COST MANAGEMENT LOOSELEAF CUSTOM
8th Edition
ISBN: 9781307659177
Author: BLOCHER
Publisher: MCG/CREATE
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 52P
1.
To determine
Prepare sales budget of “S” manufacturing Company for the year 2019.
1.
Expert Solution
Explanation of Solution
Compute the sales budget of “S” manufacturing Company for the year 2019:
| "S" Manufacturing Company Sales Budget 2019 | |||
| Particulars | Amount | Amount | Total |
| Sales (in units) | 12000 | 9000 | 21000 |
| Selling Price per unit | $150 | $220 | |
| Total Sales Revenue | $1,800,000 | $1,980,000 | $3,780,000 |
Working notes:
| "S" Manufacturing Company Sales Budget 2019 | |||
| Particulars | Amount | Amount | Total |
| Sales (in units) | 12000 | 9000 | =SUM(C6:D6) |
| Selling Price per unit | 150 | 220 | |
| Total Sales Revenue | =C6*C7 | =D6*D7 | =SUM(C8:D8) |
Compute of production budget of “S” manufacturing Company for the year 2019:
| "S" Manufacturing Company Production Budget 2019 | ||
| Particulars | Amount | Amount |
| Budgeted Sales (in units) | 12,000 | 9,000 |
| Add: Desired finished goods | 300 | 200 |
| Total units needed | 12,300 | 9,200 |
| Less: Beginning finished goods | 400 | 150 |
| Budgeted Production (in units) | 11900 | 9050 |
Compute the direct material purchase budget of “S” manufacturing Company for the year 2019:
| "S" Manufacturing Company Direct Material Purchase Budget (units and dollars) 2019 | |||
| Particulars | Amount | Amount | Total |
| Raw Material (RM) 1: | |||
| Budgeted Production | 11,900 | 9,050 | |
| Pounds per Unit | 9 | 7 | |
| RM 1 needed for production | 107,100 | 63,350 | 170,450 |
| Add: Desired Ending Inventory | 4000 | ||
| Total RM 1 needed | 174,450 | ||
| Less: Beginning inventory | 3000 | ||
| Required purchases of RM 1 | 171,450 | ||
| Cost per pound | $2 | ||
| Budgeted purchases, RM 1 | $342,900 | ||
| Raw Material (RM) 2 | |||
| Budgeted Production | 11,900 | 9,050 | |
| Pounds per Unit | 0 | 3.6 | |
| RM 2 needed for production | 0 | 32,580 | 32,580 |
| Add: Desired Ending Inventory | 1,000 | ||
| Total RM 2 needed | 33,580 | ||
| Less: Beginning inventory | 1,500 | ||
| Required purchases of RM 2 | 32,080 | ||
| Cost per pound | $2.50 | ||
| Budgeted purchases, RM 2 | $80,200 | ||
| Raw Material (RM) 3 | |||
| Budgeted Production | 11,900 | 9,050 | |
| Pounds per Unit | 1.8 | 0.8 | |
| RM 3 needed for production | 21,420 | 7,240 | 28,660 |
| Add: Desired Ending Inventory | 1,500 | ||
| Total RM 3 needed | 30,160 | ||
| Less: Beginning inventory | 1,000 | ||
| Required purchases of RM 3 | 29,160 | ||
| Cost per pound | $0.50 | ||
| Budgeted purchases, RM 3 | $14,580 | ||
Working notes:
| "S" Manufacturing Company Direct Material Purchase Budget (units and dollars) 2019 | |||
| Particulars | Amount | Amount | Total |
| Raw Material (RM) 1: | |||
| Budgeted Production | 11900 | 9050 | |
| Pounds per Unit | 9 | 7 | |
| RM 1 needed for production | =C23*C24 | =D23*D24 | =SUM(C25:D25) |
| Add: Desired Ending Inventory | 4000 | ||
| Total RM 1 needed | =E25+E26 | ||
| Less: Beginning inventory | 3000 | ||
| Required purchases of RM 1 | =E27-E28 | ||
| Cost per pound | 2 | ||
| Budgeted purchases, RM 1 | =E29*E30 | ||
| Raw Material (RM) 2 | |||
| Budgeted Production | 11900 | 9050 | |
