costs are expected to be $20,990 in the first quarter of 2010 with $4,200 increments in each of the remaining three quarters. Fixed overhead costs are estimated to be $35,580 in each quarter. Complete the manufacturing overhead budget by quarters and in total for the year.

JUSTUS INC.Manufacturing Overhead Budget

For the Year Ending December 31, 2010Quarter

1 2 3 4 Year

Variable costs$ $ $ $ $

Fixed costs

Total manuf. overhead

$ $ $ $ $

E20-6

On January 1, 2011 the Batista Company budget committee has reached agreement on the following data for the 6 months ending June 30, 2011. Sales units: First quarter 5,000; second quarter 6,000; third quarter 7,000Ending raw materials inventory: 50% of the next quarter's production requirementsEnding finished goods inventory: 30% of the next quarter's expected sales unitsThird-quarter production: 7,250 unitsThe ending raw materials and finished goods inventories at December 31, 2010, follow the same percentage relationships to production and sales that occur in 2011. Three pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $4 per pound.

Complete the production budget by quarters for the 6-month period ended June 30, 2011. BATISTA COMPANYProduction Budget

For the Six Months Ending June 30, 2011Quarter Six

1 2 Months

Add:

Total required units

Less:

Required production units

E20-16

Donnegal Dental Clinic is a medium-sized dental service specializing in family dental care. The clinic is currently preparing the master budget for the first 2 quarters of 2010. All that remains in this process is the cash budget. The following information has been collected from other portions of the master budget and elsewhere.

Beginning cash balance $ 30,000Required minimum cash balance 25,000Payment of income taxes (2nd quarter) 4,000Professional salaries:1st quarter 140,0002nd quarter 140,000Interest from investments (2nd quarter) 5,000Overhead costs:1st quarter 75,0002nd quarter 100,000Selling and administrative costs, including $3,000 depreciation: 1st quarter 50,0002nd quarter 70,000Purchase of equipment (2nd quarter) 50,000Sale of equipment (1st quarter) 15,000Collections from clients: 1st quarter 230,0002nd quarter 380,000

Interest payments (2nd quarter) 300

Complet the cash budget for each of the first two quarters of 2010. (List multiple entries from largest to smallest amounts, e.g. 10, 5, 1. for January. If answer is zero please enter 0, do not leave any fields blank.)

DONNEGAL DENTAL CLINICCash Budget

For the the Two Quarters Ending June 30, 20101 st Quarter 2 nd Quarter

Beginning cash balance

$ $Add: Receipts

Total receipts

Total available cash

Less: Disbursements

Total disbursements

Excess (deficiency) of available cash over cash disbursementsFinancing

Ending cash balance

$ $

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P20-2A

Larussa Inc. is preparing its annual budgets for the year ending December 31, 2011. assistants furnish the data shown below.

Product ProductJB 50 JB 60

Sales budget:Anticipated volume in units 400,000 200,000Unit selling price $20 $25Production budget:Desired ending finished goods units 25,000 15,000Beginning finished goods units 30,000 10,000Direct materials budget: Direct materials per unit (pounds) 2 3Desired ending direct materials pounds 30,000 15,000Beginning direct materials pounds 40,000 10,000Cost per pound $3 $4Direct labor budget:Direct labor time per unit 0.4 0.6Direct labor rate per hour $12 $12Budgeted income statement:Total unit cost $12 $21

An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of $660,000 for product JB 50 and $360,000 for product JB 60, and administrative expenses of $540,000 for product JB 50 and $340,000 for product JB 60. Income taxes are expected to be 30%.

Complete the following budgets for the year. (List operating expenses from largest to smallest amount, e.g. 10, 5, 2.)

(a) Sales (d) Direct labor(b) Production (e) Income statement (Note: Income taxes are not allocated to the

products.) (c) Direct materialsLARUSSA INC.Sales Budget

For the Year Ending December 31, 2011JB 50 JB 60 Total

Expected unit sales

Unit selling price

× $ × $

Total sales

$ $ $

LARUSSA INC.Production Budget

For the Year Ending December 31, 2011JB 50 JB 60 Total

Add:

Total required units

Less:

Required production units

LARUSSA INC.

