Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 6, Problem 6.26AE
LO 5
(Learning Objective 5: Use the COGS model to make management decisions) McGuire Industries prepares budgets to help manage the company. McGuire is budgeting for the fiscal year ended January 31, 2018. During the preceding year ended January 31, 2017, sales totaled $9,200 million and cost of goods sold was $6,300 million. At January 31, 2017, inventory was $1,700 million. During the upcoming 2018 year, suppose McGuire expects cost of goods sold to increase by 12%. The company budgets next year’s ending inventory at $2,000 million.
Requirement
1. One of the most important decisions a manager makes is how much inventory to buy. How much inventory should McGuire purchase during the upcoming year to reach its budget?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
McGuire prepares budgets to help manage the company. McGuire is budgeting forthe fiscal year ended January 31, 2016. During the preceding year ended January 31, 2015, salestotaled $9,500 million and cost of goods sold was $6,300 million. At January 31, 2015, inventorywas $1,800 million. During the upcoming 2016 year, suppose McGuire expects cost of goodssold to increase by 10%. The company budgets next year’s ending inventory at $2,100 million.Requirement1. One of the most important decisions a manager makes is how much inventory to buy. Howmuch inventory should McGuire purchase during the upcoming year to reach its budget?
Mungus Coffee has recently recruited you to assist them with the financial aspect of their business. One component of your job is prepare budgets. The Income Statement for last year is presented below and you are required to create a Proforma Income Statement for July 31st 2021 using the fixed variable method. The company expects Sales to increase by 5%.
Mungus Coffee
Income Statement
For the period July 31st 2020
Sales 126,000
Less Cost of Goods Sold 54,000 (variable)
Gross Profit 72,000
Less Operating Expenses:
Marketing Expense 28,400 (6000 variable and 22,400 fixed)
General and Admin. Expense 8,600 (3000 variable and 5,600 fixed)
Total Operting Expense 37,000
Operating Income 35,000
Less Interest Expense 1,800 (fixed)…
Please help me with the functions for this ! Thank you!
Jay Corporation has decided to prepare contribution income statements for internal planning.
Budgeted information for Quarter 1 of 2024:
Sales in units
17,000
Sales price per unit
$48.00
After analyzing expenses, the company has determined the following cost patterns.
Cost of Goods Sold (per unit)
$29.00
Sales Commissions (per dollar of sales)
9.50%
Administrative Salaries (per quarter)
$45,000
Rent Expense (per quarter)
$27,000
Depreciation Expense (per quarter)
$36,000
Shipping has been determined to be a mixed cost with the following total costs and units:
2022
Total Cost
Units
Quarter 1
$67,000
12,500
Quarter2
$94,000
21,000
Quarter 3
$89,800
13,800
Quarter 4
$92,600
20,000
2023
Quarter 1
$72,500
13,700
Quarter2
$80,000
14,000
Quarter 3
$84,000
14,300
Quarter…
Chapter 6 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. 6 - Ravenna Candles recently purchased candleholders...Ch. 6 - Which inventory system maintains a running record...Ch. 6 - How is cost of goods sold classified in the...Ch. 6 - Snyders total cost of goods available for sale...Ch. 6 - Snyders cost of goods sold using the average-cost...Ch. 6 - Snyders ending inventory using the FIFO method...Ch. 6 - Snyders cost of goods sold using the LIFO method...Ch. 6 - Which U.S. GAAP principle or rule would apply if...Ch. 6 - Corrigan Corporation had beginning inventory of...Ch. 6 - Corrigans gross profit for the period is a.79,000....