| Pounds per Unit | 0 | 3.6 | |
| RM 2 needed for production | =C34*C35 | =D34*D35 | =SUM(C36:D36) |
| Add: Desired Ending Inventory | 1000 | ||
| Total RM 2 needed | =E36+E37 | ||
| Less: Beginning inventory | 1500 | ||
| Required purchases of RM 2 | =E38-E39 | ||
| Cost per pound | 2.5 | ||
| Budgeted purchases, RM 2 | =E40*E41 | ||
| Raw Material (RM) 3 | |||
| Budgeted Production | 11900 | 9050 | |
| Pounds per Unit | 1.8 | 0.8 | |
| RM 3 needed for production | =C45*C46 | =D45*D46 | =SUM(C47:D47) |
| Add: Desired Ending Inventory | 1500 | ||
| Total RM 3 needed | =E47+E48 | ||
| Less: Beginning inventory | 1000 | ||
| Required purchases of RM 3 | =E49-E50 | ||
| Cost per pound | 0.5 | ||
| Budgeted purchases, RM 3 | =E51*E52 | ||
Compute of direct labor purchase budget of “S” manufacturing Company for the year 2019:
| "S" Manufacturing Company Direct Labor Budget 2019 | |||
| Particulars | Amount | Amount | Total |
| Budgeted production | 11,900 | 9,050 | |
| Direct labor hours per unit | 1.5 | 2 | |
| Total direct labor hours needed | 17,850 | 18,100 | 35,950 |
| Hourly wage rate | $30.00 | ||
| Budgeted direct labor costs | $1,078,500 | ||
Working notes:
| "S" Manufacturing Company Direct Labor Budget 2019 | |||
| Particulars | Amount | Amount | Total |
| Budgeted production | 11900 | 9050 | |
| Direct labor hours per unit | 1.5 | 2 | |
| Total direct labor hours needed | =C57*C58 | =D57*D58 | =SUM(C59:D59) |
| Hourly wage rate | 30 | ||
| Budgeted direct labor costs | =E59*E60 | ||
Compute of factory
| "S" Manufacturing Company Factory overhead Budget 2019 | ||
| Particulars | Amount | Amount |
| Variable Factory Overhead: | ||
| Indirect materials | $10,000 | |
| Miscellaneous supplies and tools | $5,000 | |
| Indirect labor | $40,000 | |
| Payroll taxes and | $250,000 | |
| Maintenance costs | $10,080 | |
| Heat, light, and power | $11,000 | $326,080 |
| Fixed Factory Overhead: | ||
| Supervision | $120,000 | |
| Maintenance costs | $20,000 | |
| Heat, light, and power | $43,420 | |
| Total Cash Fixed Factory Overhead | $183,420 | |
| $71,330 | $254,750 | |
| Total Budgeted Factory Overhead | $580,830 | |
| Budgeted Variable OH: | ||
| Variable cost | $293,472 | |
| Budgeted Fixed OH: | ||
| Cash Charges | $174,249 | |
| Depreciation | $71,330 | |
| Total Budgeted Fixed OH | $245,579 | |
Working notes:
| "S" Manufacturing Company Factory overhead Budget 2019 | ||
| Particulars | Amount | Amount |
| Variable Factory Overhead: | ||
| Indirect materials | 10000 | |
| Miscellaneous supplies and tools | 5000 | |
| Indirect labor | 40000 | |
| Payroll taxes and fringe benefits | 250000 | |
| Maintenance costs | 10080 | |
| Heat, light, and power | 11000 | 326080 |
| Fixed Factory Overhead: | ||
| Supervision | 120000 | |
| Maintenance costs | 20000 | |
| Heat, light, and power | 43420 | |
| Total Cash Fixed Factory Overhead | 183420 | |
| Depreciation | 71330 | 254750 |
| Total Budgeted Factory Overhead | 580830 | |
| Budgeted Variable OH: | ||
| Variable cost | =326080*(1-0.1) | |
| Budgeted Fixed OH: | ||
| Cash Charges | =183420*(1-0.05) | |
| Depreciation | 71330 | |
| Total Budgeted Fixed OH | =SUM(C84:C85) | |
Prepare cost of goods sold and ending finished goods inventory budget for the year:
