P14.24.
(continued)
Note: In the total column, the beginning and ending inventory figures represent the
number of units on hand at October 1, 2016 and December 31, 2016, respectively.
Thus, the “goods available for sale” line does not add across.
d.
October
November
December
Total
Beginning inventory of
raw materials …………………
19,200
24,600
23,400
19,200
Purchases of raw materials ……
Raw materials available for use..
88,600
92,100
238,100
Desired ending inventory of
raw materials (40% of next
Quantity of raw materials to be
224,000
(b) Next month’s “units to be produced” (see answer to part c) is multiplied by five
pounds to determine raw material requirements, which is then multiplied by 30%.
January
Beginning inventory of finished goods (carried over from December)…
3,600
Units to be produced ……………………………………………………
9,400
Goods available for sale…………………………………………………
13,000
Desired ending inventory of finished goods (40% of February’s sales)…
Quantity of goods sold ………………………………………….………
9,000
(d) “Units to be produced” each month (see answer to part c) * 5 pounds per unit.
e.
Cash payments for:
October
November
December
Total
September purchases…………
$ 75,960e
$75,960
October purchases……………
194,320
$ 83,280
277,600
November purchases…………
226,240
$96,960
323,200
December purchases…………
192,360
192,360
Total cash payments…………
P14.24.
(continued)
(e) Purchases from August and all prior months would have been fully paid by the end
of September. Thus, the $75,960 of expected accounts payable at September 30,
2016, represents the 30% of September purchases that will be paid for in October.
to determine cash payments.
C14.25.
a.
10,000 impressions per hour: This level of activity represents an ideal standard,
sometimes referred to as an “engineering” standard, and assumes that operating
conditions will be ideal and that material and labor inputs will be at maximum levels
of efficiency at all times.
Con: while the standard is used realistically throughout CPGI’s printing
operation, it does not consider the unique differences in the nature of work and
quality results that Pierre must provide his customers. Running jobs at this
faster speed could result in more job waste, lower overall job quality, and
dissatisfied customers.
Con: none of Pierre’s press operators are currently producing at this level of
activity and may view this standard as challenging but still unattainable.
Eventual changes in worker efficiency and/or changes in the nature of the
C14.25.
(continued)
Chapter 14 Cost Planning
a.
7,400 impressions per hour: This level of activity would represent a past experience
standard for Pierre’s most productive press operator.
Pro: this standard will be viewed by all press operators as being attainable and
reflects current performance levels.
Con: this standard includes all the inefficiencies that have crept into the
operations over the years. Press operators will not be challenged and
performance is not likely to improve over time.
b.
Qualitative factors that should be considered when setting standards for the same
press model at other sites across Canada would include, but not be limited to, the age
and general operating condition of each press, the skill and availability of an
c.
achieving the goals that they perceive as challenging but attainable.
A standard of 8,000 impressions per hour seems to provide the necessary balance
C14.26.
comprehensive as the Budget of the United States Government. Our hope is that
these links will remain available for use by your students and perhaps even additional
years will be provided, but we certainly do not control availability as time marches
on. This solution provides a response based on FY 2002 but it can easily be adapted
if additional fiscal years become available.
a.
The Citizen’s Guide to the Federal Budget is designed to give the reader a walking
tour of the budget. The guide outlines for you how the Government raises revenues
and spends money, how the President and Congress enact the budget, how the
country has been able to move from deficit to surplus to deficit, and what the
President hopes to accomplish with his budget.
C14.26.
(continued)
b.
The Federal budget is:
a plan for how the Government spends your money.
a plan for how the Government pays for its activities.
a plan for Government borrowing or repayment of borrowing.
c.
The Federal budget, of course, is not the only budget that affects the economy or the
American people. The budgets of state and local governments have an impact as well.
While Federal Government spending was a little less than 18 percent of the Gross
d.
The money that the Federal Government uses to pay its bills—its revenues or receipts-
-comes mostly from taxes. Revenues come from these sources:
Individual income taxes.
