grand acc360 week 5 assignment

6-32Revenue and production budgets.(CPA, adapted) The Sabat Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2013, Sabat’s budget department gathered the following data to prepare budgets for 2014:

2014 Projected Sales

Product Units Price

Thingone 62,000 $172

Thingtwo 46,000 $264

2014 Inventories in Units

Expected Target

Product January 1, 2014 December 31, 2014

Thingone 21,000 26,000

Thingtwo 13,000 14,000

The following direct materials are used in the two products:

Amount Used per Unit

Direct Material Unit Thingone Thingtwo

A pound 5 6

B pound 3 4

C each 0 2

Projected data for 2014 for direct materials are:

Direct Material Anticipated Purchase Price Expected Inventories Target Inventories

January 1, 2014 December 31, 2014

A $11 37,000 lb. 40,000 lb.

B 6 32,000 lb. 35,000 lb.

C 5 10,000 units 12,000 units

Projected direct manufacturing labor requirements and rates for 2014 are:

Product Hours per Unit Rate per Hour

Thingone 3 $11

Thingtwo 4 14

Manufacturing overhead is allocated at the rate of $19 per direct manufacturing labor-hour.

Based on the preceding projections and budget requirements for Thingone and Thingtwo, prepare the following budgets for 2014:

1.Revenues budget (in dollars)

2.What questions might the CEO ask the marketing manager when reviewing the revenues budget? Explain briefly.

3.Production budget (in units)

4.Direct material purchases budget (in quantities)

5.Direct material purchases budget (in dollars)

6.Direct manufacturing labor budget (in dollars)

7.Budgeted finished goods inventory at December 31, 2014 (in dollars)

8.What questions might the CEO ask the production manager when reviewing the production, direct materials, and direct manufacturing labor budgets?

9.How does preparing a budget help Sabat Corporation’s top management better manage the company?

8-39Review of Chapters 7 and 8, 3-variance analysis.(CPA, adapted) The Brown Manufacturing

Company’s costing system has two direct-cost categories: direct materials and direct manufacturing labor.

Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labor-hours (DLH). At the beginning of 2014, Beal adopted the following standards for its manufacturing costs:

Input Cost per Output Unit

Direct materials 5 lb. at $4 per lb. $ 20.00

Direct manufacturing labor 4 hrs. at $16 per hr. 64.00

Manufacturing overhead:

Variable $8 per DLH 32.00

Fixed $9 per DLH 36.00

Standard manufacturing cost per output unit $152.00

The denominator level for total manufacturing overhead per month in 2014 is 37,000 direct manufacturing labor-hours. Beal’s flexible budget for January 2014 was based on this denominator level. The records for January indicated the following:

Direct materials purchased 40,300 lb. at $3.80 per lb.

Direct materials used 37,300 lb.

Direct manufacturing labor 31,400 hrs. at $16.25 per hr.

Total actual manufacturing overhead (variable and fixed) $650,000

Actual production 7,600 output units

1.Prepare a schedule of total standard manufacturing costs for the 7,600 output units in January 2014.

2.For the month of January 2014, compute the following variances, indicating whether each is favorable

(F) or unfavorable (U):

a.Direct materials price variance, based on purchases

b.Direct materials efficiency variance

c.Direct manufacturing labor price variance

d.Direct manufacturing labor efficiency variance

e.Total manufacturing overhead spending variance

f.Variable manufacturing overhead efficiency variance

g.Production-volume variance