Homework Assignment 2 (5%)
Homework Assignment 2 (30%)
Exercise 1. Mandall Company is a merchandising company that sells a single product. The company provided the budgeted sales in units for the next fourth quarter:
Octobe
Novembe
Decembe
Budgeted unit Sales
20,000 units
30,000 units
25,000 units
Selling price is $50 per unit. Mandall Company expects to collect 30% of a month's sales in the month of sale, 60% in the month following sale, and 10% are uncollectable. The beginning balance of accounts receivable, all of which is expected to be collected in October is $90,000.
Required: Prepare the schedule of expected cash collections from sales by month and in total for the fourth quarter.
Exercise 2. Almana Hospital uses patient-visits as its measure of activity. The hospital has provided the following report:
Almana Hospital
Comparison of Actual Results to Planning Budget
For the Month Ended May 31
Actual Results
Planning Budget
Flexible Budget
Variances
Patient-visits
2,000
2,300
Revenue ($36.40q)
$76,110
$83,720
Expenses:
Personnel expenses ($20,400 + $10.40q)
43,240
44,320
Medical supplies ($1,100 + $6.60q)
13,990
16,280
Occupancy expenses ($6,400 + $1.50q)
9,800
9,850
Administrative expenses ($2,400 + $0.40q)
3,080
3,320
Total expense
70,110
73,770
Net operating income
$6,000
$9,950
Required:
a) Prepare a flexible budget.
) Prepare a report showing the hospital's revenue and spending variances for May.
c) Label each variance as favorable (F) or unfavorable (U). Fill in the last column of the table above.
Exercise 3. Zee Corporation has developed the following cost standards for the production of its leather backpacks:
Standard Cost Per Backpack
Leather (0.9 yards × $22 per yard)
$19.80
Direct labor (1.3 hours × $9.00 per hour)
$11.70
The actual results for last month were as follows:
Number of backpacks produced
15,000
Direct labor hours incu
ed
18,800
Yards of leather used in production
14,100
Cost of leather purchased
$306,675
Direct labor cost
$159,800
Required:
Compute the following variances for Zee.
a. Materials price variance.
b. Materials quantity variance.
c. Labor efficiency variance.
d. Labor rate variance.
Exercise 4. The following information relates to Marter Manufacturing Corporation for next year:
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Expected sales (in units)
220,000
230,000
160,000
180,000
Desired ending finished goods inventory (in units)
29,800
32,300
38,000
35,000
Beginning balance of Quarter 1 inventory is 37,100 units.
Required: Prepare the production budget by quarter and in total for the year.