Exercise 8.24
Del Spencer’s Men’s Clothing Store
Schedule of Cash Receipts
For the months of August and September
August September
(0.9)(0.14)($45,000)(1.03) ………… 5,840
August: [(0.9 × 0.15) × $56,000] …………… 7,560
[(0.9 × 0.65) × $56,000] …………… 32,760
Exercise 8.25
1. August September
July: [(1/3 × $22,500) × 0.98] …………………. $ 7,350 —
2. July August
July 1: [(1/3 × $27,500) × 0.98] ……………… $ 8,983 —
3. Monthly cost of temporary clerk = (2 × 4) × $20 = $160
Exercise 8.26
1. Production budget for August:*
Unit sales ………………………………… 2,900
2. August purchases budget for table legs:
Units produced ………………………… 2,100
DM per unit ……………………………… × 4
3. Number of direct labor hours = 2,340 units × (16/60) direct labor hour per unit
Exercise 8.27
1. Meliore, Inc.
Overhead Budget
For the Year Ended December 31
Formula 24,600 DLH*
Variable costs:
Maintenance ……………………. 1.25 $ 30,750
Power ……………………………… 0.50 12,300
Exercise 8.27 (Concluded)
2. 10% higher:
Meliore Products
Overhead Budget
For the Year Ended December 31
Formula 27,060 DLH*
Variable costs:
Maintenance ……………………. 1.25 $ 33,825
Power ……………………………… 0.50 13,530
20% lower:
Meliore Products
Overhead Budget
For the Year Ended December 31
Formula 19,680 DLH*
Variable costs:
Maintenance ……………………. 1.25 $ 24,600
Power ……………………………… 0.50 9,840
Exercise 8.28
Meliore Products
Performance Report
For the Year Ended December 31
Actual Budget Variance
DLH for units produced ………. 24,700 24,700 0
Production costs*
Maintenance ………………… $ 64,100 $ 65,375 $(1,275) F
Power ………………………….. 12,420 12,350 70 U
Exercise 8.29
1. Sales revenue:
Pessimistic Expected Optimistic
Sleepeze ………………….. $2,250,000 $ 3,000,000 $ 3,600,000
Plushette …………………. 3,000,000 4,200,000 5,040,000
2.
Pessimistic Expected Optimistic
Salaries …………………….. $ 130,000 $ 130,000 $ 130,000
Depreciation ……………… 20,000 20,000 20,000
Office supplies & other . 21,000 21,000 21,000
Advertising:
Exercise 8.30
1. Activity-based budget:
Research:
Salary ………………………… $ 30,000
Internet connections…… 1,920 $ 31,920
Shipping:
Salaries ……………………… $ 24,500
Jobbers:
Salaries ……………………… $ 18,750
Telephone ………………….. 2,500
2. Clearly, shipping is the most costly activity, followed by Ultima advertising
and commissions to jobbers. It would be worthwhile to investigate shipping
CPA-TYPE EXERCISES
Exercise 8.31
d.
September production in units (toy cars) 100,000
Add: ending inventory (0.10 × 125,000) 12,500
Exercise 8.32
Exercise 8.33
a.
Salaries expense ($360,000 × 1.03) $370,800
Exercise 8.34
c.
Exercise 8.35
PROBLEMS
Problem 8.36
1. Schedule 1: Sales budget
January February March Total
Units …………………. 10,000 10,500 13,000 33,500
2. Schedule 2: Production budget
January February March Total
Unit sales (Schedule 1) ……… 10,000 10,500 13,000 33,500
Desired ending inventory…… 2,100 2,600 3,200 3,200
3. Schedule 3: Direct materials purchases budget (Assumes May sales equal
April sales in units)
January February
Part K29 Part C30 Part K29 Part C30
Units produced …………. 11,200 11,200 11,000 11,000
Dir. mat. per unit ……….. × 2 × 3 × 2 × 3
Production needs ….. 22,400 33,600 22,000 33,000
Desired EI …………………. 6,600 9,900 8,160 12,240
March Total
Part K29 Part C30 Part K29 Part C30
Units produced ………….. 13,600 13,600 35,800 35,800
Dir. mat. per unit ………… × 2 × 3 × 2 × 3
Production needs …… 27,200 40,800 71,600 107,400
Problem 8.36 (Continued)
4. Schedule 4: Direct labor budget
January February March Total
Units to be produced
5. Schedule 5: Overhead budget
January February March Total
6. Schedule 6: Selling and administrative expense budget
January February March Total
Planned sales (Schedule 1) 10,000 10,500 13,000 33,500
Variable selling &
Problem 8.36 (Continued)
7. Schedule 7: Ending finished goods inventory budget
Unit cost computation:
Direct materials:
Part K29 (2 × $4) …………………………………………………….. $ 8.00
8. Schedule 8: Cost of goods sold budget
Direct materials used (Schedule 3):
Part K29 (71,600 × $4.00) ……………………………… $286,400
9. Schedule 9: Budgeted income statement
Sales (Schedule 1) …………………………………………………………………. $3,685,000
Problem 8.36 (Concluded)
10. Schedule 10: Cash budget
January February March Total
Beginning balance ………… $ 62,900 $ 30,020 $ 25,450 $ 62,900
Cash receipts ……………….. 1,100,000 1,155,000 1,430,000 3,685,000
Problem 8.37
1. Schedule of purchases:
Cost of sales + 0.3333 Cost of sales = Sales
Cost of sales = 0.75 Sales
August September October November
Cost of sales…………….. $ 90,000 $ 67,500 $ 75,000 $101,250
Desired end. inventory* 27,000 30,000 40,500 45,000