Exercise 6 (Selling and Administrative Budget) The budgeted unit sales of Helene Company for the upcoming fiscal year are provided below: 3rd quarter 11,000 4th 1s quarter 12,000 2nd quarter 14,000 quarter Budgeted unit sales 10,000 The company's variable selling and administrative expenses per unit are P2.75. Fixed selling and administrative expenses include advertising expenses of P12,000 per quarter, executive salaries of P40,000 per quarter, and depreciation of P16,000 per quarter. In addition, the company will make insurance payments of P6,000 in the 2nd Quarter and P6,000 in the 4th Quarter. Finally, property taxes of P6,000 will be paid in the 3rd Quarter.

Exercise 6 (Selling and Administrative Budget) The budgeted unit sales of Helene Company for the upcoming fiscal year are provided below: 3rd quarter 11,000 4th 1s quarter 12,000 2nd quarter 14,000 quarter Budgeted unit sales 10,000 The company's variable selling and administrative expenses per unit are P2.75. Fixed selling and administrative expenses include advertising expenses of P12,000 per quarter, executive salaries of P40,000 per quarter, and depreciation of P16,000 per quarter. In addition, the company will make insurance payments of P6,000 in the 2nd Quarter and P6,000 in the 4th Quarter. Finally, property taxes of P6,000 will be paid in the 3rd Quarter.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 10CE: Coral Seas Jewelry Company makes and sells costume jewelry. For the coming year, Coral Seas expects...

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Operating Budget, Comprehensive Analysis Allison Manufacturing produces a subassembly used in the production of jet aircraft engines. The assembly is sold to engine manufacturers and aircraft maintenance facilities. Projected sales in units for the coming 5 months follow: The following data pertain to production policies and manufacturing specifications followed by Allison Manufacturing: a. Finished goods inventory on January 1 is 32,000 units, each costing 166.06. The desired ending inventory for each month is 80% of the next months sales. b. The data on materials used are as follows: Inventory policy dictates that sufficient materials be on hand at the end of the month to produce 50% of the next months production needs. This is exactly the amount of material on hand on December 31 of the prior year. c. The direct labor used per unit of output is 3 hours. The average direct labor cost per hour is 14.25. d. Overhead each month is estimated using a flexible budget formula. (Note: Activity is measured in direct labor hours.) e. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Note: Activity is measured in units sold.) f. The unit selling price of the subassembly is 205. g. All sales and purchases are for cash. The cash balance on January 1 equals 400,000. The firm requires a minimum ending balance of 50,000. If the firm develops a cash shortage by the end of the month, sufficient cash is borrowed to cover the shortage. Any cash borrowed is repaid at the end of the quarter, as is the interest due (cash borrowed at the end of the quarter is repaid at the end of the following quarter). The interest rate is 12% per annum. No money is owed at the beginning of January. Required: 1. Prepare a monthly operating budget for the first quarter with the following schedules. (Note: Assume that there is no change in work-in-process inventories.) a. Sales budget b. Production budget c. Direct materials purchases budget d. Direct labor budget e. Overhead budget f. Selling and administrative expenses budget g. Ending finished goods inventory budget h. Cost of goods sold budget i. Budgeted income statement j. Cash budget 2. CONCEPTUAL CONNECTION Form a group with two or three other students. Locate a manufacturing plant in your community that has headquarters elsewhere. Interview the controller for the plant regarding the master budgeting process. Ask when the process starts each year, what schedules and budgets are prepared at the plant level, how the controller forecasts the amounts, and how those schedules and budgets fit in with the overall corporate budget. Is the budgetary process participative? Also, find out how budgets are used for performance analysis. Write a summary of the interview.
Coral Seas Jewelry Company makes and sells costume jewelry. For the coming year, Coral Seas expects sales of 15.9 million and cost of goods sold of 8.75 million. Advertising is a key part of Coral Seas business strategy, and total marketing expense for the year is budgeted at 2.8 million. Total administrative expenses are expected to be 675,000. Coral Seas has no interest expense. Income taxes are paid at the rate of 40 percent of operating income. Required: 1. Construct a budgeted income statement for Coral Seas Jewelry Company for the coming year. 2. What if Coral Seas had interest payments of 500,000 during the year? What effect would that have on operating income? On income before taxes? On net income?
Performance Report Based on Budgeted and Actual Levels of Production Balboa Company budgeted production of 4,500 units with the following amounts: At the end of the year, Balboa had the following actual costs for production of 4,700 units: Required: 1. Calculate the budgeted amounts for each cost category listed above for the 4,500 budgeted units. 2. Prepare a performance report using a budget based on expected (budgeted) production of 4,500 units. 3. Prepare a performance report using a budget based on the actual level of production of 4,700 units.
