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9-21
PROBLEM 9-33 (CONTINUED)
3. Since the 20x1 usage of Islin is 200,000 gallons, the firm’s raw-material purchases
budget (in dollars) for Islin for 20x2 is as follows:
Quantity of Islin required for production in 20x2 (in gallons):
Yarex (120,800 × 1) ...................................................................
Darol (79,200 × .7) ....................................................................
120,800
55,440
4. The company should continue using Islin, because the cost of using Philin is
$152,632 greater than using Islin, calculated as follows:
Change in material cost from substituting Philin for Islin:
9-22
PROBLEM 9-34 (25 MINUTES)
1. Tuition revenue budget:
Current student enrollment…………………….
12,000
Add: 5% increase in student body……………
600
2. Faculty needed to cover classes:
Total student body…………………………………….
12,600
Classes per student per year [(15 credit hours ÷
3. Possible actions might include:
• Hire part-time instructors
9-23
PROBLEM 9-35 (25 MINUTES)
1.
Sales budget
July
August
September
2.
Production budget (in sets)
July
August
September
3.
Raw-material purchases
July
August
September
Planned production (sets) ............................
5,200
6,300
7,500
Raw material required per set
(board feet) ................................................
10
10
10
Raw material required for production
9-24
PROBLEM 9-35 (CONTINUED)
4.
Direct-labor budget
July
August
September
Planned production (sets) ............................
5,200
6,300
7,500
Chapter 09 - Financial Planning and Analysis: The Master Budget
9-25
PROBLEM 9-36 (30 MINUTES)
1. Sales are collected over a two-month period, 40% in the month of sale and 60% in the
3. Dakota Fan collected 40% of February’s sales during February, or $78,400. Thus,
7. Financing required is $3,500 ($15,000 minimum balance less ending cash balance of
Chapter 09 - Financial Planning and Analysis: The Master Budget
9-26
PROBLEM 9-37 (45 MINUTES)
1.
The benefits that can be derived from implementing a budgeting system include the
following:
Chapter 09 - Financial Planning and Analysis: The Master Budget
9-27
PROBLEM 9-37 (CONTINUED)
2.
a. Schedule
b. Subsequent Schedule
Sales Budget
Production Budget
Selling Expense Budget
Budgeted Income Statement
Chapter 09 - Financial Planning and Analysis: The Master Budget
9-28
PROBLEM 9-38 (60 MINUTES)
1. Sales budget for 20x3:
Units
Price
Total
2.
Production budget (in units) for 20x3:
Light
Coils
Heavy
Coils
3.
Raw-material purchases budget (in quantities) for 20x3:
Raw Material
Sheet
Metal
Copper
Wire
Platforms
Chapter 09 - Financial Planning and Analysis: The Master Budget
9-29
PROBLEM 9-38 (CONTINUED)
4.
Raw-material purchases budget for 20x3:
Raw Material
Raw Material
Required
(units)
Anticipated
Purchase
Price
Total
5.
Direct-labor budget for 20x3:
Projected
Production
(units)
Hours
per
Unit
Total
Hours
Rate
Total
Cost
6. Production overhead budget for 20x3:
Cost Driver
Quantity
Cost
Driver
Rate
Budgeted
Cost
Purchasing and material handling .......................
725,000 lb.a
$.50
$362,500
Chapter 09 - Financial Planning and Analysis: The Master Budget
9-30
PROBLEM 9-39 (60 MINUTES)
1.
Sales budget:
Box C
Box P
Total
Sales (in units)
500,000
500,000
2.
Production budget (in units):
Box C
Box P
Sales ......................................................................................
500,000
500,000
3.
Raw-material budget:
CORRUGATING MEDIUM
Box C
Box P
Total
Production requirements (number of boxes) .........
495,000
495,000
Raw material required per box (pounds) ................
.2
.3
Raw material required for
9-31
PROBLEM 9-39 (CONTINUED)
PAPERBOARD
Box C
Box P
Total
Production requirement (number of boxes) ...........
495,000
495,000
Raw material required per box (pounds) ................
.3
.7
Raw material required for
4.
Direct-labor budget:
Box C
Box P
Total
Production requirements (number of boxes)
495,000
495,000
5.
