ACCT230 - Week 6 Homework
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ACCT230 – Week 6 Homework – Chapter 9
Objective: Preparing the revenue budget, professional labor budget, overhead budget, other
expenses budget, and budgeted income statement.
Information
Henry and Jones, partners in a sports management consulting firm, budgeted the following
professional labor hours for the year ended December 31, 20--:
Partners
.......................................................
4,000
Associates
....................................................
7,000
Staff
.............................................................
11,000
Partners have a billing rate of $200 per hour and actually earn $100 per hour. Associates bill out at
$120 per hour and earn $60 per hour. Staff has a billing rate of $80 an hour and earns $40 per hour.
Budgeted overhead and other expenses are as follows:
Overhead:
Depreciation—Equipment
.....................
$ 40,000
Depreciation—Building
........................
90,000
Fringe Benefits
......................................
190,000
Photocopying
........................................
22,000
Secretarial Support
................................
230,000
Telephone/Fax
.......................................
31,000
Utilities
.................................................
43,000
Other Direct Expenses:
Travel
....................................................
$ 54,000
Meals
....................................................
18,000
Directions:
1.
Using the schedule below, prepare a revenue budget for the year ended December 31, 20--.
Henry and Jones
Revenue Budget
For the Year Ended December 31, 20--
Item
Professional
Hours
Billing
Rate
Total
Revenues
Partners
.........................
4,000
$200
$800,000
Associates
......................
7,000
$120
$840,000
Staff
...............................
11,000
$80
$880,000
Total
..........................
22,000
$2,520,000
2.
Using the schedule below, prepare a professional labor budget for the year ended December 31,
20--.
Henry and Jones
Professional Labor Budget
For the Year Ended December 31, 20--
Item
Professional
Hours
Wage
Rate
Total Labor
Dollars
Partners
.........................
4,000
$100
$400,000
Associates
......................
7,000
$60
$420,000
Staff
...............................
11,000
$40
$440,000
Total
..........................
22,000
$1,260,000
3.
Using the schedule below, prepare an overhead budget for the year ended December 31, 20--.
Henry and Jones
Overhead Budget
For the Year Ended December 31, 20--
Item
Amount
Secretarial Support
..............................................................
$
230,000
Fringe Benefits
....................................................................
$190,000
Depreciation—Building
......................................................
$90,000
Utilities
...............................................................................
$43,000
Depreciation—Equipment
...................................................
$40,000
Telephone/Fax
.....................................................................
$31,000
Photocopying
......................................................................
$22,000
Total
................................................................................
$646,000
4.
Using the schedule below, prepare an other direct expenses budget for the year ended December
31, 20--.
Henry and Jones
Other Direct Expenses Budget
For the Year Ended December 31, 20--
Item
Amount
Travel
..................................................................................
$
54,000
Meals
..................................................................................
$18,000
Total
................................................................................
$72,000
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Print Item
Professional Fees Earned Budget
Day & Spieth, CPAS, offer three types of services to clients: auditing, tax, and small business accounting. Based on experience and projected growth, the
following billable hours have been estimated for the year ending March 31, 20Y6:
Billable Hours
Audit Department:
Staff
27,300
Partners
4,100
Tax Department:
Staff
21,000
Partners
2,600
Small Business Accounting Department:
Staff
3,500
Partners
500
The average billing rate for staff is $105 per hour, and the average billing rate for partners is $225 per hour.
Prepare a professional fees earned budget for Day & Spieth, CPAS, for the year ending March 31, 20Y6.
DAY & SPIETH, CPAS
Professional Fees Earned Budget
For the Year Ending March 31, 20Y6
Sign out
O 11:09
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Cash budget
The following information is budgeted for McCracken Plumbing Supply Company for next quarter:
April May June
Sales ........................................................... $110,000 $130,000 $180,000
Merchandise purchases .............................. $85,000 $92,000 105,000
Selling and administrative expenses .......... $50,000 $50,000 $50,000
All sales at McCracken are on credit. Forty percent are collected in the month of sale, 58% in the month following the sale, and the remaining 2% are uncollectible.
Merchandise purchases are paid in full the month following the month of purchase.
