The production supervisor of the Machining Department for Niland Company agreed to the following monthly static budget for the upcoming year: Niland Company Machining Department Monthly Production Budget

The production supervisor of the Machining Department for Niland Company agreed to the following monthly static budget for the upcoming year: Niland Company Machining Department Monthly Production Budget

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 2PA: Sales, production, direct materials purchases, and direct labor cost budgets The budget director of...

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Sales, production, direct materials purchases, and direct labor cost budgets The budget director of Royal Furniture Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for February is summarized as follows: Estimated sales of King and Prince chairs for February by sales territory: Estimated inventories at February 1: Desired inventories at February 28: Direct materials used in production: Anticipated purchase price for direct materials: Direct labor requirements: Instructions Prepare a sales budget for February. Prepare a production budget for February. Prepare a direct materials purchases budget for February. Prepare a direct labor cost budget for February.
Flexible budget for factory overhead Presented below are the monthly factory overhead cost budget (at normal capacity of 5,000 units or 20,000 direct labor hours) and the production and cost data for a month. The predetermined overhead rate is based on normal capacity. Required: 1. Assuming that variable costs will vary in direct proportion to the change in volume, prepare a flexible budget for production levels of 80%, 90%, and 110% of normal capacity. Also determine the predetermined factory overhead rate at each level of volume in both units and direct labor hours. 2. Prepare a flexible budget for production levels of 80%, 90%, and 110%, assuming that variable costs will vary in direct proportion to the change in volume, but with the following exceptions. (Hint: Set up a third category for semi-variable expenses.) a. At 110% of capacity, another supervisor will be needed at a salary of 24,000 annually. b. At 80% of capacity, the repairs expense will drop to one-half of the amount at 100% capacity. c. At 80% of capacity, one part-time maintenance worker, earning 10,000 a year, will be laid off. d. At 110% of capacity, a machine not normally in use and on which no depreciation is normally recorded will be used in production. Its cost was 12,000, it has a 10-year life, and straight-line depreciation will be taken.
The production supervisor of the Machining Department for Niland Company agreed to the following monthly static budget for the upcoming year: Niland CompanyMachining DepartmentMonthly Production Budget Wages $1,125,000 Utilities 90,000 Depreciation 50,000 Total $1,265,000 The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: Amount Spent Units Produced January $1,100,000 80,000 February 1,200,000 90,000 March 1,250,000 95,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for January–March have been significantly less than the monthly static budget of $1,265,000. However, the plant manager believes that the budget should not remain fixed for every month but should “flex” or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as…
The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year: The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: Amount Spent Units Produced May $1,600,000 40,000 June 1,950,000 48,000 July 2,200,000 52,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for May-July have been significantly less than the monthly static budget of $2, 358,000. However, the plant manager believes that the budget should not remain fixed for every month but should" flex" or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows: Wages per hour $25.00 Utility cost per direct labor hour $0.80 Direct labor hours per unit 1.5 Planned monthly unit production 60,000 a. Prepare a flexible budget for the…
The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year: Hagerstown CompanyMachining DepartmentMonthly Production Budget Wages $2,250,000 Utilities 72,000 Depreciation 36,000 Total $2,358,000 The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: Amount Spent Units Produced May $1,600,000 40,000 June 1,950,000 48,000 July 2,200,000 52,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for May–July have been significantly less than the monthly static budget of $2,358,000. However, the plant manager believes that the budget should not remain fixed for every month but should “flex” or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows:…
The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year: Hagerstown Company Machining Department Monthly Production Budget Wages Utilities Depreciation Total The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: Amount Spent Units Produced 113,000 June 103,000 July 93,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for May-July have been significantly less than the monthly static budget of 1,150,000. However, the plant manager believes that the budget should not remain fixed for every month but should "flex" or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows: May $985,000 62,000 103,000 $1,150,000 $1,085,000 1,037,000 992,000 Wages per hour Utility cost per direct…
The production supervisor of the Machining Department for Niland Company agreed to the following monthly static budget for the upcoming year: Niland CompanyMachining DepartmentMonthly Production Budget Wages $447,000 Utilities 20,000 Depreciation 33,000 Total $500,000 The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: Amount Spent Units Produced January $471,000 82,000 February 445,000 74,000 March 425,000 67,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for January–March have been less than the monthly static budget of $500,000. However, the plant manager believes that the budget should not remain fixed for every month but should “flex” or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows: Wages per hour…
The production supervisor of the Machining Department for Celtic Company agreed to the following monthly static budget for the upcoming year: Celtic CompanyMachining DepartmentMonthly Production Budget Wages $1,056,000 Utilities 85,800 Depreciation 42,000 Total $1,183,800 The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: AmountSpent UnitsProduced January $994,500 68,000 February 1,078,500 76,000 March 1,174,900 84,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for January–March have been less than the monthly static budget of $1,183,800. However, the plant manager believes that the budget should not remain fixed for every month but should “flex” or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows: Wages per…
The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year: Hagerstown Company Machining Department Monthly Production Budget Wages Utilities Depreciation Total $417,000 28,000 47,000 $492,000 The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: Amount Spent Units Produced May June July $464,000 448,000 425,000 51,000 47,000 42,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for May-July have been significantly less than the monthly static budget of 492,000. However, the plant manager believes that the budget should not remain fixed for every month but should "flex" or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows: Wages per hour Utility cost per direct labor hour…
The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year: Hagerstown CompanyMachining DepartmentMonthly Production Budget Wages $480,000 Utilities 27,000 Depreciation 45,000 Total $552,000 The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: Amount Spent Units Produced May $520,000 55,000 June 496,000 50,000 July 472,000 45,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for May–July have been significantly less than the monthly static budget of 552,000. However, the plant manager believes that the budget should not remain fixed for every month but should “flex” or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows: Wages per…
The production supervisor of the Machining Department for Niland Company agreed to the following monthly static budget for the upcoming year: Niland CompanyMachining DepartmentMonthly Production Budget Wages $282,000 Utilities 20,000 Depreciation 34,000 Total $336,000 The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: Amount Spent Units Produced January $318,000 74,000 February 306,000 68,000 March 292,000 61,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for January–March have been less than the monthly static budget of $336,000. However, the plant manager believes that the budget should not remain fixed for every month but should “flex” or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows: Wages per hour…
Harper Manufacturing determines allocation rates as part of its annual budgeting process, which takes place 1 month before the beginning of the year. The company reports the following manufacturing overhead information as part of its budgeting process: Budgeted MOH Budgeted production (units) Budgeted direct labor hours Cost Pool Cost Pool 1 Cost Pool 2 Total Total Cost $ 6,000,000 $ 9,000,000 $ 15,000,000 $ 15,000,000 25,000,000 40,000 Allocation Base Unit Direct labor hour Question a. Assuming that Harper uses a traditional job costing system with a single allocation base (units), what is the predetermined overhead rate for the upcoming year? Note: Round your answer to 2 decimals. b. Assume Job 189 comprises 36 units and 2 direct labor hours. If Harper uses a traditional job costing system with a single allocation base (units), what is the total manufacturing overhead allocated to the job? Note: Round your answer to 2 decimals. c1. Now assume that Harper uses a two-stage job costing…