| "S" Manufacturing Company Ending Finished Goods Inventory and Budgeted CGS 2019 | |||
| Particulars | Amount | Amount | Total |
| Sales volume | 12,000 | 9,000 | 21,000 |
| Cost per unit (Schedule 1 and 2) | $86.39 | $113.39 | |
| Cost of Goods Sold | $1,036,700 | $1,020,500 | $2,057,201 |
| Ending Finished Goods Inventory | 300 | 200 | |
| Cost per unit (Schedule 1 and 2) | $86.39 | $113.39 | |
| Budgeted ending inventories | $25,918 | $22,678 | $48,595 |
Working notes
| "S" Manufacturing Company Ending Finished Goods Inventory and Budgeted CGS 2019 | |||
| Particulars | Amount | Amount | Total |
| Sales volume | 12000 | 9000 | =SUM(C116:D116) |
| Cost per unit (Schedule 1 and 2) | 86.3917 | 113.38893 | |
| Cost of Goods Sold | =C116*C117 | =D116*D117 | =SUM(C118:D118) |
| Ending Finished Goods Inventory | 300 | 200 | |
| Cost per unit (Schedule 1 and 2) | 86.3917 | 113.38893 | |
| Budgeted ending inventories | =C120*C121 | =D121*D120 | =SUM(C122:D122) |
Schedule-1
| Schedule 1: Cost per Unit--Product | |||
| Cost Element | Unit Input Cost | Quantity | Per Unit |
| RM-1 | $2.00 | 9 | $18.00 |
| RM-3 | $0.50 | 1.8 | $0.90 |
| Direct labor | $30.00 | 1.5 | $45.00 |
| Variable factory OH ($293,472 ÷ 35,950) | $8.16 | 1.5 | $12.24 |
| Fixed factory OH ($254,579 ÷ 35,950) | $6.83 | 1.5 | $10.25 |
| $86.39 | |||
Schedule-2
| Schedule 2: Cost per Unit--Product | |||
| Cost Element | Inputs Unit Input Cost | Quantity | Cost Per Unit |
| RM-1 | $2.00 | 7 | $14.00 |
| RM-2 | $2.50 | 3.6 | $9.00 |
| RM-3 | $0.50 | 0.8 | $0.40 |
| Direct labor | $30.00 | 2 | $60.00 |
| Variable factory OH ($293,472 ÷ 35,950) | $8.16 | 2 | $16.33 |
| Fixed factory OH ($254,579 ÷ 35,950) | $6.83 | 2 | $13.66 |
| Manufacturing cost per unit | $113.39 | ||
Prepare the selling and administrative budget of “S” manufacturing Company for the year 2019:
| "S" Manufacturing Company Selling and administrative expense Budget 2019 | ||
| Particulars | Amount | Amount |
| Selling Expenses: | ||
| Advertising | $60,000 | |
| Sales salaries | $200,000 | |
| Travel and entertainment | $60,000 | |
| Depreciation | $5,000 | $325,000 |
| Administrative expenses: | ||
| Offices salaries | $60,000 | |
| Executive salaries | $250,000 | |
| Supplies | $4,000 | |
| Depreciation | $6,000 | $320,000 |
| Total selling and administrative expenses | $645,000 | |
Prepare
| "S" Manufacturing Company Budgeted Income Statement 2019 | |||
| Particulars | Amount | Amount | Total |
| Sales | $1,800,000 | $1,980,000 | $3,780,000 |
| Less: Cost of Goods Sold | $1,036,699 | $1,020,499 | $2,057,198 |
| Gross Profit | $763,301 | $959,501 | $1,722,802 |
| Selling and Administrative Expenses | $645,000 | ||
| Pre-tax Operating Income | $1,077,802 | ||
| Income Taxes (@40%) | $431,121 | ||
| After-tax Operating Income | $646,681 | ||
Working notes:
| "S" Manufacturing Company Budgeted Income Statement 2019 | |||
| Particulars | Amount | Amount | Total |
| Sales | 1800000 | 1980000 | 3780000 |
| Less: Cost of Goods Sold | 1036699 | 1020499 | =SUM(C106:D106) |
| Gross Profit | =C105-C106 | =D105-D106 | =E105-E106 |
| Selling and Administrative Expenses | 645000 | ||
| Pre-tax Operating Income | =E107-E108 | ||
| Income Taxes (@40%) | =E109*40% | ||
| After-tax Operating Income | =E109-E110 | ||
2.
