Notre Dame College
MBA 540 Accounting
Week 4
Assignment 4-2
Total points: 50
1. This is a numerical assignment. The maximum points are shown against each problem given below.
2. Show the complete work before you give the final answer.
3. Analytical approach is expected where a question is descriptive in nature.
1. (3 points) Each unit requires direct labor of 4.5 hours. The labor rate is $20.00 per hour and next year’s direct labor budget totals $50,000.
Required
Calculate the number of units included in the production budget for next year.
Answer and Work:
2. (3 points) Given the following information from Power Enterprises’ direct materials budget.
Production
500,000 units
Beginning Materials Inventory
270,000 units
Ending materials inventory
170,000 units
Estimated sales
Required
Calculate how many units are estimated to be sold?
Answer and Work:
3. (4 points) Diya Corporation’s Management has prepared the following summary data to use in its annual budgeting process:
Budgeted unit sales
640
Selling price per unit
$ 2,040
Cost per unit
$ 1,370
Variable selling and administrative expense (per unit)
$ 75
Fixed selling and administrative expense (per year)
$ 300,000
Interest expense for the yea
$ 20,000
Required:
Prepare the company’s budgeted income statement for the year.
Answer and Work:
4. (8 points) The Diya Corporation’s Management has compiled the following data to use in preparing its budgeted balance sheet for next year:
XXXXXXXXXXEnding Balances
Cash
?
Accounts receivable
$ 9,700
Supplies inventory
$3,800
Equipment
$ 42,000
Accumulated depreciation
$ 17,000
Accounts payable
$ 3,400
Common stock
$ 5,000
Retained earnings
?
The beginning balance of retained earnings was $33,000, net income is budgeted to be $16,900 and dividends are budgeted to be $3,700.
Required:
Prepare the company’s budgeted balance sheet.
Answer and Work:
5. (6 points) The production manager of Patel Corporation has submitted the following quarterly production forecast for the upcoming fiscal year:
1st Quarte
2nd Quarte
3rd Quarte
4th Quarte
Units to be produced
2,000
1,800
1,500
1,200
Each unit requires 0.65 direct labor-hours, and direct laborers are paid $25.00 per hour.
Required:
Prepare the company’s direct labor budget for the upcoming fiscal year.
Answer and Work:
6. (10 points) Nona’s Manufacturing data shows the following information:
January
Fe
uary
March
April
May
Estimated sales in units
15,000
14,500
16,000
15,500
15,800
Sales price per unit
$45
$45
$45
$45
$45
Direct labor per unit
3
3
2.25
2
2
Labor rate per hou
$18
$18
$21
$21
$21
New machinery will be added in April. This machine will reduce the labor required per unit and increase the labor rate for those employees qualified to operate the machinery. Finished goods inventory is required to be 20% of the next month’s requirements. Direct material requires 2 pounds per unit at a cost of $5 per pound. The ending inventory required for direct materials is 15% of the next month’s needs. In January, the beginning inventory is 3,000 units of finished goods and 4,470 pounds of material.
Required:
a) Prepare a production budget for the first quarter of the year.
) Prepare a direct materials budget for the first quarter of the year.
c) Prepare a direct labor budget for the first quarter of the year.
Answer and Work:
7. (6 points) Weller Company produces surgical supplies and sells to other companies. It prepared a static budget for the sales of 5,000 units. These variances were observed:
Actual Results
Variance
Units
Sales
$150,000
$25,000
Favorable (F)
Variable expenses
77,800
12,800
Unfavorable(U)
Fixed expenses
70,300
300
Unfavorable(U)
Net income (loss)
$1,900
$11,900
Unfavorable(U)
Required
a) Determine the static budget and use the above information to prepare a flexible budget and analysis for the 6,000 units actually sold.
) Calculate the variance and state whether your calculated variance is favorable or unfavorable.
c) What could be the possible reasons for the variance?
Answer and Work:
8. (10 points) Relevant data from the Poster Company’s operating budgets are:
Quarter 1
Quarter 2
Sales
$33,948
$76,482
Direct material purchased
25,312
26,423
Direct labo
29,948
24,328
Manufacturing overhead
9,322
10,299
Selling and administration expenses
19,283
19,238
Depreciation included in selling and administration expenses
950
800
Collection from customers
34,324
76,938
Cash payments for purchases
29,349
20,937
Cash Received: othe
8,000
500
Dividend
0
500
· Capital assets were sold in quarter 1 and $8,000 was collected in quarter 1 and $500 collected in quarter 2.
· Dividends of $500 will be paid in May.
· The beginning cash balance was $50,000 and the required minimum cash balance is $10,000.
Required
Use this information above and prepare a cash budget for the first two quarters of the year.
Answer and Work:
Notre Dame College
MBA 540 Accounting
Week 4
Assignment 4
-
2
Total points: 50
1.
This is a numerical assignment. The maximum points are shown against each problem given
elow.
2.
Show the complete work before you give the final answer.
3.
Analytical approach is expected where a question is descriptive in nature.
1.
(
3 points
)
Each unit requires direct labor of 4.5 hours. The labor rate is $20.00 per hour and
next year’s direct labor budget totals $50,000.
Required
Calculate the number of units included in the production budget for next year.
Answer and Work
:
2.
(
3
points
) Given the following information from Power Enterprises’ direct materials budget.
Production
500,000 units
Beginning Materials Inventory
270,000 units
Ending materials inventory
170,000 units
Estimated sales
Required
Calculate how many
units are estimated to be sold?
Answer and Work
:
Notre Dame College
MBA 540 Accounting
Week 4
Assignment 4-2
Total points: 50
1. This is a numerical assignment. The maximum points are shown against each problem given
elow.
2. Show the complete work before you give the final answer.
3. Analytical approach is expected where a question is descriptive in nature.
1. (3 points) Each unit requires direct labor of 4.5 hours. The labor rate is $20.00 per hour and
next year’s direct labor budget totals $50,000.
Required
Calculate the number of units included in the production budget for next year.
Answer and Work:
2. (3 points) Given the following information from Power Enterprises’ direct materials budget.
Production 500,000 units
Beginning Materials Inventory 270,000 units
Ending materials inventory 170,000 units
Estimated sales
Required
Calculate how many units are estimated to be sold?
Answer and Work: