LO 7.2Lens Junction sells lenses for $45 each and is estimating sales of 15,000 units in January and 18,000 in February. Each lens consists of 2 pounds of silicon costing $2.50 per pound, 3 oz of solution costing $3 per ounce, and 30 minutes of direct labor at a labor rate of $18 per hour. Desired inventory levels are:
Prepare a sales budget, production budget, direct materials budget for silicon and solution, and a direct labor budget.
LO 7.2The data shown were obtained from the financial records of Italian Exports, Inc., for March:
Sales are expected to increase each month by 10%. Prepare a budgeted income statement.
LO 7.2Echo Amplifiers prepared the following sales budget for the first quarter of 2018:
It also has this additional information related to its expenses:
Prepare a sales and administrative expense budget for each month in the quarter ending March 31, 2018.
LO 7.2Prepare a budgeted income statement using the information shown.
LO 7.2Spree Party Lights overhead expenses are:
Prepare a manufacturing overhead budget if the number of units to produce for January, February, and March are 2,500, 3,000, and 2,700, respectively.
LO 7.3Relevant data from the Poster Company’s operating budgets are:
Additional data: Capital assets were sold in January for $10,000 and $4,500 in May. Dividends of $4,500 were paid in February. The beginning cash balance was $60,359 and a required minimum cash balance is $59,000. Use this information to prepare a cash budget for the first two quarters of the year
LO 7.3Fill in the missing information from the following schedules:
LO 7.3Direct labor hours are estimated as 2,000 in Quarter 1; 2,100 in Quarter 2; 1,900 in Quarter 3; and 2,300 in Quarter 4. Prepare a manufacturing overhead budget using the information provided.
LO 7.3Fitbands’ estimated sales are:
What are the balances in accounts receivable for January, February, and March if 65% of sales is collected in the month of sale, 25% is collected the month after the sale, and 10% is second month after the sale?
LO 7.3Sports Socks has a policy of always paying within the discount period and each of its suppliers provides a discount of 2% if paid within 10 days of purchase. Because of the purchase policy, 85% of its payments are made in the month of purchase and 15% are made the following month. The direct materials budget provides for purchases of $129,582 in November, $294,872 in December, $239,582 in January, and $234,837 in February. What is the balance in accounts payable for January 31, and February 28?
LO 7.4Prepare a flexible budgeted income for 120,000 units using the following information from a static budget for 100,000 units:
LO 7.4Before the year began, the following static budget was developed for the estimated sales of 100,000. Sales are sluggish and management needs to revise its budget. Use this information to prepare a flexible budget for 80,000 and 90,000 units of sales.
LO 7.4Caribbean Hammocks currently sells 75,000 units at $50 per unit. Its expenses are:
Management believes it can increase sales by 5,000 units for every $5 decrease in sales price. It also believes the additional sales will allow a decrease in direct material of $1 for each additional 5,000 units. Prepare a flexible budgeted income statement for 75,000-, 80,000-, and 85,000-unit sales.
LO 7.4Total Pop’s data show the following information:
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 $3 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. Prepare a production budget, direct materials budget, and direct labor budget for the first quarter of the year.
LO 7.4Identify the document that contains the information listed in these lines from the budgeted balance sheet shown.
- Accounts receivable
- Raw materials inventory
- Accounts payable
LO 7.5Titanium Blades refines titanium for use in all brands of razor blades. It prepared a static budget for the sales of 5,000 units. These variances were observed:
Determine the static budget and use the information to prepare a flexible budget and analysis for the 6,000 units actually sold.