Production-overhead budget:
Indirect material ...........................................................................................
$ 15,750
Chapter 09 - Financial Planning and Analysis: The Master Budget
9-32
PROBLEM 9-39 (CONTINUED)
6.
Selling and administrative expense budget:
Salaries and fringe benefits of sales personnel ........................................
$112,500
7.
Budgeted income statement:
Sales revenue [from sales budget, req. (1)] ...............................................
$1,650,000
Less: Cost of goods sold:
*Calculation of production cost per unit:
(a)
Predetermined overhead rate
=
hours labor-direct of volume
overhead ingmanufactur budgeted
Chapter 09 - Financial Planning and Analysis: The Master Budget
9-33
PROBLEM 9-39 (CONTINUED)
(b)
Calculation of production cost per unit:
Box C
Box P
Direct material:
Paperboard
9-34
PROBLEM 9-40 (45 MINUTES)
1.
The revised operating budget for Vancouver Consulting Associates for
the fourth quarter is presented below. Supporting calculations follow:
VANCOUVER CONSULTING ASSOCIATES
REVISED OPERATING BUDGET
FOR THE FOURTH QUARTER OF 20X4
Revenue:
Consulting fees:
Computer system consulting .........................................................
$ 956,250
9-35
PROBLEM 9-40 (CONTINUED)
Supporting calculations:
• Schedule of projected revenues for the fourth quarter of 20x4:
Computer
System
Consulting
Management
Consulting
Third Quarter:
Revenue ............................................................................
$843,750
$630,000
Hourly billing rate ............................................................
÷ $150
÷ $180
Chapter 09 - Financial Planning and Analysis: The Master Budget
9-36
PROBLEM 9-40 (CONTINUED)
• Schedules of projected salaries, travel, general and administrative, and allocated
corporate expenses:
Computer
System
Consulting
Management
Consulting
Compensation:
Existing consultants:
Annual salary ...........................................................
$ 92,000
$100,000
Quarterly salary .......................................................
$ 23,000
$ 25,000
Travel expenses:
Computer system consultants (425 hrs. 15) .............
6,375
Management consultants (400 hrs. 13) ......................
5,200
Total hours ...............................................................
11,575
2.
An organization would prepare a revised operating budget when the assumptions
underlying the original budget are no longer valid. The assumptions may involve
9-37
PROBLEM 9-41 (40 MINUTES)
1. Strategic planning identifies the overall objective of an organization and generally
considers the impact of external factors such as competitive forces, market demand,
2. For each of the financial objectives established by the board of directors and
president of Fit-for-Life Foods, Inc., the calculations to determine whether John
Winslow’s budget attains these objectives are presented in the following table.
CALCULATION OF FINANCIAL OBJECTIVES: FIT-FOR-LIFE FOODS, INC.
Objective
Attained/
Not Attained
Calculations
Increase sales by 12%
($1,700,000 × 1.12 = $1,904,000)
Not attained
($1,895,500 - $1,700,000)/$1,700,000 = 11.5%
3. The accounting adjustments contemplated by John Winslow are unethical because
they will result in intentionally overstating income by understating the cost of goods
sold. The specific standards of ethical conduct for management accountants
violated by Winslow are as follows:
9-38
PROBLEM 9-41 (CONTINUED)
Competence. By making the accounting adjustments, Winslow violated the
PROBLEM 9-42 (120 MINUTES)
1.
Sales budget:
20x0
20x1
December
January
February
March
First
Quarter
Total sales ........................
$800,000
$880,000
$968,000
$1,064,800
$2,912,800
2.
Cash receipts budget:
20x1
January
February
March
First
Quarter
Cash sales ............................................
$220,000
$242,000
$266,200
$ 728,200
Cash collections from credit
sales made during current
9-39
PROBLEM 9-42 (CONTINUED)
3.
Purchases budget:
20x0
20x1
December
January
February
March
First
Quarter
Budgeted cost of
goods sold ..................
$560,000
$616,000
$677,600
$745,360
$2,038,960
Add: Desired
†The desired ending inventory for the quarter is equal to the desired ending inventory
on March 31, 20x1.
