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Cariman Limited is a manufacture of special plant pots. Cariman has the following budgeted sales for the next six-month period: Month Unit Sales June 45,000 July 60,000 August 105,000 September 75,000 October 90,000 60,000 November There were 15,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month. Five kilograms of materials are required for each unit produced. Each kilogram of material costs $8. Inventory levels for materials are equal to 30% of the needs for the next month. Materials inventory on June 1 was 7,500 kilograms.

Cariman Limited is a manufacture of special plant pots. Cariman has the following budgeted sales for the next six-month period: Month Unit Sales June 45,000 July 60,000 August 105,000 September 75,000 October 90,000 60,000 November There were 15,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month. Five kilograms of materials are required for each unit produced. Each kilogram of material costs $8. Inventory levels for materials are equal to 30% of the needs for the next month. Materials inventory on June 1 was 7,500 kilograms.

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter7: The Master Budget And Flexible Budgeting
Section: Chapter Questions
Problem 1E: The sales department of Macro Manufacturing Co. has forecast sales for its single product to be...
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Cariman contracts delivery drivers to service customers. Cariman owns the vans and pays for the gas. With reference to the following independent situations for Cariman, determine where (a) responsibility and (b) controllability lie. Suggest what might be done to solve the problem or to improve the situation: (20 marks)

a) In the manufacturing plant the production manager is not happy with the material that the purchasing manager has been purchasing. In May the production manager stops requesting materials from the supply warehouse, and starts purchasing them directly from a different materials supplier. Actual materials costs in May are higher than budgeted.

b) Overhead costs in the manufacturing plant for June are much higher than budgeted. Investigation reveals a utility rate hike in effect that was not figured into the budget. 

Cariman Limited is a manufacture of special plant pots. Cariman has the following budgeted sales for the next six-month period: Month Unit Sales June 45,000 July 60,000 August 105,000 September 75,000 October 90,000 60,000 November There were 15,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month. Five kilograms of materials are required for each unit produced. Each kilogram of material costs $8. Inventory levels for materials are equal to 30% of the needs for the next month. Materials inventory on June 1 was 7,500 kilograms.
Transcribed Image Text:Cariman Limited is a manufacture of special plant pots. Cariman has the following budgeted sales for the next six-month period: Month Unit Sales June 45,000 July 60,000 August 105,000 September 75,000 October 90,000 60,000 November There were 15,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month. Five kilograms of materials are required for each unit produced. Each kilogram of material costs $8. Inventory levels for materials are equal to 30% of the needs for the next month. Materials inventory on June 1 was 7,500 kilograms.
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