Q8
2022 Budgeted Information:
2022 Budgeted Contribution Margins Basic Customized
Selling Price $ 1.62 $ 3.22
Variable Cost $ 1.26 $ 2.43
Sale Commission $ 0.06 $ 0.12
CM/unit $ XXXXXXXXXX $ XXXXXXXXXX
Basic Custom
bud qty bud price bud cost/unit bud qty bud price bud cost/unit
Plastic 0.0625 9.2 0.5750 0.125 9.2 1.1500
Cartridge 1 0.48 0.4800 1 0.48 0.4800
Direct Labor 0.01 15.4 0.1540 0.02 15.4 0.3080
VManufOps 0.002 18.4995 0.0370 0.004 18.4995 0.0740
VSupsMOH 0.0004 30.5612 0.0122 0.008 30.5612 0.2445
VS&A 0.06 0.12
Total 1.3182 2.3765
Compute the following:
Sales Budget MOH Budget Ending Inventory Budget
Selling Price Units Sold Total Revenues Manufacturing Operations Overhead Cost Cost per unit Units Total
Basic $ 1.62 2,460,000 $3,985,200 Variable OH Direct Materials
Customized $ 3.22 820,000 $2,640,400 Fixed OH Cartridge
$6,625,600 Total Plastic
Manufacturing Setup Overhead Cost Finished Goods
Production Budget Variable OH Basic
Basic Customized Fixed OH Customized
Units required for sales 2,460,000 820,000 Total
Add: Ending inventory of FG 504,000 0
Total finished units required 2,964,000 820,000 Cost of Goods Sold Budget
Less: Beginning inventory of FG 350,000 0 Beginning FG inventory:
Units to be produced 2,614,000 820,000 Direct Materials used
Direct Manufacturing Labo
Direct Materials Usage Budget MOH
Cartridge Plastic Cost of Goods Manufactured
Physical units budget Basic Customized Total Basic Customized Total Cost of Goods Available for Sale
DM required 2,614,000 820,000 3,434,000 163,375 102,500 265,875 Deduct ending FG inventory
Cost budget COGS
Available for beg. Material inventory 72,000 96,000
To be purchased 1,561,920 2,335,650
DM to be used this period 1,633,920 2,431,650 4,065,570
Direct Materials Purchases Budget S&A Budget
Physical units budget Cartridge Plastic Advertising Expense
Units needed for production 3,434,000 265,875 Sales Department Salaries
Target ending inventory S&A Depreciation
Total requirements Commission
Less: Beginning inventory Total
Units to be purchased
Cost budget
Purchases Budgeted Income Statement
Revenue
Direct Labor Budget Less: Cost of Goods Sold
Labor hours budget Basic Customized Gross Margin
Units to be produced Selling and Administration Expense
Hours to be per unit Operating Income
Cost budget
Labor cost per hou
Cash Budget for 2022
Cash balance, beginning
Add: Collection from customers
Total cash available
Disbursement
Direct Materials:
Payroll
MOH costs
Non-manufacturing costs
Minimum cash balance
Total cash needed
Cash excess
Cash balance, ending
Q9
a. Calculate the direct material price variance, the direct material efficiency variance, the direct labor price variance, and the direct labor efficiency variance for each of the product lines separately.
Also, for each overhead activity, calculate the FMOH (spending and production volume) variances for the Pen division and the VMOH (spending and efficiency) variances for the two products.
Use IF statements to determine if the variances are favorable or unfavorable.
Actual quantities and costs recorded at the end of 2022:
Basic Pen Customized Pen
Total pens produced 2,500,200 pens 901,600 pens
Average selling price $1.55 per pen $3.30 per pen
Pounds of plastic used to produce pens 154,000 pounds 118,000 pounds
Amount of cartridges used to produce pens 2,505,000 cartridges 925,000 cartridges
Direct labor hours used 24,900 DLHrs 19,700 DLHrs
Distribution of $882,075 in total wages payable $379,725 $502,350
Actual machine hours 4,800 actual MHrs 3,750 actual MHrs
Number of pens produced into batches 5,400 pens 920 pens
Hours per batch 1.9 hours per batch 8.4 hours per batch
Total pounds of plastic purchased 280,000 @ $2,590,000
Total of cartridges purchased 3,600,000 @ $1,764,000
Manufacturing Operations Overhead Actual Fixed Costs $254,000
Manufacturing Operations Overhead Actual Variable Costs $185,000
Machine Setup Overhead Actual Fixed Costs $333,000
Machine Setup Overhead Actual Variable Costs $235,011
b. Which of the variances that you calculated should you investigate – and why? Provide possible reasons for the variances.