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Solutions Manual, Chapter 8 11
The Foundational 15 (continued)
9. The estimated raw materials inventory balance at the end of July is
computed as follows:
10. The estimated direct labor cost for July is computed as follows:
July
Required production in units ………… 10,400
11. The estimated unit product cost is computed as follows:
Quantity Cost Total
Direct materials ……………… 5 pounds $2 per pound $10.00
12. The estimated finished goods inventory balance at the end of July is
computed as follows:
Endin
g
finished
g
oods inventory in units (a)……. 2,400
g
g
g
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12 Managerial Accounting, 16th Edition
The Foundational 15 (continued)
13. The estimated cost of goods sold for July is computed as follows:
Unit sales (a) …………………………………………… 10,000
The estimated gross margin for July is computed as follows:
T
otal sales (a) ………………………………………….. $700,000
–
14. The estimated selling and administrative expense for July is computed
as follows:
Jul
y
Bud
g
eted unit sales …………………………… 10,000
V
ariable sellin
g
and administrative …………
T
T
15. The estimated net operating income for July is computed as follows:
Gross mar
g
in (a) ………………………………………. $100,000
–
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Solutions Manual, Chapter 8 13
Exercise 8-1 (20 minutes)
1.
April May June Total
February sales:
$230,000 × 10% ..…… $ 23,000 $ 23,000
March sales: $260,000
× 70%, 10% …………. 182,000 $ 26,000 208,000
A
pril sales: $300,000 ×
20%, 70%, 10% …….. 60,000 210,000 $ 30,000 300,000
May sales: $500,000 ×
2. Accounts receivable at June 30:
From May sales: $500,000 × 10%…………………… $ 50,000
T
T
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14 Managerial Accounting, 16th Edition
Exercise 8-2 (10 minutes)
April May June Quarter
Bud
g
eted unit sales …………….. 50,000 75,000 90,000 215,000
A
dd desired units of endin
g
T
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Solutions Manual, Chapter 8 15
Exercise 8-3 (15 minutes)
Quarter—Year 2
First Second Third Fourth Year
Required production in units of finished
goods …………………………………………….. 60,000 90,000 150,000 100,000 400,000
Units of raw materials needed per unit of
finished goods ………………………………….. × 3 × 3 × 3 × 3 × 3
Units of raw materials needed to meet
production ………………………………………. 180,000 270,000 450,000 300,000 1,200,000
A
dd desired units of endin
g
raw materials
T
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16 Managerial Accounting, 16th Edition
Exercise 8-4 (20 minutes)
1. Assuming that the direct labor workforce is adjusted each quarter, the direct labor budget is:
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter Year
Required production in units ………………………. 8,000 6,500 7,000 7,500 29,000
Direct labor time per unit (hours)………………… × 0.35 × 0.35 ×0.35 ×0.35 ×0.35
2. Assuming that the direct labor workforce is not adjusted each quarter and that overtime wages are
paid, the direct labor budget is:
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter Year
Required production in units……………………… 8,000 6,500 7,000 7,500
Direct labor time per unit (hours)……………….. × 0.35 × 0.35 ×0.35 ×0.35
T
otal direct labor-hours needed …………………. 2,800 2,275 2,450 2,625
T
T
T
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Solutions Manual, Chapter 8 17
Exercise 8-5 (15 minutes)
1.
Y
uvwell Corporation
Manufacturing Overhead Budget
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter Year
Bud
g
eted direct labor-hours …………………………. 8,000 8,200 8,500 7,800 32,500
V
ariable manufacturin
g
overhead rate …………….. × $3.25 × $3.25 × $3.25 × $3.25 × $3.25
2.
T
otal bud
g
eted manufacturin
g
overhead for the year (a) .. $297,625
V
T
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18 Managerial Accounting, 16th Edition
Exercise 8-6 (15 minutes)
Weller Company
Selling and Administrative Expense Budget
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter Year
Bud
g
eted unit sales …………………………………… 15,000 16,000 14,000 13,000 58,000
V
ariable sellin
g
and administrative expense per
unit ………………………………………………….…. × $2.50 × $2.50 × $2.50 × $2.50 × $2.50
V
ariable sellin
g
and administrative expense …….. $ 37,500 $ 40,000 $ 35,000 $ 32,500 $145,000
Fixed sellin
g
and administrative expenses:
A
T
g
T
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Solutions Manual, Chapter 8 19
Exercise 8-7 (15 minutes)
Garden Depot
Cash Budget
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter Year
Be
g
innin
g
cash balance $ 20,000 $ 10,000 $ 35,800 $ 25,800 $ 20,000
T
otal cash receipts ……. 180,000 330,000 210,000 230,000 950,000
T
otal cash available …… 200,000 340,000 245,800 255,800 970,000
Less total cash
T
* Since the deficiency of cash available over disbursements is $60,000,
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20 Managerial Accounting, 16th Edition
Exercise 8-8 (10 minutes)
Gi
g
Harbor Boatin
g
Budgeted Income Statement
Sales (460 units × $1,950 per unit) …………………. $897,000
Cost of
g
oods sold (460 units × $1,575 per unit) … 724,500
Gross mar
g
in ……………………………………………… 172,500