Ch. 6 - What is Corrigans gross profit percentage (rounded...Ch. 6 - Prob. 12QCCh. 6 - A companys beginning inventory is 150,000, its net...Ch. 6 - An understatement of ending inventory by 2 million...Ch. 6 - Prob. 6.1ECCh. 6 - LO 1 (Learning Objective 1: Show how to account...Ch. 6 - LO 1 (Learning Objective 1: Show how to account...Ch. 6 - LO 1 (Learning Objective 1: Show how to account...Ch. 6 - (Learning Objective 2: Apply the average-cost,...Ch. 6 - (Learning Objective 2: Compare income tax effects...Ch. 6 - LO 2 (Learning Objective 2: Apply the average-cost...Ch. 6 - (Learning Objective 2: Apply the FIFO method)...Ch. 6 - (Learning Objective 2: Apply the LIFO method)...Ch. 6 - (Learning Objective 2: Compare income, tax, and...Ch. 6 - LO 3 (Learning Objective 3: Apply the...Ch. 6 - (Learning Objective 4: Compute ratio data to...Ch. 6 - (Learning Objective 5: Estimate ending inventory...Ch. 6 - (Learning Objective 6: Analyze the effect of an...Ch. 6 - Prob. 6.14SCh. 6 - LO 1,2 (Learning Objectives 1, 2: Show how to...Ch. 6 - LO 1,2 (Learning Objectives 1, 2: Show how to...Ch. 6 - LO 2 (Learning Objective 2: Compare ending...Ch. 6 - (Learning Objective 2: Compare the tax advantage...Ch. 6 - Prob. 6.19AECh. 6 - LO 2 (Learning Objective 2: Compare ending...Ch. 6 - LO 2 (Learning Objective 2: Compare gross...Ch. 6 - Prob. 6.22AECh. 6 - LO 5 (Learning Objective 5: Compute cost of goods...Ch. 6 - Prob. 6.24AECh. 6 - LO 4 (Learning Objective 4: Compute and evaluate...Ch. 6 - LO 5 (Learning Objective 5: Use the COGS model to...Ch. 6 - LO 5 (Learning Objective 5: Use the COGS model to...Ch. 6 - LO 6 (Learning Objective 6: Analyze the effect of...Ch. 6 - LO 1, 2 (Learning Objectives 1, 2: Show how to...Ch. 6 - LO 1, 2 (Learning Objectives 1, 2: Show how to...Ch. 6 - LO1, 2 (Learning Objectives 1, 2: Show how to...Ch. 6 - Prob. 6.32BECh. 6 - LO 2 (Learning Objective 2: Apply the average,...Ch. 6 - Prob. 6.34BECh. 6 - Prob. 6.35BECh. 6 - Prob. 6.36BECh. 6 - Prob. 6.37BECh. 6 - Prob. 6.38BECh. 6 - Prob. 6.39BECh. 6 - Prob. 6.40BECh. 6 - Prob. 6.41BECh. 6 - Prob. 6.42BECh. 6 - Prob. 6.43QCh. 6 - Prob. 6.44QCh. 6 - Prob. 6.45QCh. 6 - The word market as used in the lower of cost or...Ch. 6 - Prob. 6.47QCh. 6 - Prob. 6.48QCh. 6 - Prob. 6.49QCh. 6 - In a period of rising prices, a.cost of goods sold...Ch. 6 - Prob. 6.51QCh. 6 - The following data come from the inventory records...Ch. 6 - Prob. 6.53QCh. 6 - Prob. 6.54QCh. 6 - Prob. 6.55QCh. 6 - Prob. 6.56QCh. 6 - Prob. 6.57QCh. 6 - Prob. 6.58QCh. 6 - Prob. 6.59QCh. 6 - LO 1, 2 (Learning Objectives 1, 2: Show how to...Ch. 6 - Prob. 6.61APCh. 6 - LO 2 (Learning Objective 2: Compare inventory by...Ch. 6 - LO 2 (Learning Objective 2: Compare various...Ch. 6 - Prob. 6.64APCh. 6 - (Learning Objective 4: Compute and evaluate gross...Ch. 6 - LO 4, 5 (Learning Objectives 4, 5: Compute gross...Ch. 6 - Prob. 6.67APCh. 6 - Prob. 6.68APCh. 6 - Prob. 6.69BPCh. 6 - LO 2 (Learning Objective 2: Apply various...Ch. 6 - Prob. 6.71BPCh. 6 - LO 2 (Learning Objective 2: Compare various...Ch. 6 - LO 3 (Learning Objective 3: Explain GAAP and apply...Ch. 6 - Prob. 6.74BPCh. 6 - Prob. 6.75BPCh. 6 - LO 5 (Learning Objective 5: Use the COGS model to...Ch. 6 - Prob. 6.77BPCh. 6 - Prob. 6.78CEPCh. 6 - Prob. 6.79CEPCh. 6 - Prob. 6.80CEPCh. 6 - Prob. 6.81CEPCh. 6 - Prob. 6.82SCCh. 6 - Prob. 6.83DCCh. 6 - Prob. 6.85EICCh. 6 - Prob. 1FFCh. 6 - Prob. 1FA
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- The Budget Committee is now ready with the budget estimates for the preparation of the Operating Budget of YAKANG-YAKA Company for the year 2022. The following data were preseted below: Finished Product Model B 8,000 P 140 Model M 5,000 P 170 Budget sales-units Selling price per unit Inventory, Beginning in units Expected inventory end in units 850 600 700 500 Inventory, Beginning in units Expected inventory end in units Material MI 5,000 5,500 Material M2 4,000 5,000 Material M3 3,000 3,600 Model B Model M 4 units 3 units 3 units 15 hours Material Content of each unit: Material M1 Material M2 Material M3 Direct labor hours per unit 6 units 4 units 2 units 10 hours Overhead is applied based on 100% of direct labor hours. Budgeted unit costs: Material M1 Material M2 per unit Material M3 2.50 per unit Direct labor P2.00 Р.00 per uniti 3.00 per hour Other budgeted data based on production are shown below: Factory Overhead: Indirect labor Factory supplies Repairs and maintenance Other…arrow_forwarda) Why do successful companies tend to use the bottom-up approach to establish