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 COMPANY Production Budget For the Six Months Ending June 30, 2010 Quarter 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, 2010 Quarter 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 7,000 Ending raw materials inventory: 50% of the next quarter's production requirements Ending finished goods inventory: 30% of the next quarter's expected sales units Third-quarter production: 7,250 units The 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 COMPANY Production Budget For the Six Months Ending June 30, 2011 Quarter 1 2

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

For the the Two Quarters Ending June 30, 2010 1st Quarter Beginning cash balance Add: Receipts $

2nd Quarter $

Total receipts Total available cash Less: Disbursements

Total disbursements Excess (deficiency) of available cash over cash disbursements Financing

Ending cash balance

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P20-2A

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take-question

Larussa Inc. is preparing its annual budgets for the year ending December 31, 2011. assistants furnish the data shown below. Product Product JB 50 JB 60 Sales budget: Anticipated volume in units 400,000 200,000 Unit selling price $20 $25 Production budget: Desired ending finished goods units 25,000 15,000 Beginning finished goods units 30,000 10,000 Direct materials budget: Direct materials per unit (pounds) 2 3 Desired ending direct materials pounds 30,000 15,000 Beginning direct materials pounds 40,000 10,000 Cost per pound $3 $4 Direct labor budget:

Direct labor time per unit Direct labor rate per hour Budgeted income statement: Total unit cost

0.4 $12 $12

0.6 $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) (b) (c) Sales Production Direct materials (d) (e) Direct labor Income statement (Note: Income taxes are not allocated to the products.) LARUSSA INC. Sales Budget For the Year Ending December 31, 2011 JB 50 JB 60 Total

Expected unit sales Unit selling price Total sales $ $ $ $

$ LARUSSA INC. Production Budget For the Year Ending December 31, 2011 JB 50

JB 60

Total

Add:

Total required units Less:

Required production units LARUSSA INC. Direct Materials Budget For 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, 2011 JB 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, 2011 JB 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 COMPANY Static Direct Labor Budget Report For the Month Ended January 31, 2010 Budget Actual Difference Direct Labor $ $ MUSSATTO COMPANY Flexible Direct Labor Budget Report For the Month Ended January 31, 2010 Budget Actual $ $

Difference $

Direct Labor

BE21-11 Wasson, Inc. reports the following financial information. Average operating assets Controllable margin Minimum rate of return Compute the return on investment and the residual income. $3,000,000 $600,000 9%

Return on investment Residual income $

E21-7 Pletcher Company's manufacturing overhead budget for the Variable Costs Indirect materials $12,000 Indirect labor 10,000 Utilities 8,000 Maintenance 6,000 first quarter of 2010 contained the following data. Fixed Costs Supervisory salaries $36,000 Depreciation 7,000 Property taxes and insurance 8,000 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 COMPANY Manufacturing Overhead Flexible Budget Report For the Quarter Ended March 31, 2010 Difference Favorable F Budget Actual Unfavorable U Variable costs Indirect materials Indirect labor Utilities Maintenance Total variable costs Fixed 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 Report For the Quarter Ended March 31, 2010 Difference Favorable 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 Average operating assets Minimum rate of return Return on investment Residual income $ % 24% $90,800 200,400 $1,001,000 13% % $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 Overhead Actual Budget

Individual costs-Cutting Department-Seattle Indirect labor Indirect materials Maintenance Utilities Supervision Total costs Shaping Department-Seattle Finishing Department-Seattle Denver division San Diego division

$ 73,000 47,700 20,500 20,100 22,000 $183,300 $158,000 210,000 676,000 722,000

$ 70,000 46,000 18,000 17,000 20,000 $171,000 $148,000 206,000 673,000 715,000

Additional 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 Marketing Finance Actual $133,600 109,000 Budget $130,000 105,000

Complete the following responsibility reports. 1. 2. 3. 4. Manufacturing Manufacturing Manufacturing Manufacturing overhead-Cutting Department manager-Seattle division. overhead-Seattle division manager. overhead-vice president of production. overhead and expenses-president. No. 1 Month: January Fav/Unfav $

To Cutting Department Manager - Seattle Division Budget Controllable Costs: Indirect labor Indirect materials Maintenance Utilities Supervision Total $ $ $ $

Actual

$ No. 2 Month: January Fav/Unfav $

To Division Production Manager - Seattle Budget Controllable Costs: Seattle Division Departments: Cutting Shaping Finishing Total $ $ $ $

Actual

$ No. 3 Month: January Fav/Unfav

To Vice President - Production Budget Controllable Costs:

Actual

V-P Production Divisions: Seattle Denver San Diego Total To President Controllable Costs: President Vice-Presidents: Production Marketing Finance Total

$ No. 4 Month: January Fav/Unfav $

Budget $ $

Actual

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

(a) (b) (c)

$ pounds $

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

Account/Description 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 $ $ $