The selling and administrative expenses above include $8,000 of depreciation on display fixtures and warehouse equipment. All other selling and administrative expenses are paid as incurred. McCracken wants to maintain a cash balance of $15,000. Any amount below this can be borrowed from a local bank as needed in increments of $1,000. All borrowings…
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Performance reportPrepare a performance report for the dining room of Leonardo’sItalian Cafe ́ for the month of February 2011, using the followingdata:Budgeted Data: January FebruaryDining room wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,300 $4,150Laundry and housekeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,650 1,500Utilities ............................................... 2,200 2,050Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 1,500Actual Data: January FebruaryDining room wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,700 $4,400Laundry and housekeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,600 1,400Utilities ............................................... 2,350 2,100Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 1,500
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Deleon Inc. is preparing its annual budgets for the year ending December 31, 2022. Accounting assistants furnish the data shown
below.
Sales budget:
Anticipated volume in units
Unit selling price
Production budget:
Desired ending finished goods units
Beginning finished goods units
Direct materials budget:
Direct materials per unit (pounds)
Desired ending direct materials pounds
Beginning direct materials pounds
Cost per pound
Direct labor budget:
Direct labor time per unit
Direct labor rate per hour
Budgeted income statement:
Total unit cost
Product
JB 50
400,000
$20
30,000
25,000
2
30,000
40,000
$3
0.4
$12
$13
Product
JB 60
200,000
$25
15,000
10,000
3
10,000
15,000
$4
0.6
$12
$20
An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget.
The latter shows selling expenses of $560,000 for product JB 50 and $360,000 for product JB 60, and administrative expenses of
$540,000 for product JB 50 and $340,000 for product…
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6) Some of the beginning and end of the period information of the production enterprise, which budgets the General Production Expenses on its products according to the Direct Labor Hours, are as follows.Budgeted General Production Expenses 20.000.-₺Actual Activity Volume 3,800 Direct labor hoursActual General Production Expenses 18.000.-₺Overload 1.000.-₺Desired: Calculate the "Budgeted Activity Volume" of the business.
A. 4,500 Direct labor hoursB. 4,000 Direct labor hoursC. 2,500 direct labor hoursD. 3,000 Direct labor hoursE. 5,000 Direct labor hours
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College Memories, Inc., publishes college yearbooks. A monthly flexible overhead budget for the firm follows.
Budgeted Cost 1,500 1,750 2,000
Variable costs:
Indirect material:
Glue .....................................$ 750 $ 875 $ 1,000
Tape ............................................300 350 400
Miscellaneous supplies ...............3,000 3,500 4,000
Indirect labor ..............................7,500 8,750 10,000
Utilities:
Electricity ..............................1,500 1,750 2,000
Natural gas ..................................450 525 600
Total variable cost $ 13,500 $ 15,750 $ 18,000
Fixed costs:
Supervisory labor.................. 12,500…
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College Memories, Inc., publishes college yearbooks. A monthly flexible overhead budget for the firm follows.
Budgeted Cost 1,500 1,750 2,000
Variable costs:
Indirect material:
Glue .....................................$ 750 $ 875 $ 1,000
Tape ............................................300 350 400
Miscellaneous supplies ...............3,000 3,500 4,000
Indirect labor ..............................7,500 8,750 10,000
Utilities:
Electricity ..............................1,500 1,750 2,000
Natural gas ..................................450 525 600
Total variable cost $ 13,500 $ 15,750 $ 18,000
Fixed costs:
Supervisory labor.................. 12,500…
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Arberg Company s controller prepared the following budgeted income statement for the coming year: Sales ........................$415,000 Total variable cost .........302,950 Contribution margin ......$112,050 Total fixed cost ..............64,800 Operating income .........$47,250
Required
4. What is Arberg s expected margin of safety?
5. What is Arberg s margin of safety if sales revenue is $380,000?
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Arberg Company s controller prepared the following budgeted income statement for the coming year: Sales ........................$415,000 Total variable cost .........302,950 Contribution margin ......$112,050 Total fixed cost ..............64,800 Operating income .........$47,250 Required:
1. What is Arberg s variable cost ratio? What is its contribution margin ratio?
2. Suppose Arberg s actual revenues are $30,000 more than budgeted. By how much will operating income increase? Give the answer without preparing a new income statement.