Budgeted income statement and balance sheet As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Mesa Publishing Co.: Factory output and sales for 20Y9 are expected to total 3,800 units of product, which are to be sold at 120 per unit. The quantities and costs of the inventories at December 31, 20Y9, are expected to remain unchanged from the balances at the beginning of the year. Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows: Balances of accounts receivable, prepaid expenses, and accounts payable at the end of the year are not expected to differ significantly from the beginning balances. Federal income tax of 35,000 on 20Y9 taxable income will be paid during 20Y9. Regular quarterly cash dividends of 0.20 per share are expected to be declared and paid in March, June, September, and December on 20,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for 22,000 cash in May. Instructions Prepare a budgeted income statement for 20Y9. Prepare a budgeted balance sheet as of December 31, 20Y9, with supporting calculations.
Performance Report Based on Budgeted and Actual Levels of Production Bowling Company budgeted the following amounts: At the end of the year, Bowling had the following actual costs for production of 3,800 units: Required: 1. Calculate the budgeted amounts for each cost category listed above for the 4,000 budgeted units. 2. Prepare a performance report using a budget based on expected production of 4,000 units. 3. Prepare a performance report using a budget based on the actual level of production of 3,800 units.
Digital Solutions Inc. uses flexible budgets that are based on the following data: Prepare a flexible selling and administrative expenses budget for October for sales volumes of 500,000, 750,000, and 1,000,000.
Use the following information for Exercises 9-50 and 9-51: Assume that Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. The S12L7 sells for 475, and the S12L5 sells for 300. Projected sales (number of speakers) for the coming 5 quarters are as follows: The vice president of sales believes that the projected sales are realistic and can be achieved by the company. Exercise 9-50 Sales Budget Refer to the information regarding Stillwater Designs above. Required: 1. Prepare a sales budget for each quarter of 20X1 and for the year in total. Show sales by product and in total for each time period. 2. CONCEPTUAL CONNECTION How will Stillwater Designs use this sales budget?
Exercise 5 (Manufacturing Overhead Budget) The direct labor budget of Kiko Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours. 1s' quarter 2nd quarter 3rd quarter 4th quarter Budgeted direct labor- hours 5,000 4,800 5,200 5,400 The company's variable manufacturing overhead rate is P1.75 per direct labor- hour and the company's fixed manufacturing overhead is P35,000 per quarter. The only noncash item included in the fixed manufacturing overhead is depreciation, which is P15,000 per quarter. Required: 1. Construct the company's manufacturing overhead budget for the upcoming fiscal year. 2. Compute the company's manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. Round off to the nearest whole centavos.
Exercise 6 (Selling and Administrative Budget) The budgeted unit sales of Helene Company for the upcoming fiscal year are provided below: 1stquarter 2ndquarter 3rd quarter 4th quarter Budgeted unit sales..... 12,000 14,000 11,000 10,000 The company's variable selling and administrative expenses per unit are P2.75. Fixed selling and administrative expenses include advertising expenses of P12,000 per quarter, executive salaries of P40,000 per quarter, and depreciation of P16,000 per quarter. In addition, the company will make insurance payments of P6,000 in the 2nd Quarter and P6,000 in the 4thQuarter. Finally, property taxes of P6,000 will be paid in the 3rd Quarter. Required: Prepare the company's selling and administrative expense budget for the upcoming fiscal year.
Exercise 6 (Selling and Administrative Budget) The budgeted unit sales of Helene Company for the upcoming fiscal year are provided below: 1stquarter 2ndquarter 3rd quarter 4th quarter Budgeted unitsales.. 12,000 14,000 11,000 10,000 The company's variable selling and administrative expenses per unit are P2.75. Fixed selling and administrative expenses include advertising expenses of P12,000 per quarter, executive salaries of P40,000 per quarter, and depreciation of P16,000 per quarter. In addition, the company will make insurance payments of P6,000 in the 2nd Quarter and P6,000 in the 4thQuarter. Finally, property taxes of P6,000 will be paid in the 3rd Quarter. Required: Prepare the company's selling and administrative expense budget for the upcoming fiscal year.
Exercise 5 (Manufacturing Overhead Budget) The direct labor budget of Kiko Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours. 1st quarter 2nd quarter 3rd quarter 4th quarter Budgeted direct labor hour.. . 5,000 4,800 5,200 5,400 The company's variable manufacturing overhead rate is P1.75 per direct labor- hour and the company's fixed manufacturing overhead is P35,000 per quarter. The only noncash item included in the fixed manufacturing overhead is depreciation, which is P15,000 per quarter. Required: 1. Construct the company's manufacturing overhead budget forthe upcoming fiscalYear. 2. Compute the company's manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscalyear. Round off to the nearest wholecentavos.
Exercise 5 (Manufacturing Overhead Budget) The direct labor budget of Kiko Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours. 1st quarter 2nd quarter 3rd quarter 4th quarter Budgeted direct labor hour........... 5,000 4,800 5,200 5,400 The company's variable manufacturing overhead rate is P1.75 per direct labor hour and the company's fixed manufacturing overhead is P35,000 per quarter. The only noncash item included in the fixed manufacturing overhead is depreciation, which is P15,000 per quarter. Required: Compute the company’s manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. Round off to the nearest whole centavos.