a master budget? b) Green Tea’s data show the following information for the financial year, beginning July 2020: July Aug. Sept. Oct. Nov. Estimated sales (units) 25,000 25,000 27,000 27,500 28,000 Sales price per unit $31 $31 $31 $31 $31 Direct labour per unit $1.75 $1.75 $1.50 $1.50 $1.50 Labour rate per hour $21 $21 $24 $24 $24 New machinery will be added in September. This machine will reduce the labour required per unit and increase the labour rate for those employees qualified to operate the machinery. Finished goods inventory is required to be 20% of the next month’s requirements. Direct material requires 2.5 kg per unit at a cost of $5 per kg. The ending inventory required for direct materials is 20% of the next month’s needs. In July, the beginning inventory is 3,750 units of finished goods and 13,125 kg of…arrow_forwardLily Inc. is preparing its annual budgets for the year ending December 31, 2022. Accounting assistants furnish the data shown below. Sales budget: Anticipated volume in units Unit selling price Production budget: Desired ending finished goods units Beginning finished goods units Direct materials budget: Direct materials per unit (pounds) Desired ending direct materials pounds Beginning direct materials pounds Cost per pound Direct labor budget: Direct labor time per unit Direct labor rate per hour Budgeted income statement: Total unit cost Product JB 50 336,000 $25 25,200 21,000 2 25,200 33,600 $3 0.4 $12 $13 Product JB 60 168,000 $30 12,600 8,400 3 8,400 12,600 $4 0.6 $12 $20 An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of $470,400 for product JB 50 and $302,400 for product JB 60, and administrative expenses of $453,600 for product JB 50 and $285,600 for product JB…arrow_forward
- Imagine the marketing team has an annual budget for 2022 of $500k. Using the table below, create a tracker in excel that communicates to the marketing team, as of the end of Q2 2022, how their actual spend compares to that which has been budgeted. Make up numbers for Q2 2022, and also make up a few examples of commentary that might explain or give context to the spend that is left and/or has been exceeded. Item Annual budget Revisionist History $ 50,000 The Happiness Lab $ 50,000 Deep Cover $ 50,000 Cautionary Tales $ 40,000 Bad Women $ 25,000 A Slight Change of Plans $ 40,000 The Bomber Mafia $ 65,000 Web development $ 100,000 Marketing tech $ 30,000 Social campaign management $ 50,000 total $ 500,000arrow_forwardCapstone, Inc. is preparing its budget for the coming year, 2020. The first step is to plan for the first quarter of that coming year. Capstone, Inc. gathered the following information from the managers. Sales Unit sales for November 2019 112500 Unit sales for December 2019 104,000 Expected unit sales for January 2020 116,000 Expected unit sales for February 2020 115,500 Expected unit sales for March 2020 117,000 Expected unit sales for April 2020 135,000 Expected unit sales for May 2020 145,000 Unit selling price $13.00 Capstone, Inc. likes to keep 10% of the next month’s unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale, and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31, 2019,…arrow_forwardNO. 3. Budgeting No.1 ANGEL Trading Company presents the actual sales for the first three months of year 2019 on its two products as follows: Total Sales 880,000 941,000 1,006,750 1,214,520 1,353,461 The business expects that the trends for the past three months will continue in June and July 2019. Product AB Product XY January February March April May 340,000 374, 000 411,400 529,200 599,250 540,000 576,000 593,350 685,320 754,211 Required: Determine the projected sales for June and July 2019 for the two products. Round the amounts to thousand pesos.arrow_forward
- Cali Industries prepares budgets to help manage the company. Cali is budgeting for the fiscal year ended January 31, 2021. During the preceding year ended January 31, 2020, sales totaled $9,400 million and cost of goods sold was $6,100 million. At January 31, 2020, inventory was S1,600 million. During the upcoming year, suppose Cali expects cost of goods sold to increase by 10%. The company budgets next year's ending inventory at $1,900 million. Read the reguirement. ..... How much inventory (in millions) should the company purchase during the upcoming year to reach its budget? Requirement 1. One of the most important decisions a manager makes is how much inventory to buy. How much inventory should Cali purchase during the upcoming year to reach its budget? Print Donearrow_forward1. Explain