3. How much sales revenue must Arberg earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer.
4. What is Arberg s expected margin of safety?
5. What is Arberg s margin of safety if sales revenue is $380,000?
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Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company’s operations in July appear below:Vulcan FlyoversOperating DataFor the Month Ended July 31Planning Flexible ActualBudget Budget ResultsFlights (q) .................................................................. 50 48 48Revenue ($320.00q) .................................................. $16,000 $15,360 $13,650Expenses:Wages and salaries ($4,000 $82.00q) ............... 8,100 7,936 8,430Fuel ($23.00q) ....................................................... 1,150 1,104 1,260Airport fees ($650 $38.00q) ............................... 2,550 2,474 2,350Aircraft depreciation ($7.00q) ................................ 350 336 336Office expenses ($190 $2.00q) .......................... 290 286 460Total expense ............................................................ 12,440 12,136 12,836Net operating income…
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Cash budget—comprehensive Following are the budgeted income statements for the second quarter of 2013 for SeaTech, Inc.:April May JuneSales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $140,000 $170,000 $190,000Cost of goods sold* . . . . . . . . . . . . . . . . . . . . . 96,000 114,000 126,000Gross profi t . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 44,000 $ 56,000 $ 64,000Operating expenses† . . . . . . . . . . . . . . . . . . . . 22,000 25,000 27,000Operating income . . . . . . . . . . . . . . . . . . . . . . . $ 22,000 $ 31,000 $ 37,000*Includes all product costs (i.e., direct materials, direct labor, and manufacturing overhead). †Includes all period costs (i.e., selling, general, and administrative expenses). The company expects about 30% of sales to be cash transactions. Of sales on account, 60% are expected to be collected in the first month after the sale is made, and 40% are expected to be collected in the second month after sale. Depreciation,…
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The following relationships pertain to a year's budgeted activity for ABC Company: High Low Direct labor hours.................................................................... 400,000 300,000Total costs................................................................................... $154,000 $129,000What are the budgeted fixed costs for the year?
a. $100,000
b. $25,000
c. $54,000
d. $75,000
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Cash receipts budget Scottsdale Co. has actual sales for July and August and forecast sales for September, October, November, and December as follows:Actual:July . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 98,000August . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,000Forecast:September . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,000October . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,000November . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,000December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,000Based on past experience, it is estimated that 30% of a month’s sales are collected in the month of sale, 55% are collected in the month following the sale, and 10% are collected in the second month following the sale.Required:Calculate the estimated cash receipts for September, October, and…
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The management of Mecca Copy, a photocopying center located on University Avenue, has compiled thefollowing data to use in preparing its budgeted balance sheet for next year:Ending BalancesCash ..................................................................... ?Accounts receivable ............................................. $8,100Supplies inventory ................................................ $3,200Equipment ............................................................ $34,000Accumulated depreciation .................................... $16,000Accounts payable ................................................. $1,800Common stock ...................................................... $5,000Retained earnings ................................................ ?The beginning balance of retained earnings was $28,000, net income is budgeted to be $11,500, and dividends are budgeted to be $4,800.Required:Prepare the company’s budgeted balance sheet.
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Given below the 2PM’s Hairstyling information for the month ended June 30:
a) Revenue and cost formula
Budgeted client-visits q
Revenue RM180q
Wages and salaries RM65,000 + RM37q
Hairstyling supplies RM1.50q
Client gratuities RM4.10q
Electricity RM1500 + RM0.10q
Rent RM28,500
Liability insurance RM2,800
Employee health insurance RM21,300
Miscellaneous RM1,200 + RM0.20q
b) The budgeted client-visits were 1,000.
c) Income statement for the month ended June 30:
2PM’s Hairstyling Income Statement For the month ended June 30
Actual client-visits
1100
RM
Revenue
194,200
Expenses:
Wages and salaries
106,900
Hairstyling supplies
1,620
Client gratuities
6,870
Electricity
1,550
Rent
28,500
Employee health insurance
22,600…
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3. Prepare a direct materials purchases budget for July.
4. Prepare a direct labor cost budget for July.
PR 22-3A
Budgeted income statement and supporting budgets
/4. Total direct
labor cost in
Fabrication Dept.,
$29,216
The budget director of Feathered Friends Inc.., with the assistance of the controller, trea-
surer, production manager, and sales manager, has gathered the following data for use
in developing the budgeted income statement for December 2016:
OBJ. 4
a.
Estimated sales for December:
Bird house....
3,200 units at $50 per unit
3,000 units at $70 per unit
Bird feeder....