To determine
Explain the benefits of adopting the improvement program by “S” manufacturing.
2.
Expert Solution
Explanation of Solution
The revised budget after-tax operating income is $646,681. Therefore, an increase in the amount of income is 37%. The company is benefited in the long-run from the deduction in direct materials, direct labor hours, and factory overhead that is needed in production. The reduction in the consumption of manufacturing elements will decrease the wear and tear of equipment and other facilities.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Covered member’s independence is impaired with respect to an attest client. What is a covered member for a CPA?
What are the sources of liability for an auditor who violates the rules of professional conduct in an audit engagement?
Monty Inc., a major retailer of high-end office furniture, operates several stores and is a publicly traded company. The company is currently preparing its statement of cash flows. The comparative statement of financial position and income stetement for Monty as at May 31, 2020, are as
The rollowing is additional Informacon soous transectons cunne tie year shoes may sa, coat for Monty ancy which tohows arks. Plant assets costing $69,000 were purchased by paying $47,000 in cash and issuing 5,000 common shares. In order to supplement is casn, Monty Issued ,000 edditone common snares. Cash dividends of $35,000 were declared and paid at the end of the fiscal year
create cashflow direct method statement
Bonita Industries reports the following ledger account balances at June 30, 2025:
Cash $1158
Accounts receivable 2838
Inventory 3384
Prepaid rent 104
Equipment 320
Accumulated depreciation-equipment 66
Accounts payable 920
Unearned rent revenue 144
Common stock 220
Retained earnings 6740
Service revenue 392
Interest revenue 80
Salaries and wages expense 200
Insurance expense 98
Assuming that all of the accounts have normal balances, what are total credits on the company's trial balance at June 30, 2025?
A. $8562.
B. $8586.
C. $8496.
D. $8482.
Chapter 10 Solutions
COST MANAGEMENT LOOSELEAF CUSTOM
Ch. 10 - Prob. 1QCh. 10 - Differentiate among master, operating, and...Ch. 10 - Many accountants believe that the most important...Ch. 10 - Some critics of budgeting believe that budgets are...Ch. 10 - Prob. 5QCh. 10 - Prob. 6QCh. 10 - Prob. 7QCh. 10 - Prob. 8QCh. 10 - Prob. 9QCh. 10 - Prob. 10Q
Ch. 10 - Prob. 11QCh. 10 - Prob. 12QCh. 10 - Prob. 13QCh. 10 - Prob. 14BECh. 10 - Prob. 15BECh. 10 - Prob. 16BECh. 10 - Prob. 17BECh. 10 - Easy Clean operates a chain of dry cleaners. It is...Ch. 10 - Prob. 19BECh. 10 - Prob. 20BECh. 10 - Prob. 21BECh. 10 - Prob. 22BECh. 10 - Prob. 23BECh. 10 - Purchase Discounts It is typically beneficial for...Ch. 10 - Production and Materials Purchases Budgets White...Ch. 10 - Prob. 26ECh. 10 - Prob. 27ECh. 10 - Cash Budget—Financing Effects You are a relatively...Ch. 10 - Cash Budget Marsha Inc. has the following budgeted...Ch. 10 - Budgeted Cash Receipts: Cash Discounts Allowed on...Ch. 10 - Cash Receipts and Payments Information pertaining...Ch. 10 - Retailer Budget D. Tomlinson Retail seeks your...Ch. 10 - Accounts Receivable Collections and Sensitivity...Ch. 10 - Prob. 34ECh. 10 - What-If Analysis As the management accountant for...Ch. 10 - Profit Planning and Sensitivity Analysis You are...Ch. 10 - Scenario Analysis As part of the process of...Ch. 10 - Prob. 40ECh. 10 - Activity-Based Budgeting (ABB) OFC Company of...Ch. 10 - Prob. 42ECh. 10 - Prob. 43ECh. 10 - Prob. 44ECh. 10 - Prob. 45ECh. 10 - Prob. 46ECh. 10 - Prob. 47ECh. 10 - Prob. 48ECh. 10 - Budgeting for a Merchandising Firm Goldberg...Ch. 10 - Prob. 50PCh. 10 - Prob. 51PCh. 10 - Prob. 52PCh. 10 - Prob. 53PCh. 10 - Prob. 57PCh. 10 - Prob. 59PCh. 10 - Prob. 60P
Knowledge Booster
Similar questions