Social insurance payroll taxes including Social Security taxes, Medicare
taxes, unemployment insurance taxes, and Federal employee retirement
payments.
Corporate income taxes.
e.
The Federal Government will spend over $2.0 trillion and have a surplus of $231
billion in 2002, which is divided into nine large categories (as shown in Chart 2-6).
Social Security accounts for 23 percent of all Federal spending.
Medicare will comprise 12 percent of all Federal spending.
Medicaid accounts for seven percent of the budget.
The means-tested entitlements category will account for an estimated six
percent of the budget.
The remaining mandatory spending comprises seven percent of the budget.
C14.26.
(continued)
f.
budget.
Through the budget process, the President and Congress decide how much to spend
and tax in any one fiscal year. More specifically, they decide how much to spend on
each activity, ensure that the Government spends no more and spends it only for that
activity, and report on that spending at the end of each budget cycle. The President’s
g.
minus our surpluses, over the years.
Once the President and Congress approve spending, the Government monitors the
budget through:
agency program managers and budget officials, including the Inspectors
General, or IGs;
OMB;
This oversight is designed to:
ensure that agencies comply with legal limits on spending, and that they use
budget authority only for the purposes intended;
see that programs are operating consistently with legal requirements and
existing policy; and, finally,
ensure that programs are well managed and achieving the intended results.
i.
Budget deficits force the Government to borrow money in the private capital
markets. That borrowing competes with (1) borrowing by businesses that want to
build factories and machines that make workers more productive and raise incomes,
and (2) borrowing by families who hope to buy new homes, cars, and other goods.
The competition for funds tends to produce higher interest rates. Deficits increase
C14.26.
(continued)
j.
The government’s budget process outlines a plan for revenues and expenditures just
as the operating budget in Chapter 14 describes for a business entity. They both start
with an analysis of revenue sources and ultimately prescribe how those revenues will
C14.27.
things to look for as they review each product.
Note to instructor: The purpose of the case is to make students aware of the many
software solutions that are available to address an organization’s planning and control
information needs. You might choose to define a specific set of questions or tasks
Instructor’s Manual / Solutions Manual
TAKE-HOME QUIZ: CHAPTER 14 NAME______________________
1. Actual sales for the past two months, and the sales forecast for the next four months, in
dollars and units, are presented below:
Actual________
Forecast___________________
Units
……
a. The firm’s policy is to have finished goods inventory on hand at the end of each month
equal to 40% of the next month’s sales. It is currently estimated that there will be 2,640
units on hand at the end of April. Calculate the number of units to be produced in each of
the next three months (May, June, and July).
b. Each unit of finished product requires 4 gallons of raw material A. The firm’s policy is to
have raw material inventory on hand at the end of each month equal to 80% of the next
month’s estimated usage. It is currently estimated that 15,200 gallons of raw material A
will be on hand at the end of April. Calculate the number of gallons of raw material A to
be purchased in each of the next two months (May and June).
c. Based on an analysis of accounts receivable made near the end of April, it is estimated
that collections of accounts receivable at April 30 will amount to $160,000 in May and
$40,000 in June. Based on past experience, it is estimated that 15% of a month’s sales are
collected in the month of sale, 60% are collected in the month following the sale, and
24% are collected in the second month following the sale. Calculate the estimated cash
receipts for May, June, and July.
Chapter 14 Cost Planning
TAKE-HOME QUIZ KEY: CHAPTER 14
1. a.
May
June
July
August
Beginning inventory ……………
2,640
2,200
2,280
Production ………………………
5,660
5,580
6,020
Goods available for sale…………
8,300
7,780
8,300
Less: Ending inventory …………
Quantity sold ……………………
6,100
5,500
5,700
May
June
July
Beginning inventory ……………
Add: Purchases …………………
Raw materials available for use …
Less: Ending inventory …………
Quantity used in production ……
May
June
July
April 30 accounts receivable ……
$160,000
Current month’s sales ……………
$ 23,085
Prior month’s sales ………………
2nd prior month’s sales …………
Total collections …………………
$184,705
$161,095
$151,713