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task 1
Prepare the following budgets for the year 2021: -
a. Sales budget. Show total sales by quarter and in total for the year.
b. Production budget. Show total production unit by quarter and in total for the year.
c. Direct material usage and purchase budget.
d. Direct labour budget.
task 2
Based Jaka’s experience, fifty percent (50%) of sales are paid in cash. Of the sales on account, seventy percent (70%) are collected in the quarter of sale; the remaining thirty percent (30%) are collected in the quarter following the sale. Total sales for the fourth quarter of 2020 totaled RM2,000,000.
Required:
Refer to the sales budget prepared in Task 1. Construct a cash receipts budget including an accounts receivable aging schedule for Jaka Sdn Bhd for each quarter of year 2021.
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Exercise 7 (Cash Budget Analysis)
A cash budget, by quarters, is given below for a retail company. (000 omitted).
The company requires a minimum cash balance of P5,000 to start each quarter.
Quarter
1 2 3 4 Year
Cash balance, beginning..................... P9 P? P? P? P?
Add collections from customers….. ? ? 125 ? 391
Total cash available………………. 85 ? ? ? ?
Less disbursements:
Purchase of inventory….................. 40 58 ? 32 ?
Operating expenses…………... ? 42 54 ? 180
Equipment purchases…................ 10 8 8 ? 36
Dividends…………………….. 2 2 2 2 ?
Total disbursement………………..…
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Q5
A budget is 'accepted' by managers when they______.
Select one:
a. relates it to their own personal objectives
b. receive the budget in writing
c. are consulted by top management
d. agree to it verbally
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Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:1st Quarter 2nd Quarter 3rd Quarter 4th QuarterTotal cash receipts .............................. $180,000 $330,000 $210,000 $230,000Total cash disbursements .................... $260,000 $230,000 $220,000 $240,000The company’s beginning cash balance for the upcoming fiscal year will be $20,000. The company requiresa minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterlyinterest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repayits loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at thetime it is repaid. For simplicity, assume that interest is not compounded.Required:Prepare the company’s cash budget for the upcoming fiscal year
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PLEASE ANSWER ALL QUESTIONS
27 .Budgeting:
A. Sets targets and objectives established by management
B. Is intended to control expenses
C. Defines how revenue will be earned
D. Sets the organization's "rules of the road" for operating
28. Hospitals are currently paid less if a patient is discharged and readmitted within 30 days for a related diagnosis. This is an example of:
A. Payment for service provided
B. Payment for quality measurement
C. Payment for coinsurance
D. Payment for deductible
29. Which of the following is not an emerging payment model?
A. Patient Centered Medical Home
B. ACO
C. Bundled Payment
D. DRG
30. Which of the following is NOT an incentive to provide more services?
A. Capitation
B. Charge-based reimbursement
C. Per diem
D. Per procedure
31. The party ultimately responsible for payment for healthcare services is:
A. Medicaid
B. The insurer
C. The patient
D. The provider accounts receivable staff
32. Population health management challenges clinicians to…
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Q. Prepare a revenues budget for the year, assuming that Ever Clean charges customers $0.60 per square foot.
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You have been awarded a project to start in the next six months. One of your tasks is to determine a budget based on the scope of works provided. State four (4) benefits of Budgeting to Management?
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Exercise 5 (Manufacturing Overhead Budget)
The direct labor budget of Kiko Corporation for the upcoming fiscal year
contains the following details concerning budgeted direct labor-hours.
1st quarter 2nd quarter 3rd quarter 4th quarter
Budgeted direct labor
hour........... 5,000 4,800 5,200 5,400
The company's variable manufacturing overhead rate is P1.75 per direct labor hour and the company's fixed manufacturing overhead is P35,000 per quarter. The only noncash item included in the fixed manufacturing overhead is depreciation, which is P15,000 per quarter.
Required:
Construct the company’s manufacturing overhead budget for the
upcoming fiscal Year.
Compute the company’s manufacturing overhead rate (including both
variable and fixed manufacturing overhead) for the upcoming fiscal year.
Round off to the nearest whole centavos.
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Exercise 5 (Manufacturing Overhead Budget)
The direct labor budget of Kiko Corporation for the upcoming fiscal year
contains the following details concerning budgeted direct labor-hours.
