CHAPTER 23
SOLUTIONS TO EXERCISES—SET B
EXERCISE 23–1B
JARGON ELECTRONICS INC.
Sales Budget
For the Six Months Ending June 30, 2017
Quarter 1
Quarter 2
Six Months
Product
Units
Selling
Price
Total
Sales
Units
Selling
Price
Total
Sales
Units
Selling
Price
Total
Sales
XQ–103
20,000
$10
$200,000
25,000
$10
$250,000
45,000
$10
$450,000
23-1
VARGA AND MENENDEZ, CPAs
Sales Revenue Budget
For the Year Ending December 31, 2017
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Billable
Billable
Total
Billable
Billable
Total
Billable
Billable
Total
Billable
Billable
Total
Dept.
Hours
Rate
Rev.
Hours
Rate
Rev.
Hours
Rate
Rev.
Hours
Rate
Rev.
Auditing
2,200
$60
$132,000
1,600
$60
96,000
2,000
$60
$120,000
2,400
$60
$144,000
Tax
3,000
70
210,000
2,400
70
168,000
2,000
70
140,000
2,500
70
175,000
Year
Billable
Billable
Total
Dept.
Hours
Rate
Rev.
Auditing
8,200a
$ 60
$ 492,000
Tax
9,900b
693,000
$1,665,000
Consulting
1,500
80
1,500
80
1,500
80
1,500
80
$462,000
$380,000
$439,000
EXERCISE 23-3B
VILLA COMPANY
Production Budget
For the Year Ending December 31, 2016
Product HD-240
Quarter
1
2
3
4
Year
Expected unit sales
Add: Desired ending
6,000
7,000
9,000
10,000
(2)
EXERCISE 23-4B
ROSE INDUSTRIES
Direct Materials Purchases Budget
For the Quarter Ending March 31, 2017
January
February
March
Units to be produced
Direct materials per unit
Total pounds needed for production
Add: Desired ending direct materials
10,000
X 3
30,000
8,000
X 3
24,000
5,000
X 3
15,000
EXERCISE 23-5B
(a) MOLLY COMPANY
Production Budget
For the Six Months Ending June 30, 2017
Quarter
Six
Months
1
2
Expected unit sales
Add: Desired ending finished goods
units
Total required units
5,000
2,100
7,100
(1)
6,000
2,450
8,450
(2)
EXERCISE 23-5B (Continued)
(b) MOLLY COMPANY
Direct Materials Budget
For the Six Months Ending June 30, 2017
Quarter
Six
Months
1
2
Units to be produced
Direct materials per unit
Total pounds needed for production
Add: Desired ending direct
5,350
X 2
10,700
6,350
X 2
12,700
EXERCISE 23-6B
Finished goods:
Ending inventory ……………………………………………………….. 2,190
Plus: Sales ………………………………………………………………… 2,475
Total required ………………………………………………………………… 4,665
Less: beginning inventory …………………………..…………….. 2,230
Production required ……………………………………………………….. 2,435
EXERCISE 23-7B
MASON, INC.
Direct Labor Budget
For the Year Ending December 31, 2017
Quarter
1
2
3
4
Year
Units to be produced
Direct labor time
(hours) per unit
Total required direct
20,000
X 2.3
25,000
X 2.3
35,000
X 2.3
30,000
X 2.3
110,000
.2
EXERCISE 23-8B
WANG COMPANY
Production Budget
For the Quarter Ending March 31, 2017
Jan Feb Mar Total
Sales in units 12,000 14,000 10,000 36,000
WANG COMPANY
Direct Labor Budget
For the Quarter Ending March 31, 2017
Jan Feb Mar Total
Production in units 11,000 10,000 11,000
Direct labor hours per unit X 3.00 X 3.00 X 2.50
EXERCISE 23-9B
CHAD COMPANY
Manufacturing Overhead Budget
For the Year Ending December 31, 2017
Quarter
1
2
3
4
Year
Variable costs
Indirect materials ($.70/hour)
Indirect labor ($1.20/hour)
Maintenance ($.50/hour)
Total variable
$ 10,500
18,000
7,500
36,000
$ 12,600
21,600
9,000
43,200
$ 15,750
27,000
11,250
54,000
$ 18,900
32,400
13,500
64,800
$ 57,750
99,000
41,250
198,000
EXERCISE 23-10B
MORGAN COMPANY
Selling and Administrative Expense Budget
For the Six Months Ending June 30, 2017
Quarter
Six
Months
1
2
136,000
Budgeted sales in units
33,000
35,000
EXERCISE 23–10B (Continued)
MORGAN COMPANY
Selling and Administrative Expense Budget (Continued)
For the Six Months Ending June 30, 2017
Quarter
Six
Months
1
2
Fixed expenses
Sales salaries
Office salaries
15,000
6,000
15,000
6,000
30,000
12,000
EXERCISE 23-11B
(a) CHRIS COMPANY
Production Budget
For the Two Months Ending February 28, 2017
______________________________________________________________
January
February
Expected unit sales ………………………………………..