why a company needs these budgets used in #2 of your homework and how will they help the manager prepare for the next year? For example: ordering inventory, increasing or decreasing material costs so their sales will increase and cost decrease (labor, raw materials, or costs that pertain to operations)? Make sure to explain what each budget tells the manager.arrow_forwardIntegrated Excel: Preparing a Contribution Format Income Statement Using the High-Low Method Jay Corporation has provided data from a two-year period to aid in planning. The Controller has asked you to prepare a contribution format income statement. Budgeted information for Quarter 1 of 2024: Sales in units Sales price per unit After analyzing expenses, the company has determined the following cost patterns. Cost of Goods Sold (per unit) Sales Commissions (per dollar of sales). Administrative Salaries (per quarter) Rent Expense (per quarter) Depreciation Expense (per quarter) Shipping has been determined to be a mixed cost with the following total costs and units: 2022 Quarter 1 Quarter 2 Quarter 3 Quarter 4 2023 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Cost $ 67,000 $ 94,000 $ 89,800 $ 92,600 $ 72,500 $80,000 $ 84,000 $ 100,000 17,000 $ 48.00 Units 12,500 21,000 13,800 20,000 13,700 14,000 14,300 22,500 $29.00 9.50€ $ 45,000 $ 27,000 $ 36,000 Required: Use the data to answer the…arrow_forward
- Dear Bartleby, can you please assist with solving the following item enclosed, thank you. Following are the budgeted income statements for the second quarter of 2019 for SeaTech Inc.: April May June Sales $ 112,000 $ 136,000 $ 152,000 Cost of goods sold* 76,800 91,200 100,800 Gross profit $ 35,200 $ 44,800 $ 51,200 Operating expenses† 17,600 20,000 21,600 Operating income $ 17,600 $ 24,800 $ 29,600 *Includes all product costs (i.e., direct materials, direct labor, and manufacturing overhead).†Includes all period costs (i.e., selling, general, and administrative expenses).The company expects about 40% of sales to be cash transactions. Of sales on account, 65% are expected to be collected in the first month after the sale is made, and 35% are expected to be collected in the second month after sale. Depreciation, insurance, and property taxes represent $9,600 of the estimated monthly cost of goods…arrow_forward1. AL Jamat Inc. is preparing its annual budgets for the year ending December 31, 2020.Accounting assistants furnish the data shown below. Detail Product AProduct C Sales Budget Anticipated Volume in units Unit Selling price Production Budget: Desired ending finished goods units Beginning finished goods units Direct materials budget: Direct materials per unit (pounds) Desired ending direct materials pounds Beginning direct materials pounds Cost per pound Direct labor budget: Direct labor time per unit Direct labor rate per hour Budgeted income statement: Total unit cost 40500 20500 55 45 2500 1500 3000 1000 20 30 3000 1500 4000 1000 3 0.4 0.6 122 155 122 222 has prepared An accounting assistant manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of $645,000 for product A and $345,000 for product C, and administrative expenses of $545,000 for product A and $345,000 for product C. Income taxes are expected to be the detailed…arrow_forwardDear Bartleby, can you please help with "calculations for cost of goods sold/operating expenses occured in the following problem, for March, April, May and June, thank you. Following are the budgeted income statements for the second quarter of 2019 for SeaTech Inc.: April May June Sales $ 112,000 $ 136,000 $ 152,000 Cost of goods sold* 76,800 91,200 100,800 Gross profit $ 35,200 $ 44,800 $ 51,200 Operating expenses† 17,600 20,000 21,600 Operating income $ 17,600 $ 24,800 $ 29,600 *Includes all product costs (i.e., direct materials, direct labor, and manufacturing overhead).†Includes all period costs (i.e., selling, general, and administrative expenses).The company expects about 40% of sales to be cash transactions. Of sales on account, 65% are expected to be collected in the first month after the sale is made, and 35% are expected to be collected in the second month after sale. Depreciation,…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Responsibility Accounting| Responsibility Centers and Segments| US CMA Part 1| US CMA course; Master Budget and Responsibility Accounting-Intro to Managerial Accounting- Su. 2013-Prof. Gershberg; Author: Mera Skill; Rutgers Accounting Web;https://www.youtube.com/watch?v=SYQ4u1BP24g;License: Standard YouTube License, CC-BY