1st quarter 2nd quarter 3rd quarter 4th quarter
Budgeted direct labor
hour........... 5,000 4,800 5,200 5,400
The company's variable manufacturing overhead rate is P1.75 per direct labor hour and the company's fixed manufacturing overhead is P35,000 per quarter. The only noncash item included in the fixed manufacturing overhead is depreciation, which is P15,000 per quarter.
Required:
Compute the company’s manufacturing overhead rate (including both
variable and fixed manufacturing overhead) for the upcoming fiscal year.
Round off to the nearest whole centavos.
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- eBook Print Item Professional Fees Earned Budget Day & Spieth, CPAS, offer three types of services to clients: auditing, tax, and small business accounting. Based on experience and projected growth, the following billable hours have been estimated for the year ending March 31, 20Y6: Billable Hours Audit Department: Staff 27,300 Partners 4,100 Tax Department: Staff 21,000 Partners 2,600 Small Business Accounting Department: Staff 3,500 Partners 500 The average billing rate for staff is $105 per hour, and the average billing rate for partners is $225 per hour. Prepare a professional fees earned budget for Day & Spieth, CPAS, for the year ending March 31, 20Y6. DAY & SPIETH, CPAS Professional Fees Earned Budget For the Year Ending March 31, 20Y6 Sign out O 11:09arrow_forwardCash budget The following information is budgeted for McCracken Plumbing Supply Company for next quarter: April May June Sales ........................................................... $110,000 $130,000 $180,000 Merchandise purchases .............................. $85,000 $92,000 105,000 Selling and administrative expenses .......... $50,000 $50,000 $50,000 All sales at McCracken are on credit. Forty percent are collected in the month of sale, 58% in the month following the sale, and the remaining 2% are uncollectible. Merchandise purchases are paid in full the month following the month of purchase. The selling and administrative expenses above include $8,000 of depreciation on display fixtures and warehouse equipment. All other selling and administrative expenses are paid as incurred. McCracken wants to maintain a cash balance of $15,000. Any amount below this can be borrowed from a local bank as needed in increments of $1,000. All borrowings…arrow_forwardPuget Sound Divers is a company that provides diving services such as underwater ship repairs to clientsin the Puget Sound area. The company’s planning budget for May appears below:Puget Sound DiversPlanning BudgetFor the Month Ended May 31Budgeted diving-hours (q) ........................................... 100Revenue ($365.00q) .................................................... $36,500Expenses:Wages and salaries ($8,000 $125.00q) ............... 20,500Supplies ($3.00q) ..................................................... 300Equipment rental ($1,800 $32.00q) ..................... 5,000Insurance ($3,400) ................................................... 3,400Miscellaneous ($630 $1.80q) ............................... 810Total expense .............................................................. 30,010Net operating income .................................................. $ 6,490Required:During May, the company’s activity was actually 105 diving-hours. Prepare a flexible budget…arrow_forward
- Performance reportPrepare a performance report for the dining room of Leonardo’sItalian Cafe ́ for the month of February 2011, using the followingdata:Budgeted Data: January FebruaryDining room wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,300 $4,150Laundry and housekeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,650 1,500Utilities ............................................... 2,200 2,050Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 1,500Actual Data: January FebruaryDining room wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,700 $4,400Laundry and housekeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,600 1,400Utilities ............................................... 2,350 2,100Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 1,500arrow_forwardDeleon Inc. is preparing its annual budgets for the year ending December 31, 2022. Accounting assistants furnish the data shown below. Sales budget: Anticipated volume in units Unit selling price Production budget: Desired ending finished goods units Beginning finished goods units Direct materials budget: Direct materials per unit (pounds) Desired ending direct materials pounds Beginning direct materials pounds Cost per pound Direct labor budget: Direct labor time per unit Direct labor rate per hour Budgeted income statement: Total unit cost Product JB 50 400,000 $20 30,000 25,000 2 30,000 40,000 $3 0.4 $12 $13 Product JB 60 200,000 $25 15,000 10,000 3 10,000 15,000 $4 0.6 $12 $20 An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of $560,000 for product JB 50 and $360,000 for product JB 60, and administrative expenses of $540,000 for product JB 50 and $340,000 for product…arrow_forward6) Some of the beginning and end of the period information of the production enterprise, which budgets the General Production Expenses on its products according to the Direct Labor Hours, are as follows.Budgeted General Production Expenses 20.000.-₺Actual Activity Volume 3,800 Direct labor hoursActual General Production Expenses 18.000.-₺Overload 1.000.-₺Desired: Calculate the "Budgeted Activity Volume" of the business. A. 4,500 Direct labor hoursB. 4,000 Direct labor hoursC. 2,500 direct labor hoursD. 3,000 Direct labor hoursE. 5,000 Direct labor hoursarrow_forward