15,000
17,000
Total required units ………………………………………..
Less: Beginning finished goods inventory ………
(b) CHRIS COMPANY
Direct Materials Budget
For the Month Ending January 31, 2017
______________________________________________________________
January
Units to be produced ……………………………………………………
15,500
Direct material pounds per unit……………………………………..
X 2
Total pounds needed for production ……………………………..
31,000
Add: Desired pounds in ending materials inventory ………
Total materials required ………………………………………………..
Less: Beginning direct materials (pounds) …………………….
Direct materials purchases ……………………………………………
31,700
Cost per pound …………………………………………………………….
X $5
Total cost of direct materials purchases ………………………..
EXERCISE 23-12B
(a)
SAMUELS COMPANY
Computation of Cost of Goods Sold
For the Year Ending December 31, 2017
Cost of one unit of finished goods:
Direct materials (2 X $5) ………………………………………………… $10
(b)
SAMUELS COMPANY
Budgeted Income Statement
For the Year Ending December 31, 2017
Sales (34,000 X $75) …………………………………………………. $2,550,000
Cost of goods sold (see part (a)) ………………………………. 2,176,000
EXERCISE 23-13B
CHINA COMPANY
Cash Budget
For the Two Months Ending February 28, 2017
January
February
Beginning cash balance ……………………………………
Add: Receipts
Collections from customers …………………..
Less: Disbursements
Direct materials …………………………………….
Direct labor …………………………………………..
$ 40,000
90,000
60,000
30,000
$ 25,000
200,000
95,000
45,000
EXERCISE 23-14B
MANGO CORPORATION
Cash Budget
For the Quarter Ended March 31, 2017
Beginning cash balance ……………………………………………………
Add: Receipts
Collections from customers …………………………………..
Less: Disbursements
Direct materials …………………………………………………….
Direct labor …………………………………………………………..
Manufacturing overhead ………………………………………..
$ 25,000
180,000
45,000
70,000
35,000
EXERCISE 23-15B
(a) ADAMS COMPANY
Cash Budget
For the Month Ended July 31, 2017
Beginning cash balance ………………………. $ 55,000
Add: Receipts
Cash collections ………………………. 90,000
Total available cash …………………………….. $145,000
Less: Disbursements
Merchandise purchases ……………. $71,300
(b) An advantage of cash budgeting is that it allows cash shortfalls to
be predicted. If the timing of future cash shortfalls is known,
EXERCISE 23-16B
(a) APPLE COMPANY
Schedule of Expected Collections from Customers
For the Month of March
March
March cash sales (40% X $300,000)………………………………..
$120,000
Collection of March credit sales
[(60% X $300,000) X 10%] …………………………………………..
18,000
Collection of February credit sales
(b) APPLE COMPANY
Schedule of Expected Payments for Direct Materials
For the Month of March
March
March cash purchases (50% X $45,000) ………………………….
$22,500
[(50% X $35,000) X 40%] …………………………………………….
7,000
Total payments ………………………………………………….
$43,000
EXERCISE 23-17B
(a) (1)
GUARD YARDS LANDSCAPING INC.
Schedule of Expected Collections From Clients
For the Quarter Ending March 31, 2017
January
February
March
Quarter
November ($100,000) …………………………..
December ($70,000) …………………………..
$10,000
28,000
$ 7,000
$ 10,000
35,000
(2)
GUARD YARDS LANDSCAPING INC.
Schedule of Expected Payments for Landscaping Supplies
For the Quarter Ending March 31, 2014
_______________________________________________________
January
February
March
Quarter
December ($16,000) …………………………..
January ($13,000) …………………………..
$ 6,400
7,800
$ 5,200
$ 6,400
13,000