Direct Materials BudgetFor the Year Ending December 31, 2011

JB 50 JB 60 Total

× ×

Total pounds needed for production

Add:

Total materials required

Less:

Direct materials purchases

× $ × $

Total cost of direct materials purchases

$ $ $

LARUSSA INC.Direct Labor Budget

For the Year Ending December 31, 2011JB 50 JB 60 Total

Units to be produced

Direct labor time (hours) per unit

× ×

Total required direct labor hours

Direct labor cost per hour

× $ × $

Total direct labor cost

$ $ $

LARUSSA INC.Budgeted Income Statement

For the Year Ending December 31, 2011JB 50 JB 60 Total

$ $ $

Gross profit

Operating expenses

Total operating expenses

Income before income taxes

$ $

Net income

$

BE21-3

In Mussatto Company, direct labor is $20 per hour. The company expects to operate at 10,000 direct labor hours each month. In January 2010, direct labor totaling $203,000 is incurred in working 10,400 hours. Complete the (a) static budget report and (b) flexible budget report.

MUSSATTO COMPANYStatic Direct Labor Budget Report

For the Month Ended January 31, 2010Budget Actual Difference

Direct Labor$ $ $

MUSSATTO COMPANYFlexible Direct Labor Budget Report

For the Month Ended January 31, 2010Budget Actual Difference

Direct Labor$ $ $

BE21-11

Wasson, Inc. reports the following financial information. Average operating assets $3,000,000Controllable margin $600,000Minimum rate of return 9%

Compute the return on investment and the residual income.

Return on investment%

Residual income$

E21-7

Pletcher Company's manufacturing overhead budget for the first quarter of 2010 contained the following data. Variable Costs Fixed Costs

Indirect materials $12,000 Supervisory salaries $36,000Indirect labor 10,000 Depreciation 7,000Utilities 8,000 Property taxes and insurance 8,000Maintenance 6,000 Maintenance 5,000

Actual variable costs were: indirect materials $13,800, indirect labor $9,600, utilities $8,700, and maintenance $4,900. Actual fixed costs equaled budgeted costs except for property taxes and insurance, which were $8,200. The actual activity level equaled the budgeted level.

All costs are considered controllable by the production department manager except for depreciation, and property taxes and insurance.

Complete the flexible manufacturing overhead budget report for the first quarter. (If answer is zero, please enter 0, do not leave any fields blank.)

PLETCHER COMPANYManufacturing Overhead Flexible Budget Report

For the Quarter Ended March 31, 2010Difference

Favorable FBudget Actual Unfavorable U

Variable costs

Indirect materials $ $ $

Indirect labor

Utilities

Maintenance

Total variable costsFixed costs

Supervisory salaries

Depreciation

Prop. taxes & ins.

Maintenance

Total fixed costs

Total costs $ $ $

Complete the responsibility report for the first quarter. (If answer is zero, please enter 0, do not leave any

fields blank.) PLETCHER COMPANY

Manufacturing Overhead Responsibility ReportFor the Quarter Ended March 31, 2010

DifferenceFavorable F

Controllable Costs Budget Actual Unfavorable U

Indirect materials $ $ $

Indirect labor

Utilities

Maintenance

Supervisory salaries

Total costs $ $ $

AE21-19

Presented below is selected financial information for two divisions of Capital Brewery. You are to supply the missing information. (Round your answers to 0 decimal places, i.e. 250,000, except round rate of return and return on investment to 2 decimal places, i.e. 15.25.)