- College Memories, Inc., publishes college yearbooks. A monthly flexible overhead budget for the firm follows. Budgeted Cost 1,500 1,750 2,000 Variable costs: Indirect material: Glue .....................................$ 750 $ 875 $ 1,000 Tape ............................................300 350 400 Miscellaneous supplies ...............3,000 3,500 4,000 Indirect labor ..............................7,500 8,750 10,000 Utilities: Electricity ..............................1,500 1,750 2,000 Natural gas ..................................450 525 600 Total variable cost $ 13,500 $ 15,750 $ 18,000 Fixed costs: Supervisory labor.................. 12,500…arrow_forwardCollege Memories, Inc., publishes college yearbooks. A monthly flexible overhead budget for the firm follows. Budgeted Cost 1,500 1,750 2,000 Variable costs: Indirect material: Glue .....................................$ 750 $ 875 $ 1,000 Tape ............................................300 350 400 Miscellaneous supplies ...............3,000 3,500 4,000 Indirect labor ..............................7,500 8,750 10,000 Utilities: Electricity ..............................1,500 1,750 2,000 Natural gas ..................................450 525 600 Total variable cost $ 13,500 $ 15,750 $ 18,000 Fixed costs: Supervisory labor.................. 12,500…arrow_forwardArberg Company s controller prepared the following budgeted income statement for the coming year: Sales ........................$415,000 Total variable cost .........302,950 Contribution margin ......$112,050 Total fixed cost ..............64,800 Operating income .........$47,250 Required 4. What is Arberg s expected margin of safety? 5. What is Arberg s margin of safety if sales revenue is $380,000?arrow_forward
- Arberg Company s controller prepared the following budgeted income statement for the coming year: Sales ........................$415,000 Total variable cost .........302,950 Contribution margin ......$112,050 Total fixed cost ..............64,800 Operating income .........$47,250 Required: 1. What is Arberg s variable cost ratio? What is its contribution margin ratio? 2. Suppose Arberg s actual revenues are $30,000 more than budgeted. By how much will operating income increase? Give the answer without preparing a new income statement. 3. How much sales revenue must Arberg earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer. 4. What is Arberg s expected margin of safety? 5. What is Arberg s margin of safety if sales revenue is $380,000?arrow_forwardVulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company’s operations in July appear below:Vulcan FlyoversOperating DataFor the Month Ended July 31Planning Flexible ActualBudget Budget ResultsFlights (q) .................................................................. 50 48 48Revenue ($320.00q) .................................................. $16,000 $15,360 $13,650Expenses:Wages and salaries ($4,000 $82.00q) ............... 8,100 7,936 8,430Fuel ($23.00q) ....................................................... 1,150 1,104 1,260Airport fees ($650 $38.00q) ............................... 2,550 2,474 2,350Aircraft depreciation ($7.00q) ................................ 350 336 336Office expenses ($190 $2.00q) .......................... 290 286 460Total expense ............................................................ 12,440 12,136 12,836Net operating income…arrow_forwardCash budget—comprehensive Following are the budgeted income statements for the second quarter of 2013 for SeaTech, Inc.:April May JuneSales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $140,000 $170,000 $190,000Cost of goods sold* . . . . . . . . . . . . . . . . . . . . . 96,000 114,000 126,000Gross profi t . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 44,000 $ 56,000 $ 64,000Operating expenses† . . . . . . . . . . . . . . . . . . . . 22,000 25,000 27,000Operating income . . . . . . . . . . . . . . . . . . . . . . . $ 22,000 $ 31,000 $ 37,000*Includes all product costs (i.e., direct materials, direct labor, and manufacturing overhead). †Includes all period costs (i.e., selling, general, and administrative expenses). The company expects about 30% of sales to be cash transactions. Of sales on account, 60% are expected to be collected in the first month after the sale is made, and 40% are expected to be collected in the second month after sale. Depreciation,…arrow_forward
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