- A trial balance will balance even if A. a journal entry to record the purchase of equipment for cash of $52100 is not posted. B. a $13100 cash dividend is debited to dividends for $13100 and credited to cash for $1310. C. a $510 collection on accounts receivable is credited to accounts receivable for $510 without a corresponding debit. D. a purchase of supplies for $595 on account is debited to supplies for $595 and credited to accounts payable for $559.arrow_forwardEquipment costing $15200 is purchased by paying $3800 cash and signing a note payable for the remainder. The journal entry to record this transaction should include a credit to Notes Payable. credit to Notes Receivable. credit to Equipment. debit to Cash.arrow_forwardAt December 1, 2025, a company's Accounts Receivable balance was $20160. During December, the company had credit sales of $54000 and collected accounts receivable of $43200. At December 31, 2025, the Accounts Receivable balance is A. $30960 debit. B. $30960 credit. C. $74160 debit. D. $20160 debit.arrow_forward
- Whispering Winds Corp.'s trial balance at the end of its first month of operations reported the following accounts and amounts with normal balances: Cash $14720 Prepaid insurance 460 Accounts receivable 2300 Accounts payable 1840 Notes payable 2760 Common stock 4600 Dividends 460 Revenues 20240 Expenses 11500 Total credits on Whispering Winds Corp's trial balance are A. $28980. B. $30360. C. $29900. D. $29440arrow_forwardSwifty Corporation's trial balance reported the following normal balances at the end of its first year: Cash $14440 Prepaid insurance 530 Accounts receivable 2660 Accounts payable 2130 Notes payable 3190 Common stock 4100 Dividends 530 Revenues 22040 Expenses 13300 What amount did Swifty Corporation's trial balance show as total credits? A. $31460 B. $32520 C. $30930 D. $31990arrow_forwardMonty Inc., a major retailer of high-end office furniture, operates several stores and is a publicly traded company. The company is currently preparing its statement of cash flows. The comparative statement of financial position and income statement for Monty as at May 31, 2020, are as The following is additional information about transactions during the year ended May 31, 2020 for Monty Inc., which follows IFRS. Plant assets costing $69,000 were purchased by paying $47,000 in cash and issuing 5,000 common shares. In order to supplement its cash, Monty issued 4,000 additional common shares. Cash dividends of $35,000 were declered and paid at the end of the fiscal year. create direct method cash flow statement, show your workarrow_forward
- Following is additional information about transactiona during the year ended May 31, 2020 for Monty Inc., which follows IFRS. Plant assets costing $69,000 were purchased by paying $47,000 in cash and issuing 5,000 common shares. In order to supplement iRs cash, Monty Issued 4,000 additional common shares. Cash dividends of $35,000 were declared and paid at the end of the fiscal year. PRepare a direct Method Cash FLow using the format.arrow_forwardmake a trail balancearrow_forwardOn July 31, 2025, the general ledger of Cullumber Legal Services Inc. showed the following balances: Cash $4,960, Accounts Receivable $1,860, Supplies $620, Equipment $6,200, Accounts Payable $5,080, Common Stock $4,340, and Retained Earnings $4,220. During August, the following transactions occurred. Aug. 3 5 Collected $1,490 of accounts receivable due from customers. Received $1,610 cash for issuing common stock to new investors. 6 Paid $3,350 cash on accounts payable. 7 Performed legal services of $8,060, of which $3,720 was collected in cash and the remainder was due on account. 2 2 2 2 2 12 Purchased additional equipment for $1,490, paying $500 in cash and the balance on account. 14 Paid salaries $4,340, rent $1,120, and advertising expenses $340 for the month of August. 18 20 24 26 27 Collected the balance for the services performed on August 7. Paid cash dividend of $620 to stockholders. Billed a client $1,240 for legal services performed. Received $2,480 from Laurentian Bank;…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education