Lager Lite Lager

Contribution margin $500,000 $300,300

Controllable margin 200,400

Average operating assets$

$1,001,000

Minimum rate of return%

13%

Return on investment 24%%

Residual income $90,800 $199,700

P21-6A

Nieto Company uses a responsibility reporting system. It has divisions in Denver, Seattle, and San Diego. Each division has three production departments: Cutting, Shaping, and Finishing. The responsibility for each department rests with a manager who reports to the division production manager. Each division manager reports to the vice president of production. There are also vice presidents for marketing and finance. All vice presidents report to the president. In January 2010, controllable actual and budget manufacturing overhead cost data for the departments and divisions were as shown below.

Manufacturing OverheadActual Budget

Individual costs-Cutting Department-SeattleIndirect labor $ 73,000 $ 70,000

Indirect materials 47,700 46,000Maintenance 20,500 18,000Utilities 20,100 17,000Supervision 22,000 20,000

$183,300 $171,000

Total costsShaping Department-Seattle $158,000 $148,000Finishing Department-Seattle 210,000 206,000Denver division 676,000 673,000San Diego division 722,000 715,000Additional overhead costs were incurred as follows: Seattle division production manager-actual costs $52,500, budget $51,000; vice president of production-actual costs $65,000, budget $64,000; president-actual costs $76,400, budget $74,200. These expenses are not allocated.The vice presidents who report to the president, other than the vice president of production, had the following expenses.

Vice President Actual BudgetMarketing $133,600 $130,000Finance 109,000 105,000

Complete the following responsibility reports.

1. Manufacturing overhead-Cutting Department manager-Seattle division. 2. Manufacturing overhead-Seattle division manager. 3. Manufacturing overhead-vice president of production. 4. Manufacturing overhead and expenses-president.

No. 1To Cutting Department Manager - Seattle Division Month: JanuaryControllable Costs: Budget Actual Fav/Unfav

Indirect labor $ $ $

Indirect materials

Maintenance

Utilities

Supervision

Total $ $ $

No. 2To Division Production Manager - Seattle Month: JanuaryControllable Costs: Budget Actual Fav/Unfav

Seattle Division $ $ $Departments:

Cutting

Shaping

Finishing

Total $ $ $

No. 3To Vice President - Production Month: JanuaryControllable Costs: Budget Actual Fav/Unfav

V-P Production $ $ $Divisions:

Seattle

Denver

San Diego

Total $ $ $

No. 4To President Month: JanuaryControllable Costs: Budget Actual Fav/Unfav

President $ $ $Vice-Presidents:

Production

Marketing

Finance

Total $ $ $

Rank the comparative performances of:

1. Department managers in the Seattle division.

1.

2

3.

2. Division managers.

1.

2

3.

3. Vice presidents.

1.

2

3.

BE22-2

Asaki Company accumulates the following data concerning raw materials in making one gallon of finished product: (1) Price-net purchase price $2.20, freight-in $0.20 and receiving and handling $0.10. (2) Quantity-required materials 2.6 pounds, allowance for waste and spoilage 0.4 pounds. Compute the following. (Round (a) & (c) to 2 decimal places, e.g. 2.25.)

a. Standard direct materials price per gallon. b. Standard direct materials quantity per gallon. c. Total standard materials cost per gallon.

(a)$

(b)pounds

(c)$

BE22-9

Journalize the following transactions for Rogler Manufacturing. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

a. Incurred direct labor costs of $24,000 for 3,000 hours. The standard labor cost was $25,200. b. Assigned 3,000 direct labor hours costing $24,000 to production. Standard hours were 3,100.

Account/Description Debit Credit

a.

b.

E22-5

The standard cost of Product B manufactured by Mateo Company includes three units of direct materials at $5.00 per unit. During June, 28,000 units of direct materials are purchased at a cost of $4.70 per unit, and 28,000 units of direct materials are used to produce 9,000 units of Product B.

Compute the total materials variance and the price and quantity variances.

Total materials variance$

Materials price variance$

Materials quantity variance$

Repeat the question above, assuming the purchase price is $5.20 and the quantity purchased and used is 26,200 units.

Total materials variance$

Materials price variance$

Materials quantity variance$