ACC/400 Week 4 Assignment from Textbook: Chapter 23 & 24
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Brief Exercise 23.6 – Elements of the Budget
Identify the budgets in Column B from which dollar amounts are transferred directly in constructing the budgets listed in Column A
Exercise 23.1 – Budgeting Purchases and Cash Payment
The following information is from the manufacturing budget and the budgeted financial statements of Fabor Fabrication:
Direct materials inventory Jan.1…….……………………………………. $73,000
Direct materials inventory Dec.31……………………………………… 85,000
Direct materials budgeted for use during the year……………………… 264,000
Accounts payable to suppliers of materials Jan.1……………………… 46,000
Accounts payable to suppliers of materials Dec.31……………………… 77,000
Compute the budgeted amounts for:
- Purchases of direct materials during the year
- Cash payments during the year to suppliers of materials
Exercise 23.8 – Budgeting Cash Receipts
Sales on account for the first two months of the current year are budgeted as follows: Jan……………………………………… $800,000
Feb……………………………………… 880,000
All sales are made on terms of 2/10, n/30 (2% discount if paid in 10 days, full amount by
30 days); collection on accounts receivable are typically made as follows: Collections with the month of sale:
Within discount period………………………………….. 70% After discount period……………………………………. 10
Collections within the month following sale:
Within the discount period…………………………… 12
After the discount period…………………………….. 6
Returns, allowances, and uncollectibles…………………… 2
Total……………………………………………………… 100
Compute the estimated cash collections on accounts receivable for the month of
Exercise 23.9 – Budgeting an Ending Cash Balance
On March 1 of the current year, Spicer Corporation compiled information to prepare a cash budget for March, April, and May. All of the company’s sales are made on account. The following information has been provided by Spicer’s management:
Month Credit Sales Jan……………………………………… $300,000 (actual) Feb……………………………………… 800,000 (actual) Mar……………………………………… 600,000 (estimated) Apr……………………………………… 700,000 (estimated) May……………………………………… 800,000 (estimated)
The company’s collection activity on credit sales historically has been as follows: Collections in the month of the sale……………………………………… 50%
Collections one month after the sale……………………………………… 30
Collections two months after the sale……………………………………. 15
Uncollectible accounts…………………………………………………….. 5
Spicer’s total cash expenditures for March, April and May have been estimated at $1,200,000 (an average of $400,000 per month). Its cash balance on March 1 of the current year is $500,000. No financing or investing activities are anticipated during the second quarter. Compute Spicer’s budgeted cash balance at the ends of March, April and May.
Exercise 24.2 – Relationships among Standard Costs, Actual Costs and Cost Variances
The standard costs and variances for direct materials, direct labor, and factory overhead for the month of May are as follows:
Variances
Standard Cost Unfavorable Favorable
Direct Materials $85,000
| Price Variance | $5,000 | ||
| Quantity Variance | $3,000 | ||
| Direct Labor | $150,000 | ||
| Rate variance | $2,700 | ||
| Efficiency variance | $6,200 | ||
| Manufacturing
Overhead |
$300,000 | ||
| Spending variance | $4,000 | ||
| Volume variance | $5,000 |
Determine the actual costs incurred during the month of May for direct materials, direct labor, and manufacturing overhead.
Exercise 24.4 – Computing Materials Cost Variances and Volume Variance
Gumchara Corporation reported the following information with respect to the materials required to manufacture amalgam florostats during the current month:
Standard price per gram of materials…….……………………………………. $4
Standard quantity of materials per amalgam florostat..……………… 5 grams Actual materials purchased and used in production……………… 6,000 grams Actual amalgam florostats produced during the months…………… 1,000 units Actual cost of materials purchased……………………………………… $18,000
Normal monthly output………………………………………………….. 900 units a. Determine Gumchara’s materials price variance.
- Determine Gumchara’s materials quantity variance.
- Will Gumchara’s overhead volume variance be favorable or unfavorable? Why?
Exercise 24.6 – Computing Labor Cost Variances
Marlo Enterprises produces radon mitigation pumps. Information pertaining to the company’s monthly direct labor usages is provided below:
Standard labor rate per hour…….…………………………………..………. $16
Standard hours allowed per radon mitigation pump..……………… 0.5 hours Actual pumps produced during the current month…………..…… 9,000 units Actual labor hours worked during the current month……………. 3,600 hours Actual labor cost for the current month…..…………………………… $64,800
- Compute the company’s labor rate variance.
- Compute the company’s labor efficiency variance.
- An extremely large order of radon mitigation pumps was filled during the month for exportation to Saudi Arabia. Filing this order resulted in extended hours for many of the company’s workers. Which labor variance reflects the extra hours worked by Marlo’s employees? Was their time utilized? Explain.